The real cost of a disengaged workforce

What is the real cost of disengagement?

Disengagement in the workplace leads to many problems, that costs the UK economy billions each year. The problems consist of high turnover rates, lack of motivation or growth and high sick rates.

According to a recent report carried out by Oxford economics, an average employee costs between £20-30 thousand pound to replace, this includes the hiring of temporary staff, loss of time, cost of recruitment, interviewing and other factors.

Disengaged employee’s are over twice as likely to leave a company, often quite abruptly, and are a huge cost to employers. Studies found a direct correlation between high churn rate and low engagement of employees.

The main causes for disengagement are :

  • Not feeling valued in a company
  • Having opinions dismissed or being ignored
  • No recognition or praise in a job well done
  • Being aligned with your company and it’s goals, this is a key difference when feeling you have a job over a career
  • No clear vision or fair evaluations, which lead to people feeling like another person sat at a desk rather than part of the company
  • No safe place to voice problems or grievance or issues due to chain of command, few companies offer an anonymous way to discuss concerns, and many employee’s fear backlash if done so

The above reasons can lead to employee’s seeking another job, putting zero effort into their work , or even calling in sick on a regular basis. These issues, while major, are resolvable, but require employers to invest in their workforce. One of the most important factors in all these is opening new avenues of communication. Employee’s that feel they can voice their opinions, receive help and feedback about their job role, or even get recognised for doing their job have a much lower chance of leaving a company. 

To give an example of how big an issue this is, lets look at a example for a company we’ll call OfficeCorp.

OfficeCorp has 1000 employees with a churn of 15%, Which means the company will be replacing around 150 employee’s a year. Lets reduce the cost of replacing employee’s to just 10k per employee for the example, much lower than the predicted amount from the Oxford economics report. This means with 150 employee’s, it still cost’s as high as £1.5 million a year.

Here we can begin to see the true value in investing in engagement, as the costs of the replacing employee’s are huge and can have a large effect on turnover.

Just a 2% reduction in churn from improved engagement, retaining an extra 20 people would create a saving of £200,000. To engage your employee’s can start from something as small as weekly one on one meetings, to something as big as using engagement software to know as much about your employee’s and their happiness as possible and creating a community of feedback and recognition. One thing however is for certain, and that it will cost you more to have disengaged employee’s than it will to actively engage them.

 

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