The Cost Of Disengaged Employees To Your Business

The Cost of Disengaged Employees to Your Business

Published on: January 7, 2024
Last Updated: January 7, 2024

The Cost of Disengaged Employees to Your Business

Published on: January 7, 2024
Last Updated: January 7, 2024

The key to running a successful business is in maintaining productivity and efficiency in the workplace.

It seems obvious, yet many employers fail to appreciate this means keeping employees happy. 

Reports show that happy employees are more productive, the cost of disengaged employees to your business can be significant. 

It’s time to take a look at exactly what it costs you and what you can do to keep your employees happy. 

Key Statistics

  • US businesses lose $400-500 billion a year thanks to disengaged employees
  • US businesses spend $720 million a year engaging employees
  • Employee turnover costs businesses $11 billion a year
  • Company culture affects employee engagement the most
  • The global cost of disengagement is $8.8 trillion
  • In 2022, 23% of employed people in the world felt engaged
  • Only 35% of US employees are actively looking for a new job
  • 59% of employees wouldn’t recommend their employer as good to work for

The Cost Of Disengaged Employees To Your Business: True Statistics

1. US Businesses Lose $400-500 Billion A Year Thanks To Disengaged Employees

Businesses 906

Disengaged employees are less interested in getting their job done and more interested in doing just enough to keep their job and pay check.  

In some cases, this is simply the attitude of the employee.

However, many employees start out very productive and their productivity drops as they become disillusioned with the business. 

These are the employees who have become disengaged due to a poor work environment, feeling underappreciated or a variety of other reasons. 

Unfortunately, employees who become disengaged will not work as hard or as efficiently.

That results in reducing productivity for the business and even lower quality products. 

This reduction in production and quality has been shown to cost businesses across the US a total of $400-$500 billion, every year!

(Zippia)

2. US Businesses Spend $720 Million A Year Engaging Employees

Some businesses are already actively looking at ways to engage and maintain employee engagement. 

The latest reports suggest that businesses in the US spend $720 million annually in engaging employees. 

Much of this funding is targeted at employee activities, such as team-building days and in-house activities.

Naturally, there are plenty of low-cost and free options when engaging employees. 

Interestingly, the latest estimates suggest the spending on employee engagement will increase to $1.5 billion per annum by 2032.

This is likely to increase further as businesses see the rewards.

Current reports show that a 10% increase in employee engagement results in a boost of $2,400 in profits per year.

That‘s per employee!

It should be noted that a highly engaged employee will be 38% more productive than those who aren’t engaged. 

(Zippia)

3. Employee Turnover Costs Businesses $11 Billion A Year

Disengaged employees hurt the business financially as they aren’t as productive as they could be.

They can also damage the reputation of the business by simply not caring when dealing with customers. 

While some disengaged employees are happy to attend the workplace daily and do the minimum to get paid, many are looking for more fulfilment at work. 

That means they’ll be looking for alternative work.

At some point, they’ll find it and quit.

The business then needs to spend time and money on looking for a new employee and training them to the right standards. 

It’s estimated that this costs a third of the average employee salary.

According to the latest reports, this costs businesses across the US an impressive $11 billion a year. 

This cost doesn’t cover the lost business or even the loss of time and focus on the future of the business, it simply covers the time and funds spent replacing an employee.

(Zippia)

4. Company Culture Affects Employee Engagement the Most

Businesses 907

There are many reasons why an employee may feel disengaged.

In some cases, it’s an individual issue and there may be little the employer can do about it. 

However, in most cases, there is a reason for the disengagement.

Identifying this helps find a solution and improve your profits. 

Research shows that a poor company culture has the biggest detrimental effect on engagement.

Specifically, this means that the employees don’t feel like they are part of a team or share a bond. 

Other major causes of disengagement are poor communication and a feeling of no support from the management. 

A recent survey also highlighted that 39% of employees feel that there is a lack of collaboration in the workplace.

This is often seen as a result of management priorities being in the wrong place. 

What’s surprising is how obvious an oversight this is.

Employees need to collaborate with each other on a variety of issues daily.

If they don’t feel able to do this then productivity will suffer. 

(Zippia)

5. The Global Cost Of Disengagement Is $8.8 Trillion

The US isn’t the only country struggling with disengagement. The truth is it’s a global issue.

According to the latest report from Gallup’s State of the Global Workplace 2023, businesses across the globe lost a huge total of $8.8 trillion dollars simply because of employees being disengaged. 

That’s roughly 9% of the GDP for the planet!

The good news is that this figure is reducing as businesses become more aware of the issue and take steps to deal with it. 

It should be noted that employee disengagement has been slowly decreasing over the last ten years, until the global pandemic hit.

This transformed outlooks and levels of disengagement.  

(Gallup)

6. In 2022, 23% Of Employed People In The World Felt Engaged

The same Gallup survey found that 23% of employed people felt engaged in the workplace.

That’s a low number and one that needs a lot of work.

However, it is better than the previous year.

The Gallup survey found that employee engagement levels in 2021 were 21%, a slight dip on the level of engagement before the pandemic.

