Summit Team Building

How Much Is Employee Disengagement Costing Your Company?

This morning, I read an article that shared Amazon’s strategy to get rid of its disengaged employees – pay them up to $5,000 to quit. Although there are a host of reasons why Amazon offers, well, “The Offer” (yes, that’s its official name), one of its main objectives is to give incentive for disengaged employees to leave the company (and never come back). It makes sense, considering the decades of research that have concluded that people stay at their jobs for three reasons: (1) they have an emotional attachment to it, (2) they feel obligated to stay, and (3) it costs more to leave than to stay. To an extent, The Offer removes the third reason for staying among employees who have no emotional attachment or sense of obligation to the company.

But why is Amazon so willing to spend money on weeding out disengaged employees who are not committed to the company? Reading about The Offer left me wondering about, first, why companies are so willing to spend money on employee engagement issues, and second, what the financial implications of employee disengagement are. So I did some digging.

One of the most surprising things that I found was how prevalent the issue of employee disengagement was. In Gallop’s 2017 State of the Global Workforce report, which surveyed more than 70,000 employees from organizations in 155 countries, found that 85% of employees worldwide are either not engaged in their work, or actively disengaged.

Employees that are just disengaged are those that are “checked out”, and going through their workday without passion or energy. Those who are actively disengaged aren’t just unhappy at their job – they are busy acting out, by undermining fellow co-workers, lowering morale, and hurting productivity levels – these employees are the real dangers to organizations.

The financial impact that these employees have on organizations is quite alarming, to be honest. Globally, disengagement at work is costing approximately $7 trillion in lost productivity. Now I don’t mean to be dramatic, but let me repeat that number for you: Seven. Trillion. Dollars.

In the U.S., actively disengaged employees are costing the country $450-$550 billion each year. That’s almost $1700 for every American.

Gallup also presents a way of calculating the costs of disengaged employees here. In a nutshell, if you have 5,000 employees in your company, 860 of them are likely to be disengaged. If their median salary is $60,000 a year, each disengaged person will cost the company 34% of their salary, which adds up to $20, 400. In total, employee disengagement will cost the company $17.5 million a year.

Summit Team Building

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