Tag Archives: the cost of turnover

how to lower the cost of disengaged workers

cost die

Continuing with the theme of employee engagement, or the lack thereof, people readily agree that disengaged workers are “expensive.”

For example, recent data shared by Gallup indicates that 74% of actively disengaged workers are actively seeking alternative employment. Along those lines, turnover is much higher among disengaged workers, as is absenteeism.

In addition, if the predominant environment within an organization is one of disengagement, productivity and profitability are lower, there is little or no continuous improvement, and pay tends to be higher.

Clearly it is advantageous to engage our employees or, at least, make a concerted effort to address and lower the costs associated with disengagement.

Here are a few suggestions for driving engagement within a business organization and for lowering the costs of disengagement based on input from CI professionals and leaders:

  • Enhanced recruiting and on-boarding – At an Engagement World Conference, leaders from several organizations explained how they had increased employee engagement and retention beginning at the recruiting stage. The first steps involved the inclusion of the organization’s mission and vision into interviewing conversations, and a more conscious effort to identify and hire people with aligned goals. Adding a mentor program to the on-boarding process helped new hires assimilate faster so they became more productive in less time.

    Enabling people to achieve higher levels of productivity and success early-on not only promotes greater engagement levels, but also reduces first-year attrition rates, which are often among the highest. Early churn tends to demoralize the entire workforce as well, so in addition to reducing rehiring and re-training costs, the costs associated with negativity within the existing workforce are also reduced.
  • Flexibility and work/life balance – Employer/employee relationships, expectations, and engagement criteria have evolved significantly over the course of the pandemic. Depending on the type of organization, scheduling and work-from-home options has become a priority in many workplaces.
  • Consistent performance management and communication – People need to find meaning in their work, and understand how their work aligns with organizational objectives. This point was well made by several speakers in an episode of TED Radio Hour, called The Meaning of Work. If managers communicate a shared purpose or sense of direction, and encourage employees to openly share their perspectives and input, then they can increase employee engagement.

    This type of communication works best when systematized as part of structured, proactive approach to performance management. This methodology includes frequent feedback rather than annual performance appraisals and reviews, ongoing engagement surveys (i.e., e-Net Promoter Score) with real-time feedback loops, and protocols for keeping people aware of how individual work impacts organizational goals and how it aligns with mission and vision.
  • Learning and development – A young, seemingly fast-rising junior executive had been working at a large bank for just over six years. When he was asked about his job and how he felt about it he said, “The job’s OK.” His lack of enthusiasm was evident, and when pressed to say more he added, “Well, I’m not really learning much anymore.” He went on to confirm that he was not truly engaged, and that he did not make much of an extra or discretionary effort, which engaged workers regularly put forward. Only recently has it become clear to forward-thinking business leaders that the path to sustainable employee engagement is to drive productivity, and to do so through ongoing education and empowerment. In support of this perspective, a recent article in Human Resource Executive magazine identified “continuous learning opportunities and personal development” as being two of the four key criteria (scheduling flexibility and social responsibility being the other two) recent graduates value most as they evaluate career options.
  • Recognition and rewards – Recognizing and rewarding employees is not a new concept, but if the goal is to engage workers rather than simply acknowledge milestones (such as length of service), then the approach must be different and must be aligned with what is meaningful to each recipient.

Lost Opportunities: The Hidden Cost of Disengagement

We all know that engaged workers are more productive and loyal. Conversely, disengaged workers are less productive and are among the first to “turnover.” And we all know that turnover can be costly considering it involves hiring, onboarding, training, ramp time to peak productivity, the loss of engagement from others due to high turnover, higher business error rates, and general culture impacts.

But how much does turnover “really” cost?

A 2017 Deloitte study stated the cost of losing an employee can range between 1.5–2.0x the employee’s annual salary. But the costs can be even higher based upon skill level. For example, a paper from the Center for American Progress determined that the average economic cost to a company of turning over a highly skilled job is 213% of the cost of one year’s compensation for that role.

Then there are some of the less tangible considerations, as illustrated by the following example: A young, seemingly fast-rising junior executive had been working at a large bank for just over six years. When he was asked about his job and how he felt about it he said, “The job’s OK.”

His lack of enthusiasm was evident, and when pressed to say more he added, “Well, I’m not really learning much anymore.”

When asked if he was fully-engaged he said probably not but went on to say that he still did a great job. “I still give 100% and consider myself to be a great employee,” he said. Then, after a short pause, he added,” But I don’t give them 110% and there’s a big difference between 100% and 110% — at least for me.”

When asked if he was out looking he responded, “No…, but I’m listening.”

When asked whether he told his boss how he was feeling he said, “Yeah, but….”

How many people in how many places feel like he does? He is bright, educated, skilled, well-liked, and might be an ideal candidate for a senior leadership position…if he stays.

But is he being made to feel like an important part of the team? Does anyone realize that he could be giving more? Is he being engaged?

As stated above, among the many documented advantages of an engaged worker is loyalty. But so too is the discretionary effort that they put forth; going the extra mile; the above-and-beyond attitude… giving 110%! How many innovative ideas might that extra 10% yield? How much more productivity? What impact might it have on customers or coworkers?

And if he doesn’t stay, the simple replacement costs are not the real issue. He is a potential super-star! He is a known-entity… trustworthy, dependable, low-risk.

What are the real (or hidden!) costs associated with disengagement; the costs of not getting 110%… the costs of not only lost workers, but also of
lost opportunities? As we’ve discovered over the years, the biggest waste in most businesses is the lost opportunities…