Will Holland is a Principal Software Engineer at ThreeWill, where he champions our core value of “Better Together” with his focus on helping employees thrive by building meaningful connections in the workplace. Outside of work, Will can usually be found at the nearest soccer pitch, enjoying watching his children play or rooting for Atlanta United FC.
At this point, I’ve been focused on the topic of employee engagement for years. Personally, I’ve always really thought of the COVID pandemic as the “start” of the conversation but, of course, that’s just when I personally became aware of “employee engagement” as a formal concept.
So, I smiled (just a bit) to myself when I found the Forbes Article How Much Are Your Disengaged Employees Costing You? It’s sometimes nice to have a reminder that one’s perception isn’t always reality.
This Forbes article references a 2019 Gallup State of the American Workplace report which, if you’re interested in this topic, there’s a good chance you’ve read – or at least heard of – the report. If not, I’ll save you a read and tell you that, according to Gallup, the total cost of a disengaged employee is 34% of their annual salary.
And, in case you’re thinking “C’mon, Will! That data is old news,” Gallup has released its latest report for 2024, which shows that, while some of the major areas employees are struggling in have changed, the total economic impact of disengaged employees hasn’t changed much.
Specifically, their findings show that, as of November of 2023, while actively disengaged employees did not change significantly, the number of employees categorized as engaged fell by 2 percentage points from the 2019 poll, what I find more interesting is that engagement is down another percentage point from January 2020, the last pre-pandemic datapoint.
Turnover Troubles
Disengaged employees are more likely to leave their jobs, which can lead to turnover troubles. High turnover rates can be costly to an organization, as it takes time and money to recruit, train, and onboard new employees. The cost of replacing an employee can range from 50% to 200% of their annual salary, depending on the level of the role they held. Additionally, high turnover rates can also impact team morale, productivity, and quality of work, which obviously can exaggerate the cost.
Productivity Pitfalls
One of the most significant costs of disengaged employees is lost productivity. Disengaged employees are less motivated and less committed to their work, resulting in a decline in productivity. They may take longer to complete tasks, make more errors, and take more time off work. According to a Gallup survey, disengaged employees cost U.S. companies between $450 billion to $550 billion annually in lost productivity. On a more granular level, Gallup reported that disengaged employees were 18% less productive than their more engaged peers.
Culture Clash
Disengaged employees can have a negative impact on the company culture, which can affect employee morale and productivity. They may complain about their job or coworkers, create a negative work environment, and drag down team morale. This negative attitude can also be contagious, and other employees may start to feel the same way, leading to a culture clash that can further exaggerate other costs.
According to the 2023 Gallup report, the average US workforce consists of 16.2% actively disengaged employees; folks who are genuinely unhappy, unproductive, and likely to spread those attributes to others.
It All Adds Up
So, what does this mean for us? Let’s do some math.
First, let’s assume that we’re a member of a 200-person company here in the Atlanta metro area, where the average salary is $74,000 per year (source: Atlanta, Georgia Salary | PayScale).
If we accept the Gallup findings that 17% of our coworkers fall into the “actively disengaged” category and that each of those employees costs an average of 34% of their annual salary, we get…
200 employees x 17% = 34 disengaged employees.
$74,000 x 34% = $25,160 cost per disengaged employee.
34 disengaged employees x $25,160 disengagement cost = $855,440 per year.
Over $850,000 in lost ROI from your bottom line. At least.
Curious to see what disengagement is costing your organization?
Use our new calculator below to find out!
But wait, there’s more!
Gallup only reported these statistics for employees they categorized as actively disengaged, the lowest level of engagement. They did not include similar statistics for most of our workforce, which falls into a category they describe simply as “not engaged”.
Even if those slightly more engaged only cost a quarter of that compared to the 34 disengaged employees, it’s still enough to put you one million behind.
It’s staggering when you first consider it. The good news, though, is that – unless you’re at one of those rare companies that aren’t afraid to waste its resources – this creates an opportunity for savvy leaders to look like superheroes for everyone when they decide to invest in making their people happy at work and, at the same time, increasing the margins that boardrooms tend to focus on.
If you’re thinking of donning that cape, or perhaps have already started your adventure but found yourself in need of some guidance, ThreeWill is on its own mission of helping one million employees thrive at work. Perhaps it’s time for a team-up!
START YOUR HERO’S JOURNEY – CONTACT THREEWILL TODAY!
