You’d be hard-pressed to find an employer in disagreement with what is now common wisdom: employee engagement is essential to organizational success. Whether it’s customer service, profitability, or employee retention, the amount of data supporting the positive effects of employee engagement has become impossible to ignore. And yet the majority of U.S. employees are not engaged when they go to work each day. In this article, we explore the real impact of disengagement.

1. Employee disengagement costs between $450-$500 billion annually

The estimated annual cost of employee disengagement to the U.S. economy is between $450 and $500 billion.1 On a micro level, McLean & Company has estimated that just one disengaged employee can cost a company up to $3,400 per year for every $10,000 of salary.

Companies with engaged employees tend to perform much better, according to research prepared for the U.K. government, companies with a highly engaged workforce enjoyed 19.2% growth in annual operating income. Companies with lower engagement scores had an operating income that was 32.7% lower than those with higher scores.2

It’s estimated that companies in the highest quartile of employee engagement enjoy 17% better productivity and 20% higher sales than those in the lower quartile.3

2. Sixty-seven percent (67%) of employees are either not engaged or actively disengaged

According to Gallup’s recently released “State Of the American Workplace report” 4 for 2017, only 33% are engaged. Furthermore, the findings indicate that 51% are not engaged – and have not been for quite some time.

What do low engagement levels mean to your organization? According to the report, if your company is within the lowest 25% in engagement, you could see 69% higher absenteeism rates, 39% more shrinkage, and more than twice as many safety incidents than a company within the highest 25% range of employee engagement.

3. Eighty-five percent (85%) of employees are either actively looking or open to new employment opportunities5

Fifty-six percent (56%) of employed Americans believe that now is a good time to find a quality job.6 Additionally, 1 in 3 employees are actively planning to make a move within the next 12 months.7 That’s not good news for turnover and retention rates.

It also seems that it wouldn’t take too much of an incentive to make a less engaged employee leave his or her job. Nearly 69% of disengaged employees would leave for as little as a 5% increase in pay. On the other hand, a 20% increase is necessary to attract an engaged employee.8

While more pay may provide the impetus to make a move, money is not always the most important factor in changing jobs. In the book The Hidden Reasons Employees Leave, author Leigh Branham states that 89% of employers believe their employees leave for more money, but only 12% actually do. In fact, the leading reason for an employee’s departure is his or her boss.

4. Sixty percent (60%) of employees describe the ability to do what they do best as “very important”9

Offering a glimpse of what matters most to employees when it comes to considering employment elsewhere, the Gallup report ranks this as the attribute that had the greatest importance. A better work-life balance was next at 53%, followed by greater job security and stability with 51%, and a significantly higher income at 41%.

5. Sixty-nine percent (69%) of HR Professionals Recognize That Employee Engagement Is a Problem10

Business leaders know that disengaged employees represent an important issue. 90% of companies agree that there is a significant impact of disengaged employees on their success, yet only 25% have an engagement strategy or plan.11 This may help to explain why disengaged employee statistics have not changed significantly over the last few years. Those stagnant engagement rates also suggest that it isn’t a problem that fixes itself without an action plan for improving it.

Learn More

It’s powerful to know what your employees think! You can identify problems like poor supervision, communication breakdown, and mounting plans to leave your company before expensive turnover affects your business.
Find out how engaged (and disengaged) your employees are when you measure engagement with our custom employee surveys.

Sources:

[1] The Conference Board: DNA of Engagement: How Organizations Create and Sustain Highly Engaged Teams

[2] David MacLeod & Nita Clarke: Engaging for success: Enhancing performance through employee engagement (PDF)

[3] GALLUP: State of the American Workplace

[4] GALLUP: State of the American Workplace

[5] Matt Grunewald: Why More Employees Are Considering Leaving Their Companies [Infographic]

[6] GALLUP: Views of Quality Job Market Sync With U.S. Unemployment Rate

[7] MERCER: 2021 Global Talent Trends Study

[8] Dale Carnegie: Building a Culture of Engagement – the Importance of Senior Leadership (PDF)

[9] GALLUP: State of the American Workplace

[10] Psychometrics: Control, Opportunity & Leadership A Study of Employee Engagement in the Canadian Workplace

[11] Dale Carnegie: Building a Culture of Engagement – the Importance of Senior Leadership (PDF)

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