January 4, 2021

The hidden cost of a disengaged workforce

Employee engagement has always been a hot topic, and something organisations strive to understand and improve. This is simply evidenced by the plethora of tips, tricks and articles offering advice you can find with a simple google search for “how to engage employees”. When I tried this, Google served up 440 million results.

Chart showing the constant increase in searches for “employee engagement”

With the recent sudden movement towards distributed teams, and the rise of working from home, many of these tips for understanding how well engaged your employees and your workforce are even more difficult to implement across the organisation.

So how much of an issue is this, and why does digital transformation have a role to play?

Typical disengagement indicators:

  • Poor productivity
  • No enthusiasm to learn
  • Reduced quality of work
  • Increased ‘sick days’
  • Disengagement from work colleagues
  • Silence, lack of contribution or challenge
  • Late arrival, early departure
  • Reduction in personal pursuits outside the workplace
  • Mood swings and outburst
  • Increases in breaks and “water cooler” time

The cost of disengaged workforces.

To frame the importance of engagement, let's use some data points from both a LinkedIn and a Gallup study in the US.

The studies summarised that, on average, the rate of active disengagement across a typical organisation in the US was 17%, and the financial cost of this disengagement equated to 34% of the salary cost. Active disengagement is where employees are not just idle, but seeking other things to do during the work time, distracting others and creating a negative environment for others.

In the model below I look at two different company sizes, one with 5,000 employees and a median salary of £65,000, the other with 8,500 employees and a median salary of £55,000.

Using the model described in LinkedIn’s presentation, I conducted a simple sensitivity analysis to look at the impact of varying the disengagement and financial cost percentages by a few points either way.

For the larger of the two models, the financial cost of disengaged employees ranges from a best case scenario of £14.3 million, to a worst case of £43.7 million. Yes, that’s million. The range for the smaller company, with a higher median salary was equally astonishing; between £9.9 million and £30.3 million.

These numbers are eye-opening, to say the least, and the studies were conducted before the remote working shift of 2020, in a world where it was much easier to train HR teams, managers and supervisors to look out for and intervene when the early warning signs of disengagement presented themselves.

In our new world this has become significantly more difficult. With this in mind, we should look at the underlying causes of disengagement, and investigate whether there is a technological solution to mitigate and manage these risks. 

The causes of disengagement

In most workplaces nowadays, nearly all of the aspects mentioned above rely in someway on technology platforms. These technology platforms have typically been introduced to organisations  over a period of time, creating a patchwork of systems and processes through which employees need to navigate.

Typical disengagement factors:

  • Poor leadership
  • Poor feedback 
  • Poor workplace communication
  • Limited career growth prospects 
  • Lack of, or poorly implemented colleague recommendation 
  • Lack of tools and resources
  • Inability to relate contribution to business growth
  • Perceived misalignment between personal and company objectives
  • Perceived lack of employer interest in employee wellbeing 

Incoherent technology platforms lead to frustration and wasted time

From personal experience, I remember a CRM system that was so complex and convoluted, that a team of nine people were hired full-time to help sales teams input their data. This is even before adding into the mix the additional complication of having to use Citrix to access the CRM.

In another company, I had to run a virtual machine simply to request time off. This would take me the best part of two hours to remember how to do it, get it going, complete the various software updates, reset expired passwords and finally submit my request.

In organisations like this, it is frequent to see that many of the systems have their own authentication processes and requirements. The worst experience of this that I have experienced included multiple types of password enforcement, and a page of different two-factor authentication codes in my authenticator app. 

As a specific example, the payroll system, which we used for downloading our payslips and P60s had a one month password expiry policy, meaning each time we used it, we had to go through a password reset process. Sometimes it was so difficult to logon, and I simply didn't bother, or had to ask someone else to help.

Internal digital transformation

When it comes to digital transformation and the pursuit of a return on investment, it is often too easy to focus on innovating customer experiences, product lines, go to market strategies, and even entire businesses. Whilst these are perfectly valid avenues to develop, given the cost of disengagement across the workforce, ensuring your internal systems are frictionless and pain-free, especially in a distributed working environment, must be given serious contemplation and prioritised effectively.

You might think that you’ve got this covered, and your internal systems are up to scratch. However, according to a PWC study, you might need to double check that assumption.

90% of C-Suite executives say their company considers the needs of their workforce whereas only 53% of employees concur. Interestingly 63% of the C-suite admit to being frustrated by their own systems.

In short, the chances are that your workforce do not have the systems they need to be motivated, productive and successful, in which case you might indeed have a large cost of disengagement.

Impactful Incremental Improvements 

Instead of throwing yet another fancy new tool into the equation, or advocating the rip-out and replacement of existing systems, our approach at Automation Squared is to understand the pain points and design innovative solutions to overcome them.

Since the specific pain points are different for every company, and indeed, often differ between teams and departments within the same organisation, we adopt an inclusive approach to analysis, design and development to create impactful outcomes in small, incremental steps. With attention to the needs and work flows of the end users, we focus on creating user journeys that are rewarding through clever user interfaces, augmented with smart process and data automation.

Perhaps you’ve got a CRM system that your sales teams avoid until the end of quarter? Maybe your inventory and product management systems require regular audits and interventions. Do  your staff complain of duplication and wasted effort? Is it harder than ever to coordinate and manage teams?

If any of these resonate, then you might want to get in touch with us.

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