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The Cost of a Disengaged Employee

Posted by on March 23, 2012

I’ve had a lot of interesting discussions lately around employee collaboration and one of the topics I’ve been having conversations around is employee engagement.  Now before I go into more detail I want to stress that engagement in this case doesn’t refer to activity on a platform such as submitting ideas, commenting, sharing status updates or anything else of that nature.  That’s typically something that some vendors in the industry like to focus on but in my opinion it’s wrong.  Activity is not the same thing as engagement.  In this case engagement refers to employees being passionate about the work they do and the feeling of being connected to the company.  So the question becomes, is engagement a fundable business case for employee collaboration? (even though the benefits of employee collaboration extend far beyond just engagement).

It’s a similar discussion we had in the social media space a while ago, why do we want engaged customers?  Well because they stay loyal, refer their friends, can help shape future products, and keep spending.  But what about employees?

Those of you familiar with what is happening with Goldman Sachs these days will recall the recent article published by a former Goldman Sachs employee who resigned from the company in a very public way while detailing some of the poor practices and culture of the firm.  It’s now being estimated that this disengaged employee cost Goldman Sachs over $2 billion.

As I’ve said many times, we have spent so much time talking about the voice of the customer that we forgot about the voice of the employee.  Of course what happened to Goldman is perhaps on the extreme end of the spectrum but it certainly proves to be a valuable example of why engaged employees are so important and what can happen with disengaged employees.  Consider some of the following statistics:

  • The lost productivity of actively disengaged employees costs the US economy $370 BILLION annually. (Gallup)
  • 70% of engaged employees indicate they have a good understanding of how to meet customer needs; only 17% of non-engaged employees say the same. (Wright Management)
  • 78% would recommend their company’s products of services, against 13% of the disengaged. (Gallup)
  • Engaged employees advocate their company or organization – 67% against only 3% of the disengaged. (Gallup)
  • 86% of engaged employees say they very often feel happy at work, as against 11% of the disengaged. 45% of the engaged say they get a great deal of their life happiness from work, against 8% of the disengaged. (Gallup)
  • Higher levels of engagement are strongly related to higher levels of innovation. 59% of engaged employees say that their job brings out their most creative ideas against only 3% of disengaged employees. (Gallup)
  • 18% of dis-engaged employees actually undermine their co-workers’ success. (Gallup)
  • 72% of US workers are not engaged in their work. Defined as essentially sleep walking throughout their day. (Gallup)
  • This is just a small sample of figures, more stats compiled at “The Social Workplace

The same customer revolution that many have touted for the past few years in the social media space is quite applicable to the enterprise as well.  Employees also have a voice and you can be that they are going to use it

So getting back to the question, is engagement a fundable business case for employee collaboration?  I certainly think so.

  • Leanne Hoagland-Smith

    I have written numerous times about this elephant in the room that small to large businesses continue to ignore. Much of this disengagement can be attribute to a lack of alignment between strategy, structure, processes, rewards and people along with missing one of more of the 7 Rs – The Right People in the Right Seats Using the Right Talents Making the Right Decisions for the Right Results in the Right time frame and within the Right Culture.

    How many small businesses up to $50 million in sales actually work from a written plan that has been successfully shared with all employees? Very few.

    Leanne Hoagland-Smith

    • Hi Leanne,

      Completely agree with you on this.  I understand the challenges that large organizations are faced with today especially when it comes to engagement but I think we are at unique time when collaborative tools and platforms can not only impact the lives of employees at the workplace but also outside of the workplace, thus helping create truly engaged and passionate employees.

      thanks for the comment,

  • Agree with the article and would add further that keeping employees longer than their ‘shelf life’  is unproductive as well. Good management and leadership is needed in determining who is engaged or disengaged and then taking action. Not always a popular choice, but more often than not, the disengaged employee is ready to leave the organization.

    • Hi Beth,

      I get what you’re saying but at the same time I think a large part of the “shelf life” for employees depends on the organization.  Employees become disengaged not just because they are at a company for a long time but because they get bored, can’t grow, have to deal with office politics, don’t like their bosses, etc.  Sometimes however, employees just need a change.

      • Agree with that last sentiment, Jacob! Change can be a good thing – 

  • Wow, I’ve definitely learned the techniques in this comprehensive tutorial.
    They help me in future projects.Thank you for sharing this information.

  • Disengaged employees are the people who frequently cause employers to have headaches. But since we can’t avoid hard-headed employees, and they are always a part of every company, the situation can be considered a learning experience that a company has deal with. It may be challenging, but at the end of the day, overcoming it is very rewarding.

    • Hi Erwin,

      Yes, very good point.  I suppose in all organizations (or perhaps just in larger ones) we can’t expect every single employee to always be engaged and love their jobs.  But perhaps we can get better at recognizing when we have disengaged employees and take corrective measures to try to help them?

  • Thanks for the Stats.  I realize the Goldman story just exemplifies what many large organizations HR folks have known for decades but more recently put into ROI  terms to justify the investment.  Its what Kotter’s work in the 80’s proved and strategy profs at MBA schools all say: align strategy and culture and poof you’ll get higher performance.  Well poof is not an easy step.  Absolutely bringing the power of social platforms into the enterprise certainly makes it easy to share and learn from others across the organization, but that’s not the source of the magic, its merely the messenger or vehicle.    You’re right that activity isn’t engagement.  Just like increasing incentives doesn’t get your higher performance…(Daniel Pink’s drum beat.)
    Engagement is about attention and the best way to get my attention is to hook my imagination, yep help be feel that what I do matters but its just possible that if I try, reach and share collectively we might just do the impossible.  So yeah engagement requires leadership that inspires and that kind of magic is not found in the six sigma book. 

    • Hi Rachel,

      I could’t have said it any better, you should have written this post! 🙂

      I just find it a bit sad that today we focus on collaboration as a way to squeeze out more from employees instead of truly engaging, inspiring, and improving the quality of life.