5 hidden costs of employee disengagement and how to mitigate them 

Corporations are always seeking ways to reduce costs, but one of the most overlooked costs in business is disengaged employees. In fact, employee disengagement cost businesses between $450 billion and $550 billion according to Gallup. Although some costs of employee disengagement are apparent, the majority of them are hidden. In this article, we’ll explore five of the costliest factors of employee disengagement in the workplace.

Culture damage

One of the most common disengagement costs hiding in plain sight is the damage done to a company’s culture. The culture of any organisation is the sum of the standards set by the executive teams along with the morale of the employees. With rampant employee disengagement, companies can quickly develop a negative culture where employees feel like they are not valued, engaged, or listened to. This can have serious consequences for the company, such as decreased productivity, employee turnover, and difficulty recruiting talented employees in the future.

Naturally, some working environments are most likely to cause disengagement at work. For example, in the healthcare profession like nursing, long shifts, stressful situations, and lack of staff can increase the probabilities of having unmotivated employees. However, companies must be prepared to spot the potential issues from the beginning and build a strategy that will minimise the risks.

Culture damage is so costly because it’s extremely difficult to reverse. Once employees are disengaged, it will take a lot of time, money and effort from management to turn the culture tide within the company. Managers need to have a pulse on their immediate teams and prevent disengagement from creeping into their workplace.

You can mitigate culture damage by improving employee engagement with employee recognition. This can be done by setting an example as a leader, encouraging employee-to-employee communication, and celebrating employee accomplishments. By creating a culture of recognition and engagement,  you can dissuade employee disengagement from taking hold in your workplace.

loss of innovation

When employees are disengaged, they stop being creative and innovative. In fact, employee disengagement has been shown to decrease creativity. A Gallup study found that 59% of engaged employees have said their job “brings out their most creative ideas”. It’s crucial for managers to ensure that employees stay engaged to foster innovation in the workplace.

A lack of creativity can be extremely costly for companies because it stifles innovation and outside-the-box thinking. In this day and age, companies need to be constantly innovating to stay ahead of the competition. It only takes a few products or campaigns for a single organisation to take a large percent of the market share. By ensuring your employees are engaged, you can get outsized returns on both innovation and your bottom line.

There are several ways to counter and mitigate lack of innovation in the workplace. You can do this by establishing clear goals and expectations, fostering a questioning attitude, and encouraging employee creativity. By setting the tone as a manager and encouraging these behaviors in your workplace, you can help to improve innovation and creativity.

Decreased productivity

Employee disengagement has also been shown to decrease productivity. This decrease in productivity has many additional costs. Forbes found that disengaged employees have:

  • 37% higher absenteeism
  • 18% lower productivity
  • 15% lower profitability

This statistic is alarming and costly for businesses. Productivity losses can add up quickly, especially in larger companies. Most companies simply cannot afford to have this decrease in productivity due to disengagement. A company much smaller in size with more engaged employees can outmaneuver and outcompete them.

To mitigate decreased productivity, you can incentivise and encourage your employees. By motivating your employees, they are far more likely to be in better moods and thrive in their work environment. You can do this with contests, employee of the month, or simply praising employees for a job well done. With a little creativity and effort from management, productivity losses from employee disengagement can be mitigated.

increased employee turnover

The job market today is extremely competitive and companies are fighting over talent. In this tight labor market, companies simply cannot afford to let go of their top talent. It will likely take tens of thousands of dollars in addition to months of searching and recruiting to replace just one employee. Employee disengagement further accelerates employee turnover and this is one of the most hidden costs of employee disengagement.

Employee turnover can be mitigated by creating a positive work environment, offering employee development opportunities, and having an open-door policy. If employees feel like they can make career progress in their role, they are much less likely to leave. Offering employee development opportunities also helps keep employees engaged and learning.

difficulty recruiting top talent

A players want to work with A players and companies with disengaged employees have little to no A players. Talented workers, especially in technical fields, are notoriously difficult to recruit. In fact, Amazon recently doubled their base salary for corporate workers to $350,000. With large companies offering these kinds of rates and additional compensation packages, small to mid-sized organisations simply cannot afford to have disengaged employees.

One of the main reasons why top talent go to smaller organisations is because of culture and the ability to take on a more senior role. This is assuming that the smaller organisation has engaged employees and there’s a good culture fit. Without this, top talent will go to the larger organisations that have more money to offer them.

You can mitigate the difficulty in recruiting top talent by promoting from within your organisation. Staff that are going above and beyond in their role should be promoted to more senior positions and this can attract more like-minded type-A players. This ultimately creates a better culture and makes recruiting top talent easier. 

And finally…

The hidden costs of disengaged employees is one of the silent killers of innovation, culture and growth among organisations today. By understanding the hidden costs, you can take steps to improve employee engagement which will have a large impact on your business. You can use the strategies mentioned above to actively combat disengagement in the workplace and turn your organisation into an engaged and thriving place to work.

The costs of employee disengagement is too high for your organisation to ignore. To learn more on how you can combat disengagement in your workplace, explore the free resources provided by Engage For Success here.

Author: Ali Ali – Content Marketer at Alisquared.co

Photo credit: Elisa Ventur on Unsplash

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