The Cost of Disengaged Employees: Understanding the Impact on Your Business

As you step into your office, you are greeted by a sea of blank faces and weary eyes, instantly sensing the stagnant energy and heavy air of indifference that hangs in the atmosphere. It's a telltale sign of employee disengagement: a silent but powerful force that can have far-reaching consequences that impact not only their own well-being but also their business as a whole.

So, what exactly is employee disengagement? It is the state where employees feel disconnected, uninvolved, and uninspired in their work. They show up, do the bare minimum, and lack the motivation to go the extra mile. Why is it important? What causes it and what can you do to reduce employee disengagement to drive business growth and revenue? We answer all this, and more, in this article.

Factors Contributing to Disengagement

Employees are no longer interested in reporting to the office and going through the motions. In a study by McKinsey, 70% of employees agreed that their sense of purpose is defined by their work. They’re demanding more intangible and tangible benefits of being associated with an organization. Let’s explore the factors that have been linked with disengagement:

1.Work-life balance and workplace flexibility

Employees crave a balance between their personal and professional lives. When they feel overwhelmed by excessive work demands or lack the flexibility they need, their engagement levels plummet. This is even more applicable to women in your workforce: Deloitte’s Women @ Work: A Global Outlook 2023 report shows that an organization’s ability (or inability) to offer women flexibility around when their work gets done is a top lever of engagement and retention.

2. Career growth opportunities

Gartner HR research finds that employees are leaving their current jobs for better professional development opportunities (45%) at similar rates as they leave for higher compensation (48%)! Employees want to feel that their work is contributing to their personal growth and professional advancement. Without clear paths for development, they can quickly become unengaged.

3.Manager support and management style

4. Compensation and benefits

While financial rewards are not the sole driver of engagement, they do play a role. When employees feel undervalued or under-compensated, their motivation and commitment suffer.

5. Physical and mental well-being

The WHO recognizes that “Work can be a protective factor for mental health, but it can also contribute to worsening mental health” When employees are physically and mentally exhausted or face challenges related to health and safety, their engagement declines and burnout may set in. For every dollar spent on the mental well-being of its workforce, organizations can expect a return of 4.25x!

6. Lack of appreciation and recognition

The Consequences of Disengagement: A Wake-Up Call

Gallup reports that disengaged employees are costing global businesses $7.8 trillion in lost productivity — that is 11% of the world’s GDP! But, the impact of disengaged employees can be staggering in both financial and non-financial terms and directly translates into the business’ output.

Financial Consequences:

1. Higher employee turnover and recruitment costs
   Disengaged employees are more likely to seek opportunities elsewhere, leading to increased turnover rates. The cost of lost productivity, hiring and training new employees can be significant, impacting your bottom line and business growth.
   
   
2. Impact on customer satisfaction and retention
   Disengaged employees are less likely to provide exceptional customer service, which can result in lower customer satisfaction and increased customer churn.
   
   
3. Training and development investment
   When employees disengage, the investment made in their training and development goes to waste. It becomes difficult to upskill and reskill employees, hindering your organization's ability to adapt and grow.

Non-Financial Consequences:

1. Negative impact on team dynamics and collaboration
   Happy and healthy employees are more productive, take fewer sick days, and are more likely to be creative. Disengaged employees can bring down the overall morale of a team. Their lack of enthusiasm and motivation can spread negativity, impacting the productivity and cohesion of the entire team. 
   
   
2. Reduced employee loyalty and advocacy
   Engaged employees are more likely to be loyal to their organizations and act as brand advocates. Disengaged employees, on the other hand, may speak negatively about their workplace, damaging your enterprise’s brand and reputation. 

In the image: Glassdoor reviews are used by disengaged employees to vent or speak about their organization, tarnishing its reputation. 

Strategies to Combat Disengagement and Unlock Discretionary Effort

While the cost of disengaged employees is concerning, there is hope. Organizations can take proactive steps to address disengagement and foster an environment where discretionary effort thrives. Here are some practical strategies to consider:

1. Recognize signs of disengagement

2. Encourage discretionary effort in the workplace

1. Help employees understand how their individual contributions align with the larger organizational goals and make a positive impact on customers, colleagues, or society. 
2. Enable employees to have a say in how they approach their work, make decisions, and contribute their unique skills and expertise. When employees have a sense of ownership and control over their work, they feel empowered and motivated.
3. Recognition and rewards play a significant role in encouraging discretionary effort. Celebrate milestones, accomplishments, and contributions both privately and publicly. 

3. Develop a culture of meaningful feedback and recognition

1. Schedule one-on-one meetings

Set aside dedicated time for meetings with employees to discuss their individual progress, challenges, and career aspirations. By actively engaging in these conversations, you can gain valuable insights into employees' motivations and help them feel valued.

4. Develop a continuous listening strategy

1. DIY pulse surveys
   Empower leaders to create their own pulse surveys. These surveys offer full autonomy, allowing leaders to customize questions and gather feedback specific to their teams. By providing a quick and easy way for employees to share their thoughts and suggestions, you create a culture that values their input and actively seeks to address their needs.
   
   
   
2. Moments that Matter by Amber
   Make your employees feel heard and valued during significant professional milestones. Amber triggers intelligent conversations during key milestones such as 30, 60, and 90 days, manager changes, performance reviews, and even exit interviews. By actively monitoring and addressing any changes in employee mood or engagement, you can ensure a smooth transition and maintain discretionary effort.
   
   
3. Provide a safe space for your workers to share concerns or frustrations
   Encourage dialogue and feedback even when it isn’t initiated by your team or managers. A culture of candor helps your employees feel safe, honest, and share sensitive information. Amber’s anonymous surveys have been designed keeping this requirement in mind. 

5. Implement a recognition program

Rewards and recognition are a great way to acknowledge and appreciate employees' efforts and achievements — encouraging them to go above and beyond what’s expected. Celebrate small milestones and personal events too, ensuring your employees feel valued even outside of work.

6. Offer development opportunities

Invest in your employees' growth by providing training programs, workshops, mentorship opportunities, and clear career paths. Show them that you are invested in their professional advancement, and that it is a two-way street when it comes to growth and development.

7. Promote work-life balance

Build a thriving employee engagement strategy, at scale

The cost of disengaged employees cannot be overlooked. So, let's take a human-centric approach to employee engagement. Let's listen to our employees, provide meaningful feedback and recognition, offer growth opportunities, and promote work-life balance. 

The pandemic has propelled a systemic re-think, but as an organization grows and adapts to a new work model, Human Resources often lose the human touch - it's simply impossible to maintain a one-on-one with each employee as you scale past 1000 employees. It takes more effort and deliberate research to truly feel the pulse of your workforce and understand what makes a difference. 

This is where AI-powered conversational bots such as Amber can help you overcome the challenge at scale. With textual analytics, engagement drivers, early warning systems, and real-time engagement scores, your HR team is empowered with meaningful insights that matter. Want to give Amber’s Conversational Employee Experience Platform a try? Schedule a demo with our expert today.