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What Is The Cost of Poor Employee Engagement?

Figures from 2017 Britain's Healthiest Workplace Survey say that the cost of sick days and poor productivity are costing the UK economy £77.5 billion a year.

What is the Cost of Poor Employee Engagement?

Published on:

16 Nov 2017

Poor employee engagement presents a significant financial burden for businesses. Decreased productivity is a primary concern, as disengaged employees are less motivated to perform optimally, resulting in lower output and efficiency levels.

Studies indicate that actively engaged employees are up to 17% more productive than their disengaged counterparts, directly impacting profitability.

Moreover, poor engagement contributes to higher turnover rates, incurring expenses such as recruitment costs, onboarding, and training investments for new hires. High turnover disrupts workflow, diminishes team cohesion, and erodes institutional knowledge, further impeding productivity and performance.

Absenteeism and Presenteeism Challenges

Additionally, poor engagement leads to increased absenteeism and presenteeism. Disengaged employees are more likely to take unplanned leave or call in sick, leading to staffing challenges and decreased operational continuity. Even when present, disengaged employees may be physically at work but mentally checked out, exacerbating workplace inefficiencies.

Cultural Impact

Culturally, poor employee engagement undermines organisational cohesion and morale. Disengaged employees are less likely to collaborate, share knowledge, or contribute to a positive work environment, hindering innovation and problem-solving efforts. Low morale and dissatisfaction can spread throughout the workforce, creating a toxic work environment characterized by negativity and apathy.

Customer Satisfaction and Loyalty

Moreover, poor engagement impacts customer satisfaction and loyalty. Frontline employees, such as customer service representatives, play a crucial role in shaping the customer experience. Disengaged employees may deliver subpar service, leading to dissatisfied customers and diminished loyalty.

Employee engagement directly correlates with customer satisfaction, emphasising the importance of fostering a positive employee experience to enhance customer relationships.

Addressing the Challenge

Addressing poor employee engagement requires a multifaceted approach. Strategically, organisations must prioritise employee engagement as a key performance metric and invest in programs that promote a positive work environment. This may include leadership development, training opportunities, recognition programs, and regular feedback mechanisms.

Culturally, organisations must foster an inclusive and collaborative workplace culture that values diversity, equity, and transparency. Leaders play a critical role in setting the tone for organisational culture and must lead by example, demonstrating authenticity, empathy, and accountability.

By prioritising employee well-being and engagement, organisations can create a workplace where employees feel motivated, fulfilled, and inspired to contribute their best work, driving long-term success and sustainability.

In an article by the BBC this week two in five adults or 40% say that they would fake a sick day if they needed to take a day off.

Younger staff were more likely to lie about sickness than there older colleagues.

The survey of 3,655 adults aged over sixteen also found that 66% would also cover for colleagues who they know might be faking it.

This will, of course, have a financial cost.

What is causing staff to pull a sickie even though they’re not ill?

The top reasons for staff pulling a sickie were:

  1. They were too tired

  2. They couldn’t be bothered

  3. They had other plans

  4. They were hungover

All of these reasons for pretending to be sick to avoid going into work should raise alarm bells if you’ve noticed a similar trend amongst your own staff. These are all signs that your staff are feeling overworked, disengaged, have no respect for the company or their colleagues and prioritised their social life over their responsibility to go to work. When staff are sick, being proactive in managing sickness absence is important.

How do you know if your company has staffing issues?

It might seem that all is well.

Sales are rising, everyone seems to be working hard and you are on target to hit your sales targets before the end of the year. Great, yes?

But what about the softer side of business?

Is your company suffering from arise in absences and sickies?

What about low staff engagement and a high staff churn rate?

Or your starting to feel that your staff don’t care as you do and they just come to work so they can collect a paycheck at the end of the month?

The above are issues that often faced by businesses that are transactional in nature.

What do we mean by transactional?

A transactional business model is where the company focuses on a single point of sale transactions and the emphasis is on trying to maximise efficiency and sales volume rather than developing a relationship with the buyer.

This can be stressful for staff as they are always chasing the next sale and their focus is on the bottom line rather than building relationships and retaining customers.

This stress can lead to low morale, low engagement and unexplained absences and ultimately higher staff turnover.

Short-term transactional thinking seems attractive for companies who rely on constant sales to keep them profitable but can actually in the long-term be costing them money.

Are engaged employees healthier and more committed?

What is employee engagement?

Employee engagement is about creating the right conditions for your employees to thrive, be motivated to the success of your business and improving individual performance, productivity and well-being.

If your employees feel valued and are well trained so that they have an in-depth understanding of what their job entails and how they fit into your organisation, they will want to come to work.

Your incidence of staff members pulling sickies because they couldn’t be bothered would effectively disappear.

Engaged employees are excited to get to work see their equally engaged and motivated colleagues. They know what they are going to be doing, understand how to do it and can’t wait to get started.

When you look after your employees they’ll look after your business. Help and encourage them to learn new skills ,let them know you value their work and their opinion and are open their ideas.

The thought of ‘pulling a sickie because they fancy a duvet day or are hungover wouldn’t cross their minds. They are motivated, engaged and want to help push the business they work for to new heights.

How can a purpose-driven business save you money and improve morale?

The opposite of a transactional business is a purpose-driven business, one that believes in fostering relationships with both customers and staff.

As Simon Sinek said in his 2017 HBR article, ‘Profit isn’t a purpose. It’s a result. To have purpose means that the things that we do are of real value to others.’

When your employees come to work they want to do well, be appreciated for their efforts, feel they matter and can contribute.

Your business culture goes a long way towards sustaining employee happiness and enthusiasm. It’s what makes your offices the place people can’t wait to get to in the morning and reluctantly leave at night.

Generally speaking, transactional businesses operate a top-down structure where command and control come from the boardroom and can result in lower staff productivity, staff churn and lower efficiency. This will cost you money in recruitment expenses, lower productivity and unexplained absences.

In a purpose-driven organisation, a lot of these costs disappear.

Purpose-driven businesses use a bottom-up approach where the team is the most important element of this structure with support and advice coming from senior management as opposed to control and command.

The culture is positive and energetic focused on developing staff and creating an environment that values innovation, which results in improved sales and customer satisfaction.

As a result, there is far less absenteeism, staff churn is significantly reduced as is the associated recruitment costs, and productivity soars.

If a business can reduce their churn and as a result the costs of recruitment, onboarding and training, they will be a more profitable business as these savings will go straight to the bottom line.


Being less transactional has obvious cost savings and promotes a more compassionate, positive outlook.

Purpose-driven businesses have a business culture that is modern and forward-thinking and not welded to sales at all costs philosophy.

Employees are happier, motivated and well trained and see their jobs as customer-focused and they are part of driving the company forward.

Staff turnover is consequently lower because staff have a voice and contribute with ideas to improve systems, business practices and how customers are served.

Productivity is higher as is innovation and these businesses will also create value with improved trust and relationships.

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