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WHAT IS THE COST OF ENGAGED VS. DISENGAGED EMPLOYEES?

Employee Engagement

Employee engagement levels are at their highest in years!  The Gallup Organization has been measuring levels of employee engagement since 2000.  Over nearly two decades, the annual percentage of actively engaged U.S. employees has ranged from a low of 26% in 2000 to the recent six-month high of 34% in 2018.  On average, 30% of employees have been engaged at work during the past 18 years.  Conversely, the percentage of actively disengaged U.S. employees has ranged from a high of 20% in 2007 and 2008, during the heart of the recession, to the current low of 13%.   On average 16.5% of U.S. employees have been actively disengaged over 18 years of tracking.

To better understand employee engagement levels, it helps to understand how Gallup categories the three different segments of employee engagement.  “Actively engaged” employees are involved, enthusiastic, and committed to their work while “actively disengaged” employees are unhappy at work and aren’t afraid to tell others about it, they are resentful that their needs aren’t being met and act out, potentially undermining coworkers.  The biggest group of employees, those “not engaged” are unattached to their work and while putting in the time, there is no energy or passion put into their work.  To summarize, the 2018 Gallup survey categorizes employees as:

  • Actively Engaged = 34%
  • Not Engaged/Disengaged = 53%
  • Actively Disengaged = 13%

What is the cost of unengaged employees in an organization?  Gallup describes an “actively disengaged” employee costs their organization $3,400 for every $10,000 of salary, or 34%.  If the average salary is $60,000 per year, the cost for each disengaged employee is $20,400 ($60,000 x .34).  For a company size of 1,000 employees, 13% are actively disengaged, totaling 130 employees; the annual cost to the organization is $2.65 million (130 x $20,400).  This loss is only for the actively disengaged employees and does not represent the loss of employees who are “disengaged” (53%).  However, it is extremely compelling to understand the cost for the most actively disengaged employees, knowing that the cost of total employee disengagement is higher.
After computing the cost of disengagement, the focus shifts to increasing engagement.  Based on attributes measured by Gallup in their employee engagement survey, employees place the greatest importance on a role and organization that offer them:

  • The ability to do what they do best
  • Greater work-life balance and better personal well-being
  • Greater stability and job security
  • A significant increase in income
  • The opportunity to work for a company with a great brand or reputation

In terms of an action plan, a first step is for an organization is to develop great managers as their impact trickles down throughout the organization.  In turn, managers need to have career conversations with their employees to help guide them in their career development.  A component of career development is to provide on-going training opportunities.  Employee training helps employees gain new or greater skills which provide them with a better sense of personal worth leading to greater opportunities for income to increase as well as promotional opportunities.  From an organization perspective, prioritize diversity and inclusion at all levels which helps employees feel welcome and care more about their role within the organization.  To better understand the specific tactics that will increase engagement within your organization, measure engagement through employee surveys to find out what works and doesn’t work at your organization.

WageWatch offers accurate, up-to-date HR metrics, benefit survey data, market compensation data, and salary reports that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. The PeerMark™ Wage Survey is a custom-built survey tool that allows individual survey participants to select their competitive set for comparison purposes.  Our experienced compensation consultants can assist with your organization’s compensation needs.  We can help you ensure internal equity and compliance with regulations as well as help structure your compensation programs to support your company’s business strategy and objectives.   For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

This entry was posted on Wednesday, February 19th, 2020 at 11:15 AM and is filed under Human Resource Policies & Practices. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.