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Exploring the True Cost of Disengaged Employees

Discover the impact of disengaged employees on your organization's bottom line. Explore the true cost of employee disengagement and how to address it.


By ActivTrak

Exploring the True Cost of Disengaged Employees

Employee engagement is an increasingly important subject for competitive organizations. According to Gallup’s latest State of the Global Workplace report, disengaged employees cost the world $8.8 trillion in lost productivity. And with only 23% of employees saying they were engaged at work in 2022, leaders can’t overlook how employee disengagement affects their bottom line.

In this post, we discuss the cost of disengagement and strategies to combat it. 

What are disengaged employees?

Employee disengagement happens when individuals are emotionally disconnected from their work and unmotivated to perform at their fullest potential. It’s rarely the problem of a few indifferent employees — disengagement affects the entire organization, reducing productivity and overall performance across departments. 

Employee disengagement shows up in various ways, including:

  • Decreased enthusiasm for tasks
  • Reduced collaboration with colleagues
  • General sense of apathy toward organizational goals
  • Absenteeism or “presenteeism” (showing up physically but putting in the bare minimum)

A lack of engagement has far-reaching consequences on individual performance, team dynamics and overall company culture. 

6 costly effects of disengaged employees

Employee disengagement has tangible costs, ranging from operational expenses to personal damage to individuals. Disengaged employees hurt businesses in several ways:

1. Lower productivity

The most obvious consequence of low employee engagement is its impact on productivity. According to Forbes, disengaged employees are 18% less productive than engaged employees. When people disengage, they tend to miss deadlines or perform lower-quality work. They also call in sick 37% more often, leading to more missed work or redistribution of tasks. 

2. Higher turnover

Employers with high levels of disengaged employees see more people leave for other opportunities. One Gallup study estimates disengagement leads to as much as 43% higher turnover. When people leave your organization, they take all their training and know-how with them. Plus, you’ll pay 33% of an employee’s annual salary to find their replacement. 

3. Difficulty hiring new employees

Turnover is already bad for your organization. Worse, when employees leave because they’re disengaged, you earn a reputation as a bad place to work, making it harder to attract and retain top talent going forward. Employees who leave on a bad note damage your ability to attract talent when they post negative reviews on hiring sites. And disengaged employees who stay scare candidates away through word of mouth or by creating a negative work environment. 

4. Negative influence on morale

Disengagement spreads among employees and damages morale across your organization. Even engaged team members feel the drain of actively disengaged employees, whether from filling in the gaps for an employee who’s not pulling their weight or listening to complaints. HR professionals and managers also spend extra time with disengaged employees to diagnose problems, create remediation plans and more. 

5. Decrease in creative problem-solving

Engaged teams contribute to the organization through creative ideas and are eager to solve problems proactively. In contrast, disengaged employees are less likely to contribute or seek innovative solutions. They may barely meet the requirements of their job descriptions, let alone raise their hands with creative ideas. This kind of disengagement shows up as “quiet quitting,” when workers hold themselves strictly to their job descriptions and nothing more. Disengaged employees may take it even further and discourage others from contributing to the greater good of the organization. 

6. Poor customer service

Engaged business units provide better customer service because they’re interested in outcomes for both the customer and the organization. A disengaged employee may treat customers with less respect or be less willing to go above and beyond to solve a problem. Disengaged employees also produce lower-quality services or products, which leads to customer complaints. 

Stats about the cost of disengaged employees

Disengagement is a highly studied issue, with more organizations facing it more than ever. If you don’t feel moved to improve employee engagement at your organization, consider these stats:

  • Just one disengaged employee costs an organization $2,246 per year
  • Organizations with high rates of disengagement have 37% higher absenteeism than organizations with highly engaged employees
  • Disengagement can cost a company anywhere from 18%-34% of a disengaged employee’s salary
  • Even at organizations with high overall turnover, departments with highly engaged employees still achieve an 18% difference in turnover
  • Customers rate engaged teams 10% higher than other ones

Find and support disengaged employees with ActivTrak

Employee disengagement generates significant costs for businesses, both in financial and non-financial terms. As a result, investing in employee engagement is a sound business decision to drive long-term success.

The best way to prevent disengagement and associated costs is to proactively monitor it. ActivTrak offers comprehensive workforce analytics to transform engagement levels within your organization. Unlock the full potential of your workforce with deep insights into productivity and well-being. Make informed decisions and optimize outcomes with actionable insights to enhance employee engagement, prevent burnout and drive success.

Elevate your business with insights recognized in Gartner’s 2023 Hype Cycle Reports. Contact our sales team today to create your free account and start your journey toward a more engaged and productive workforce.

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