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The High Price of Disengaged Employees

Posted: Jan 31, 2014 by Ed Murphy

Numerous research studies have been conducted to validate that there is a linkage between Employee Engagement and Customer Experience, however, research is not necessary to prove that engaged employees provide a better customer experience. 

When most organizations discuss employee engagement, the focus is on how having more engaged employees will help the bottom line. Few discuss the impact disengaged employees have on their co-workers and your customers.

Why do disengaged employees have a long-term impact on the bottom line? The answer is quite simple, but first, we need to define the core components of employee engagement and their causes.

At a macro level, most experts agree on the components but how they are defined varies greatly. Strativity Group categorizes the core components of employee engagement into four areas:

original survey request

What are the causes of employee disengagement?

Identifying the numerous causes of employee disengagement is the first step in creating an action plan to improve. Each of the four components of employee engagement has unique causes.

The INDIVIDUAL component is all about the employee. A low Individual score indicates employees do not feel they belong. Disengaged employees do not:

  • Have a sense of belonging with the organization or team
  • Feel valuable to the organization
  • Have a positive perception of their work-life balance

The MANAGER component evaluates the employee’s relationship with their direct manager.A low Manager score indicates employees feel managers do not support their best interest. Disengagement in this area is driven by managers who:

  • Are not respected by employees
  • Communicate poorly with their team
  • Do not empower their employees
  • Do not provide recognition and/or continuous feedback

The CUSTOMER component assesses the employee’s perception of the organization’s relationship with its customers. A low Customer score indicates that employees are not connected to customers’ needs and expectations. Disengagement in this area is driven by employees who:

  • Put themselves before the customer
  • Do not relate to customer needs
  • Lack an understanding of the organization’s desired customer experience
  • Lack the desire to delight customers
  • Do not believe in the product(s) or service(s) provided

The ORGANIZATION component measures the employee’s relationship with the overall organization, its strategy and leadership. A low Organization score indicates employees are disconnected from the organization’s goals and strategy. Disengagement in this area is driven by: 

  • Employees who lack: 
    – Trust in senior leaders
    – Confidence in senior leaders
    – The necessary tools to be successful
  • Leaders/Organizations that Provide a poor work-life balance
    – Do not communicate the organization’s strategy
    – Do not inspire employees
    – Lack career growth opportunities
    – Provide poor training

Now for the simple part…

Why do disengaged employees have a long-term impact on the bottom line?

Disengaged employees are much more expensive to maintain because many exhibit the following habits:

  • Regularly show up late
  • Provide below average work or fail to meet the company’s basic requirements
  • Are on auto pilot (lack of attention to details)
  • Require more managerial time
  • Have a poor understanding of their customers’ needs
  • Convey their negative attitude to other employees
  • Convey their negative attitude to customers
  • Create customers who spread negative word-of-mouth
  • Don’t solve customers’ problems
  • Lack pride in the organization and its products/services
  • Speak negatively of the company
  • Refrain from volunteering for special assignments/groups
  • Are not innovative

If the habits of disengaged employees are not enough, according to The Gallup Organization, “There are 22 million disengaged employees that cost the American economy up to $350 billion per year in lost productivity, including absence, illness and other problems that result when workers are unhappy at work.” What does this mean to you? If you are a 500-employee company, disengagement costs you $4,350,000 per year on salaries for under-performing workers.

original survey request

Employees exhibiting only some of the habits of disengagement will deliver a below average customer experience that could result in a loss of future business and a loss of future recommendations.

What are the steps to improving employee engagement?

There is no single, quick fix to improve employee engagement; it is a cycle of continuous improvement. Employee engagement must start with senior leadership and the organization accepting that employee engagement is more than buying lunch for employees and making them feel good. It is a powerful business management tool that requires a commitment of time, resources and money.

Jeff Smythe hit the nail on the head in his book The CEO Chief Engagement Officer: Turning Hierarchy Upside Down to Drive Performance when he wrote, “Every leader from chief executive officer to call centre supervisor now has the added function of chief engagement officer. The job description involves being responsible for ensuring the planning and execution of the engagement of their people in day-to-day performance and change.”

Organization leaders must consider employee engagement in their decision-making process. It is a critical business discipline like assessing risk, creating financial plans, and developing competitive strategies. Exceptional customer journeys are paved with the actions of your employees.

Step 1 Obtain leadership buy-in. Organization leaders drive programs according to the priorities of their business strategy – employee engagement must be part of the organization’s strategy. However, leadership buy-in is not enough, it is essential that leaders are active participants because programs live or die based on the actions of leaders.

Step 2 Conduct an employee engagement survey. For any employee survey to be successful, employees need to trust that their feedback is confidential and, if possible, anonymous. The best way to ensure confidentiality is by using a third-party survey provider.

Step 3 Conduct a driver analysis AND a root-cause analysis among BOTH engaged and disengaged employees. Numerous surveys have been conducted identifying common themes that drive employee engagement. While there are common themes, the order and magnitude is unique to each organization. However, identifying your drivers alone will not provide you the depth needed to create an action plan. The driver analysis is what tells you your symptoms while conducting a root causes analysis allows you to understand the problem in order to take corrective action.

Step 4 Develop an action plan to address each root cause. The action plan will ensure that the required elements of the plan are documented, understood, owned and measureable, notably:

  • What actions will be taken 
  • Who will own each action item
  • When each action item will be completed
  • What resources are required As in step one, it is critical that the plan is supported by leadership and communicated throughout the entire organization.

Step 5 Monitor the plan and continually update the entire organization on progress. Too many programs fail because employee engagement is considered an event and not a program; it is a continuous process.

Every organization has disengaged employees – they will always exist. The goal is to minimize employee disengagement and maximize engagement.

Disengaged employees are like weeds in a garden, if the garden is not cultivated and maintained, the weeds will eventually overrun the garden. Your employees are your most unique and critical asset that need to be cultivated and properly managed. It is your job to engage employees so they can do their job – which is to grow your business and generate new ideas.

Ed Murphy is Research Director of Strativity Group. Ed has over 25 years of global experience, helping companies understand and communicate with their customers by providing actionable consumer and business insights.

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For more on Employee Engagement:

Are Your Employees Fully Engaged? 

Join Our Strativity Employee Engagement Webcast – February 20, 2014

Engaged Employees Deliver Higher Customer Satisfaction and Greater Profitability