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Employee Disengagement and Its Costly Nature

Employee Attrition
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Besides the fact that the modern workforce is made up mainly of the millennial generation, within the years to come they are going to move from being the largest percentage within the job market to the only generation within the job market. One thing to keep in mind is, counter to many beliefs, this generation is neither lazy, self-entitled, or unwilling to put in the effort for a job they believe is worthwhile to ensure their future is secure, fiscally and socially.

In light of this, many organizations are having to rearrange their entire work structure in order to not lose out on the expertise these workers can offer, and ensure their bottom-lines are continuously showing improvement while avoiding the employee disengagement trend.

The Hole That is Disengagement

Passive employees are some of the worse kinds of people to have in your office as passivity is not only contagious but is very effective at killing the motivation others have to go above and beyond. What’s more, these states of employee disengagement quickly turn employees against business goals and missions which can lead to employees actively going against company ideals and increasing turnover.

Disengaged employees are not only a waste of the salary they are being paid, but if they are actively going against company values, sabotaging potential sales, and bringing down the demeanour or attitude of other employees (as Gallup describes) they are further reducing the productivity of your team, which results in even more losses. If employees who are motivated can outperform other employees by up to 202%, the percentage between a disengaged employee and a highly productive one are even higher.

Up until Applauz, the SMB division of the business world has been suffering from a lack of fairly priced platforms for those smaller businesses to properly take advantage of all the benefits of having an Employee Engagement platform. The cost of most of these programs is listed as between 3-6$ per employee, per month on top of a monthly fee for simply having the platform. Initiating those kinds of alternatives, compared to Applauz, is often quite costly to companies whose employees are already not performing to their best, or who don’t have the budget for it.

Disengaged employees also lead to the inevitable turnover statistics that cost companies anywhere between 450-600 billion dollars a year. It’s extremely expensive to retrain and replace employees and depending on their level within the company, the cost only goes up the more seniority they have.

The Numbers Don’t Lie

Breaking down the aforementioned numbers of 450-600 billion yearly, the average an actively disengaged employee costs their company is 3,400$ for every 10,000$ of salary payments. This breaks down to 34% of wasted revenue for each disengaged employee.

As the current hourly wage for Employees across Canada is 25.70$ per hour, which equates to a 49344 salary per year, 49344 x .34 = 16776.96$ in wasted funds a year. According to the Canada Human Resource Centre, 15% of the Canadian workforce is actively disengaged. So if you have a business of 100 people, that would mean you would be throwing away a little over a quarter of a million dollars a year, 251654.40$ to be exact for 15 employees!

Maybe disengagement has dropped over the last decade or so, yet the cost of employees salaries have gone up. So while businesses may be saving money, there is still a significant loss as you can see. Especially in the potential of revenue to be held by those actively engaged employees. This number is then astronomical.

New Ship

The Solution

First, stop thinking that what you consider a fair wage is enough for employees to be extremely dedicated and loyal. Employees view a fair wage as the bare minimum of what’s expected from a job, for the work they do. Listening to employees, giving their voices credence, and valuing their expertise for which you hired them are all ways to begin the engagement process.

Going out of your way to get to know your employees and actively reward them with tangible gifts they personally value are ways to create the kind of environment that will yield the most amazing results in your productivity. Applauz helps you do that and gives your entire Employee Engagement budget directly to your employees. This maximises the ability to increase Employee Engagement and get that Discretionary Effort to increase your productivity.