Hidden Cost of Employee Engagement

The Cost of Employee Engagement

Consider the fact that at any given moment more than 50% of your employees are actively looking for a new job. Coupled with the fact that 87% of the workforce does not feel engaged.

Lack of employee engagement can cost your organization hundreds of thousands of dollars. On average, the cost of replacing an employee is figured by estimating 20% of their salary. If you are paying a manager $55,000/ year the “cost” to replace them is $11,000.

In reality, the cost of that unengaged employee that left for a better culture, better environment, better job possibly doing the exact same thing he or she was doing in your organization is far greater than that $11,000. You have to factor in the downtown cost of that position being vacant, the cost of the knowledge that individual took with them and the cost of getting his or her replacement up to speed once they start.

According to the Society of Human Resource Management, the total turnover cost can range from 100% to 300% of the base salary.

  • cost of offboarding – benefits continuation, severance, and administrative record keeping, payroll
  • hiring cost – advertising, interviewing, hiring
  • onboarding cost of new hire – management’s time, training
  • Productivity loss – it can take a new person 1-2 years to reach the productivity of the person that left

How many times can your company afford that cost?

This is just the internal cost, think of the external impact on your customers.

Better Engagement = Solid Economic Health

There are many managers and leaders that believe that employee engagement’s ultimate goal is higher workplace happiness and satisfaction. Truthfully though, having employees that are highly engaged result in better business outcomes.

Engaged employees are more likely to stay with your organization. They have a stronger connection to the mission and purpose of your company, which makes them the most vital weapon your company has because they are excellent brand ambassadors.

In one corporation I worked in, I had a discussion with the HR manager. She was telling me that one of the biggest issues she was facing hiring people for the many openings the company had was that the talent pool they attracted just didn’t fit the need. Their skills and experience were not strong enough.

I asked her if she ever considered that the reputation the company had amongst people in the industry she was looking to hire in was the problem. Meaning that the culture of the company was negative. A number of employees had left or were forced out of their jobs, didn’t she see how those negative experiences former employees had impacted the market. The word got out, that if you were experienced and good at what you do, go work somewhere else where you will be appreciated and valued.

Her response, “I didn’t think about that. You could be right.”

Lack of employee engagement doesn’t just result in higher turnover, it can also lead to difficulties in finding the talent you need.

Employee Engagement Encompasses What?

Earlier I alluded to the fact that employee engagement is not just about having a happy workplace and being satisfied with the job you have. Believe it or not, you can have employees that are happy and disengaged. Job satisfaction and employee engagement are not interchangeable.

Employee engagement, at its core the reason an employee gives to the mission of their employer. This means it is the scope of the employee on an intellectual, emotional and physical basis. Engaged employees will drive your organization forward because they believe in it. They are committed to it.

Your company needs to have engaged employees because the cost of not having them could severely stunt your company growth if not close your company altogether.

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