High turnover and low productivity are the hallmarks of an organization with a culture of disengagement, and the impact on bottom line profits is startling. For example, turnover costs American companies $11 billion per year. Depending on the type of position and skills required, replacing a single worker can cost between 1.5 and 4 times the individual’s annual salary.
Companies with a highly-engaged workforce avoid excessive spending on turnover, as employees who are engaged in their work are 87 percent less likely to leave the company.
The Impact of Engagement on Productivity
Disengaged workers often don’t come to work at all, and when they do, they fail to keep pace with their highly-engaged peers. Studies show that highly-engaged employees perform 20 to 28 percent better than their disengaged peers, and disengaged employees generate 40 percent less revenue than their engaged coworkers. As a result, organizations with a high percentage of disengaged workers rapidly fall behind the competition.
In fact, companies with engaged employees outperform competitors with disengaged employees by 202 percent, and companies that are committed to a formal engagement strategy are 67 percent more likely to improve their per-employee revenue year over year.
The High Cost of Low Engagement
In addition to the hard costs of replacing leavers and managing declining productivity, companies with low engagement scores are faced with the soft costs associated with poor customer service and disappointed stakeholders.
Examples include customers, shareholders, suppliers and vendors. Individuals who are enthusiastic about the work they do naturally offer better service and generate higher customer ratings than their apathetic peers.
By some estimates, the total cost of disengaged employees in the U.S. is 350 billion dollars per year, when factoring in lost productivity, theft, accidents and turnover. The business case for a comprehensive employee engagement strategy couldn’t be more compelling — particularly when you consider that research from Gallup shows only 30 percent of American workers are fully engaged in their jobs. However, studies show that increasing investment in employee engagement by just 10 percent improves per-employee profits by $2,400 each year and increases employee productivity.
