The real cost of disengaged employees [FREE ROI calculator below]

Have you ever wondered how much a disengaged employee is costing your business? Employee engagement ROI should be a core focus for every business. Disengaged employees cost the UK economy a staggering £340 billion a year in lost productivity, recruitment spend and much more. 

Poor engagement can impact employee productivity, cause you to lose your best talent and hinder you from attracting new candidates. We've helped some of the biggest brands transform their employee engagement issues.

The more engaged your employees are, productivity and retention can also increase: it's both generative and cost efficient. Engaged employees are 21% more productive than their peers and are 87% less likely to leave their current employer. Of course, this requires investment and careful planning. 

In this blog we have will show you the real world cost of disengaged employees as well as a free employee engagement ROI calculator to back up your case for a modern intranet. 

The real cost of employee disengagement 

A disengaged employee costs an estimated 18% of their annual salary. For example, one disengaged worker on an average salary of £30,000 will cost you £5,400. 

Employers must approach the matter of employee engagement with caution.  According to Gallup's 2022 'The State of Work' report, only 21% of workers are engaged. With such shocking stats at hand, it's becoming more obvious that businesses need to place larger emphasis on employee engagement if they want to get the best from their people.

Don't add fuel to the fire

Without employee engagement tools, the positive company culture suffers, causing lower morale, decreased well-being, and weakened teamwork which can lead to a toxic work environment.

However, smart companies know that investing in employee engagement tools brings numerous benefits and a competitive edge. Prioritising these tools creates a sense of belonging, open communication, and recognition for employees, leading to improved retention and higher productivity. Engaged employees are motivated, work well together and deliver better results.

By fostering a supportive company culture through these tools, businesses enhance employee well-being, and reduce absenteeism. In the long run, the financial gains of investing in employee engagement far outweigh the initial expenses, making these tools crucial for long-term success in today's ever-changing business world.

How employee disengagement can impact your business

Employees are the heart and soul of any business, but many businesses grapple with the ROI of employee engagement strategies and enablers. 

How can you focus your strategy on demonstrating the financial benefits? These are the areas of the business impacted by employee engagement and their ROI. 

Employee productivity 📉

A team of engaged employees are proven to be 21% more profitable than teams who aren't. The link between employee engagement and extra productivity is hard to deny. 

Based on the findings of the Gallup study, if you have five engaged teams, you gain the equivalent of another in productivity! By increasing output to this extent you can easily justify investment into employee engagement.

Employee retention and turnover ❌

The ROI of employee engagement will be demonstrable through its direct impact on turnover and the associated costs. Highly engaged businesses enjoy 59% less turnover. When an employee is disengaged, they have far less reason to stay or show any loyalty.

When calculating employee turnover, you must factor in the cost of exit, recruitment cost, replacement cost and lost productivity. 

Cost savings should be considered when weighing up potential ROI. 

Employee onboarding 👋

Those who have a negative onboarding experience are twice as likely to look for other career opportunities. It's clear that first impressions are important, so ensure your onboarding process is immersive and informative to increase the possibility of retention.

A Glassdoor study found that an employer spends an average of £3,000 and 27.5 days hiring a new employee. Poor onboarding will increase the regularity of this process.

Absenteeism 🤒

Several causes of regular absenteeism are linked to disengagement. Usually, these are work-related stress, general disinterest and burnout.

A Workforce Institute study found that absenteeism costs on average 1.2% of employee salary. Mitigating disengagement will help to save money from lost days, output and stress related illness. It is reported that engaged workforces enjoy 41% less absenteeism. 

Customer dissatisfaction 🤝

Engaged teams have 10% higher customer ratings and 89% of consumers will make another purchase after a positive customer service experience, so the ROI lies right there.

Engaged employees invariably provide a more pleasant customer experience projected by their mood. Quality of products and services developed by engaged teams are all linked to how a consumer feels. 

How to calculate ROI On employee engagement

Organisations can enhance their approach to measuring and managing employee engagement by incorporating specialised tools like Pulse Surveys and Polls into their employee engagement analysis. Polls offer swift, frequent, and real-time insights into employee sentiments and engagement levels.

Pulse surveys often include questions that assess factors such as job satisfaction, sense of purpose, communication, and relationships with colleagues and managers. The data collected through these surveys is typically presented in user-friendly dashboards or reports, facilitating easier tracking of changes in engagement over time by managers and HR teams. Organisations can then analyse the responses and may also use key performance indicators (KPIs) like turnover, absenteeism, and productivity to gauge employee engagement indirectly.

Benefits of engaged employees

Engagement affects every area of your business. With better employee engagement comes many additional benefits. 

Here are the top benefits linked to engaged employees:

Employee advocacy 💙

Engaged employees not only take pride in their work but also who they work for. They are likely to become brand advocates themselves.

Those who advocate the company will talk about the business in a positive light to people they know. This reflects how the reputation of a business internally can impact how it is projected externally.

Increased profits 📈

Higher output from engagement will naturally lead to higher revenue. When employees want the business to succeed, they will work towards making the business better. 

It goes to show that if you invest your time and resources wisely into employee engagement you will see significant ROI in the bottom-line of your business. ROI on employee engagement is tangible - you just need the right tools to make the decision. 

Happy employees 🤩

Happiness is the human aspect to engagement. Helping your workers be happier and more connected in their lives is something a business should aspire to do. In fact, happy employees are 13% more productive.

Significantly fewer sick days 😌

Thriving employees miss 53% less days as a result of health related issues.

Disengaged workers are generally more stressed. This causes anxiety, depression and a host of other mental and physical illnesses. Take that stress away and you will notice a marked difference in the number of sick days. 

More employee participation 👏

Do you yearn for your workers to get involved in discussions and meetings more often? Effective employee engagement can help you achieve this. 

Creative ideas can come from all types of personnel and offer innovative solutions. But that comes from them having the confidence to speak their mind.

Try our employee engagement ROI calculator now →

Caculate the cost of disengaged employees 

Our Employee Engagement ROI Calculator is designed to quantify true cost of disengaged employees based upon average salaries and size of the workforce. 

Please note that figures are based on research carried out by Gallup around the subject of employee engagement. Figures are estimates only. 

Remember, these results are informed by established research findings and are not subject to our own calculations. If you want to find out the impact of employee engagement on ROI for your business, download your own calculator now.

To find out more about proving ROI for your intranet business case and to get further senior buy-in, reach out to our team for a demo or a chat.