Disengaged Employees – the hard cost

Disengaged employees costs the UK £52-£70 Billion per year in lost productivity. These are the most negative figures in western Europe. Engaged employees may be the greatest competitive advantage an organisation can have.

Research by Gallup suggests that a staggering 83% of the UK workforce is either disengaged or ambivalent about their job and/or company. There are four main areas where disengaged employees impact organisations

The Customer experience impact

Customers make their decision to continue doing business with companies based on the level of service that they receive. We all love it when a relatively junior member of staff is clearly empowered to fix issues or add value. Well, so does the employee!

Some years ago, David Lloyd Leisure, were fortunate enough to have quarterly member satisfaction surveys and staff engagement surveys. They wanted to know whether there was a relationship between the two sets of data and commissioned some analysis. Guess what? There was a statistically strong positive correlation between clubs with satisfied members and those with engaged and happy staff.

More recently, Serco demonstrated a direct relationship between employee engagement and the Net Promoter Score (a measure of customer loyalty). Contracts serviced by employees whose engagement had improved over the year had NPS scores 24% higher than those employees whose engagement had declined.

The answer seems obvious;

• trust and empower your employees to capitalise on opportunities to deliver positive customer experiences
• maximise the opportunities for customers to provide feedback
• recognise employees immediately when they deliver great customer service

The Productivity impact

According to research by Towers Watson, disengaged employees make 100 times more errors than their engaged colleagues. That’s a huge productivity gap.

They also spend much more time simply not working. Instead, they chat, take breaks, surf the internet and play games on their phones etc.

The third area that has a significant productivity impact is sickness absence. In 2013, PwC reported that sick days cost UK organisations nearly £29 billion a year. Then factor in the result of a CBI report which estimates that around 12% of UK sickness absence is fraudulent.

The issue worsens due to two common consequences:

• the remaining, engaged, team members have to cover for their colleagues, often suspecting that the sickness is not genuine
• managers, in our experience, are notoriously reluctant to hold those ‘difficult conversation’ so often the issue goes on for far longer than it should

It’s not hard to see how engagement levels can drop as a result of this sequence of events.

It’s not easy to tackle the absenteeism problem. However, by focusing on ways to raise engagement levels, you will create a culture in which your employees want to come to work.

• creating meaning and giving them additional context and perspective will connect employees to the broader objectives
• build a work environment in which they feel happy and valued every day
•  include them at the front end of planning and involve them with business goals.

The Retention impact

The number one reason employees leave organisations is a lack of recognition. A recent Harvard Business Review study reported that recognition has the largest impact on employee engagement. Yet 65 percent of employees do not feel recognised at work.

The cost of replacing an employee is likely to be at least one fifth of their salary. HR teams are probably well aware of this but are line managers?

The profit impact

A UK government report demonstrates the financial downside of disengaged employees. Companies with low engagement scores have operating income that is 33 percent lower than companies with high engagement. Companies with an engaged workforce experience a 19 percent growth in operating income over a 12-month period. Don’t gamble when it comes to your workforce. There is a better way.

Ensure that employee engagement shapes the whole employee experience, starting from pre-recruitment. Educate line managers with hard facts about the financial impact of poor engagement. Finally, measure engagement and talk about it at every opportunity.

After all, in today’s business environment, working for you isn’t the only option your employees have.

Refs: Gallup, State of the global workplace survey, 2013
Towers Watson, Global workforce study 2014