These days, we're hard-pressed to find an employer in disagreement with what is now common wisdom: employee engagement is essential to organizational success. Whether it's customer service, profitability, or employee retention, the canon of data supporting the positive effects of employee engagement has become impossible to ignore. So, it's disheartening to know that the majority of U.S. employees are not engaged when they go to work each day. While we can all agree that it would be better if employees were willing to give extra effort, planned to stick around, and would recommend the company to loved ones, what is the real impact of disengagement? Read on for some astonishing facts and figures.
1. Disengagement Costs Between $450 and $500 Billion Annually
The estimated annual cost of employee disengagement to the U.S. economy is between $450 and $500 billion.1 On a micro level, McLean & Company has estimated that an individual disengaged employee can cost a company up to $3,400 per year for every $10,000 of salary.
The flip side of the coin is that companies with engaged employees tend to perform much better. According to research prepared for the U.K. government, companies with a highly engaged workforce enjoyed a 19.2% growth in annual operating income. Companies with lower engagement scores had an operating income that was 32.7% lower than those with higher scores.2
2. Sixty-Seven Percent (67%) of Employees Are Either Not Engaged or Actively Disengaged
According to Gallup’s recently released State Of the American Workplace report4 for 2017, only 33% are engaged. Furthermore, the findings indicate that 51% are not engaged and have not been for quite some time.
What could low engagement levels mean to your organization? According to the report, if your company is within the lowest 25% in engagement, you could see 69% higher absenteeism rates, 39% more shrinkage and a more than twice as many safety incidents than a company within the highest 25% range of employee engagement.
3. Eighty-Five Percent (85%) of Employees Are Either Actively Looking or Open to New Employment Opportunities5
Fifty-six percent (56%) of employed Americans believe that now is a good time to find a quality job.6 Additionally, 1 in 3 employees is planning to make a move within the next 12 months.7 That’s not good news for turnover and retention rates.
It also seems that it wouldn’t take too much of an incentive to make a less engaged employee leave his or her job. 69% of disengaged employees would leave for as little as a 5% increase in pay. On the other hand, a 20% increase is necessary to attract an engaged employee.8
And while more pay may provide the impetus to make a move, money is not always the most important factor that brings them to make that decision. In the book The Hidden Reasons Employees Leave, author Leigh Branham states that 89% of employers believe their employees leave for more money, but only 12% actually do. In fact, the leading reason for an employee’s departure is his or her boss.
4. Sixty Percent (60%) of Employees Describe the Ability to Do What They Do Best as "Very Important"9
Offering a glimpse of what matters most to employees when it comes to considering employment elsewhere, the Gallup report ranks this as the attribute that had the greatest importance. A better work-life balance was next at 53%, followed by greater job security and stability with 51%, and a significantly higher income at 41%.
5. Sixty-nine percent (69%) of HR Professionals Recognize That Employee Engagement Is a Problem10