Achieving Business Excellence with John Spence

The Cost of Disengaged Employees (and What You Can Do About It)

A guest blog from Sean Conrad

The Human Capital Institute lists some interesting financial consequences of employee engagement/disengagement:

  •  Fully engaged employees return 120% of their salary in value
  • Engaged employees return 100% of their salary in value
  • Somewhat disengaged employees return 80% of their salary in value
  • Disengaged employees return 60% of their salary in value
  • Gallup estimates that a disengaged employee costs an organization approximately $3,400 for every $10,000 of salary.
  • Disengaged employees cost the American economy up to $350 billion a year due to lost productivity.

You can find more about the dollars and sense of employee engagement in this blog post and infographic.

The point is, employee disengagement is costing your business money — every day. And it’s preventing your organization from achieving its potential.

So what can you do about it?

Hire the Right People

On some level, engagement is a character trait. People who are passionate about their work and about life in general, and who take pride in what they do will naturally be more engaged at work. People who can leverage their skills and experience and bring their “best selves” to work are more passionate and engaged. Those are character traits that you can’t “manufacture” or develop in your staff. They have to be there from the start. So make sure your recruiting and hiring processes screen for passion and fit with your organizational culture. You want people on your team who care about the same things you do. Look for a “spark” when candidates talk about their previous roles and the new opportunity.

Articulate and Communicate Your Organization’s Mission, Vision and Values

Of course, you can’t hire like-minded, passionate people if you haven’t yet figured out your organization’s mission, vision and values. And you can’t impassion your current staff if there’s nothing for them to rally to. So think about mission vision and values, agree on them, articulate them, and then communicate them to your employees over and over again. Make sure they’re reflected in your organization’s core competencies and strategic goals. Make your mission, vision and values part of your everyday work conversations. Make them visible and accessible to employees. And hold all employees accountable for supporting them.

Give Employees What They Need to be Engaged

Gallup and others give us fairly consistent lists of what employees need from their employers in order to be engaged in their work.

In essence, they need:

  • Clear expectations and direction for their work
  • Regular feedback on their performance
  •  The opportunity to use their knowledge, skills and experience, and “be their best”
  • The opportunity to develop further and advance their careers
  • Recognition and rewards for their contributions

These seem like such simple things, yet they can be hard for leaders and managers to provide. We often think we’re doing them, then find out that from our employees’ perspective, we’re not.

That’s why having a formalized performance management process that regularly prompts managers and employees to have conversations about goals, performance and development is so important. And doing employee reviews once a year certainly isn’t enough. Most experts now agree that quarterly reviews, especially for progress on goals are critical.

But you need to really build a management and workplace culture where discussions about expectations and performance are a weekly or even daily practice. And employee development needs to be actively encouraged and supported, both through informal, on-the-job training along with ongoing coaching and feedback, and through more formal development activities.

You also need to ensure that employees are recognized and rewarded for the contributions. Recognition can take many forms, from praise to public “thank yous” to company wide communication about team or group accomplishments, and even regular communication about organizational accomplishments that acknowledge team and individual contributions. It should also take the form of appropriate monetary rewards. It’s important to make a clear link between compensation and performance, whether that’s in the form of base pay increases, bonuses, stock options, profit sharing or some other scheme.

Make Engagement a Leadership Priority

Leaders need to not only endorse these management practices, they need to lead by example and charge HR and their management teams with engraining them in the organization’s culture, using formal and informal means.

While you can’t make your staff be engaged in their work – only they can do that — as a leader you can create a work environment and management culture that encourages and supports employee engagement. The research indicates that that is just good business.


Sean Conrad has helped countless organizations improve their employee engagement and talent management practices. He writes and speaks regularly on the topics and is a regular contributor to Halogen Software‘s Exploring talent management blog.

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