In 2019 it was shown as 22%.

In other words, employers are heading in the right direction but have a very long way to go. 

It should be noted that changing the culture in the workplace is not an easy task.

It can take years to get employees to trust management and feel engaged. 

However, businesses which succeed in engaging employees generally have 10% higher customer engagement, 23% higher profits, and are 18% more productive. 

Reports also show that, in low-turnover businesses, the rate of employee turnover can shrink by as much as 43%!

(Gallup)

7. Only 35% Of US Employees Are Actively Looking For A New Job

If you’re an employer struggling with disengagement then you might be a little relieved to learn that only 35% of employees across the US are actively looking for a new job. 

That rate includes those who are engaged and yet still looking for work.

It’s an impressive improvement on 2022 when 74% of employees were actively looking for new jobs. 

However, while that lowers the likelihood of you losing staff, it doesn’t change the fact that the same report found just 21% of employees are content in their jobs. 

In other words, just because people aren’t actively looking for new jobs, doesn’t mean they are engaged in their current one. 

Employers need to be proactively engaging their staff to prevent disengagment from happening.

This is the most effective way to boost productivity and profits!

(Forbes)

8. 59% Of Employees Wouldn’t Recommend Their Employer As Good To Work For

Businesses 908

In business reputation is everything. A good reputation attracts more customers and helps you to attract the brightest stars in your industry.

That helps you keep your business ahead of the competition. 

That’s why all employers should be concerned that 59% of employees wouldn’t recommend their workplace as a good place to work. 

An employee should be one of the most powerful advertising resources of any business.

They recommend you to potential customers and help you attract the best staff.

A disengaged employee can have the opposite effect. 

Simply imagine yourself reading a negative review of a business or product by someone who works for the company. That guarantees you’ll shop elsewhere.

It also emphasizes the importance of employee engagement. 

(Perkbox)

How To Keep Employees Engaged

It’s estimated that 52% of US employees are at work but don’t feel inspired, connected, or engaged in the workplace!

In fact, just 30% of workers are actively engaged and the remaining 18% are actively disengaged.

It’s time employers learned to engage their employees:

Open Communication Channels

You can arrange hundreds of team-building days to help your team bond. 

However, you don’t need to spend that sort of money to create engagement. 

One of the most important rules of engagement is that the communication channels are open. 

To do this you need to ensure all employees have the opportunity to voice their opinion and make suggestions.

This can be via team meetings or anonymous suggestions. 

As long as employees feel their voice is being heard they will feel more connected to the business.

An employee who feels connected and valued is more likely to be engaged. 

Be Transparent

An extension of open communication is being transparent.

News should be shared with the employees and not simply a select few. 

Organizations which have a select few knowing all the data are handicapped as those not in the know will feel they are not trusted. 

It’s important to ensure all employees are updated, it encourages team building, boosts morale, and is good for the business.

Give Praise Publically

It’s easy for a boss to praise the big achievements, such as when the team hits a specific production target.

However, praise is often given to the team leader. 

To boost engagement you need to make sure all involved employees receive the praise. 

Ideally, this should be done in front of all employees.

However, keep it simple, you want employees to know they are appreciated but not to feel uncomfortable being singled-out.  

Make Everyone Accountable

Accountability is an important part of employee engagement.

If they are held accountable for their actions then they will endeavor to do better.

Most employees will want to exceed expectations. 

This results in pride in their accomplishment which increases satisfaction and, therefore, engagement. 

You need to encourage all team leaders to give each team member an assignment and hold them accountable for completing the assignment. 

Evaluate Progress

Anonymous surveys are an excellent way to get honest feedback from your employees.

Once they realize they can be honest without repercussions they will be. 

This will allow you to evaluate what effect the changes you’re making are having.

It’s important to request improvement suggestions and, ideally, implement some of them. 

The employees will see that what they say matters and be encouraged to be honest on the surveys.

You may be surprised at how much difference this makes to employee engagement levels. 

Team Building

Team Building 912

Team building shouldn’t be the first thinking you think of when trying to improve employee engagement. However, it is worth doing. 

You need to think of activities that will engage as many of the staff members as possible.

This can be challenging!

The more you have involved, the more successful the team building event will be.

It allows employees to have some fun and connect with each other.

That’s surprisingly beneficial when they are working together daily. 

Summing Up

An engaged employee is eager to learn and promote your business.

They are generally happy at work and it shows in the way they interact with other members of staff and customers.

The good news is that while the cost of disengaged employees to your business can be high, it doesn’t need to cost a fortune to change the attitude of your team.

The basics of a happy and engaged team are simple.

Make sure every employee feels like they, and their opinions, matter.

The rest will take care of itself. 

Sources

GallupThreewillZippia
ForbesPerkbox

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Written by Kelly Indah

I’m a statistics researcher here at EarthWeb with a special interest in privacy, tech, diversity, equality and human rights. I have a master’s degree in Computer Science and I have my Certified Information Systems Security Professional (CISSP) certification.