By: Julia Figliotti Riley
What is company leadership’s greatest fear? Losing their largest client? A new competitor emerging in the market? Being bought out by a bigger fish? While all of these are valid concerns, organizations need to be on the lookout for something a little closer to home that could cost them hundreds of billions of dollars each year: their own disengaged employees.
This may be hard to believe, especially with recent reports boasting that employee engagement is on the rise in US companies – and it is. As of 2018, engaged workers made up 34% of the workforce in the US, and actively disengaged employees ranked at 13%. But with only about a third of US employees actively engaged, and a ratio of 2.6 engaged employees for each disengaged employee, we need to ask ourselves, “Is that enough?”
The answer, in short, is no.
According to Gallup, companies must achieve a 4-to-1 ratio of engaged to disengaged employees in order to counteract the negative effects of disengaged workers. This shows that while employee engagement isn’t the main focus for most organizations, it can have a greater impact than many of us realized. Disengaged employees exhibit decreased productivity and contribute to more negative customer experiences. Company culture and morale decline when the workforce doesn’t feel a connection to the organization, which leads to a greater difficulty in achieving corporate goals. Essentially, disengaged employees can significantly affect an organization’s success – or lack thereof.
Decreased Productivity
Research shows that disengaged employees are less likely to work hard, feel motivated, or meet expectations for their role, and they cause 60% more errors and defects in work performance. In fact, and 73% of actively disengaged employees are on the lookout for new jobs or opportunities. This level of apathy and sub-standard work can cost companies between $450 and $550 billion a year in lost revenue and employee turnover.
On the other hand, highly engaged organizational teams exhibit 17% higher productivity and 41% lower absenteeism than teams with disengaged employees. These levels of engagement contribute to a more customer- and process-oriented approach, resulting in 21% greater profitability for the organization. Additionally, by increasing their investment in employee engagement by just 10%, companies can expect an annual increased profit yield of $2,400 per employee.
Negative Customer Experiences
A disengaged workforce directly impacts customer experience in a negative way. Companies with average or below-average customer experience scores boast only 49% of their employee base as being highly engaged in their roles, compared to 79% of employees at companies with above-average customer experience ratings. In contrast, teams with high engagement see sales improved by 20%, as well as a 10% increase in customer ratings.
GuideSpark’s Senior Journeys Product Manager, Mac Alsbury, provides context from his previous positions as HR Manager and HR Business Partner. “In my experience, disengaged, unhappy employees typically lead to poor customer interactions. When my former HR teams measured employee Net Promoter Scores (eNPS), we consistently found that low employee ratings were directly correlated to low customer-rated NPS scores as well.” That goes to show, Alsbury concludes, “If employees are having a bad experience, that trickles down to the customer.”
Decrease in Morale and Company Culture
Company culture and employee engagement have a symbiotic relationship, and 75% of employees agree that workplace culture has a direct correlation to their on-the-job engagement. If the culture is encouraging and supportive, employees are likely to feel more engaged, whereas a dysfunctional culture can lead to widespread disengagement across the workforce. But the relationship works both ways: disengaged employees are more likely to be absent from work, leading to company-wide understaffing, burnout, and decreased morale.
Engaged employees, on the other hand, not only show up to work, but contribute more strongly to their roles, teams, and workplace culture. They feel appreciated by their organization and leaders, and are therefore more inclined to give back in a positive way.
Failed Corporate Goals
71% of senior executives and business leaders believe that employee engagement is integral to achieving organizational success. It’s clear to them that an engaged workforce leads to improved productivity and performance, as well as increased motivation. Yet of the same leaders surveyed, only 24% believe their workforce to be highly engaged, and 28% feel they have too many disengaged employees.
When employees feel disengaged with the company they work for, they are less likely to see the value in working to meet corporate goals. After all, why would they align their objectives with an organization that they feel no connection or loyalty to?
Key Learnings
Employee engagement platforms are key to an organization’s success. Disengaged employees have the power to lower a company’s productivity and morale, harm customer relationships, and impede the company from reaching its corporate goals. So it should come as no surprise that employees – including over 31% of those who consider themselves engaged in their roles – are asking for an improved workplace experience. And because of this trend, organizations across the country and around the world are beginning to address employee engagement on a larger scale, knowing that their customer experiences, and their bottom line, will likely see a positive shift as a result.
So how can your leadership team tackle the issue of disengaged employees? In order to foster increased employee engagement in an organization, leaders should focus on improving company culture. Research shows that an emphasis on employee recognition and appreciation leads to greater employee enthusiasm for their position, and therefore increased engagement and employee retention.
In addition, prioritize the development of your employees’ strengths. Historically, investing in strengths-based development, or individual training centered around each employee’s strong suits, leads to a 9% to 15% increase in employee engagement and can also fuel improved sales (10% to 19% increase), profit (14% to 29% increase), and customer engagement (3% to 7% increase).
Finally, put in the effort to improve your internal communication approach with an employee communication platform. Ineffective communication causes stress in 80% of the US workforce, with 70% of respondents feeling overwhelmed due to fragmented information and broken communication methods. By incorporating more effective and efficient internal communication practices, companies can expect increased engagement and agility from their employees.
Disengaged employees have the power to break an organization. Company leaders all over the world are investing in employee engagement – and reaping the benefits already. What will you do to improve engagement at your company?
