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Stats around employees NOT being engaged

Delivered March 20th, 2019. Contributors: Dagmawit W. and

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Statistics Around Employees Not Being Engaged

Dissatisfied employees are increasingly disengaged and will eventually quit. This costs companies several thousands of dollars as they do not perform at their optimum. The company incurs the employee turnover cost in replacing them once they leave. Several companies are becoming more and more aware of the need to ensure that employee satisfaction is a priority to the company. A new terminology used to describe this phenomenon is EX; employee experience.

METHODOLOGY

Our research analyzed data from various surveys and research carried out by trusted research companies such as McKinsey and Deloitte. We got these data points from articles on their websites, or via articles in trusted sources such as Forbes. Other sources included academic articles from established institutions such as Harvard.

RISKS OF DISENGAGED EMPLOYEES

Research shows that on average, at least 17.2% of employees in a company are disengaged. When a company does not keep its talented employees, they risk eroding customer satisfaction and increasing the cost of operations. When considering a specific industry such as a care-center, employee attrition can damage the customer experience significantly. Each new hire in this field may cost between $10,000 and $20,000 in training, direct recruiting costs, and lost productivity during ramp up.
Some companies have a higher engagement level with their employees. For this reason, less than 75% defect, and less than 26% place in a compensation claim related to safety on the job. When comparing the companies that have the highest employee engagement levels versus those that have the lowest, it is revealed that there is 3.9 times earning per share growth rate.

EMPLOYEE TURNOVER

One of the major impacts of disengaged employees is the resultant cost when they leave their place of employment. Older employees, those aged above 55 years old, have a median tenure of 10.1 years, while those aged between 25 to 34 years, have a median tenure of 2.8 years. As of 2016, 44% of millennials expected to shift from their current employer by 2018.

According to Deloitte, the employee turnover cost incurred can amount to tens of thousands of dollars. This can be 1.5 to 2X their annual salary.
The cost incurred for an entry-level may range between 30% and 50%, mid-level may be approximately 150%, and highly skilled-level may be about 400% of their annual salary. In the US, the estimate of the total cost of employee turnover per year is $160 billion.

Harvard Business Review concludes that 80% of employee turnover is caused by poor judgment in the recruitment process. This failure is clear because, within 18 months of being hired, 36% of new employees and 40% of senior managers hired externally fail. However, not all industries get affected in the same magnitude. Here is a sample of some industries and their levels of annual turnover:
  •  30% are bank tellers
  •  30-45% call center employees
  •  100% fast food/QSR outlets employees
  •  60-300% hotels staff
  •  100% supermarkets employees
  •  59% retail employees generally

RETENTION and JOB SATISFACTION

Employee satisfaction plays a big role in retention. A survey shows that 61% of current employees expect to be working at their current job in a year's time while 19% are highly likely to leave within this time frame. 60% of those likely to stay are satisfied with their current job and company, while 62% of those who are most likely to leave are dissatisfied. To maintain great EX, it is critical to keep employees engaged. Jobs are constantly threatened by technology. With the current technological advances, about 45% of the current jobs can be automated, with 60% of jobs are moving toward automation of 30% of their processes. For this reason, employees need to be constantly reassured.

A work environment that is flexible is beneficial to the company as it saves money, reduces stress, increases job satisfaction, reduces negativity in the team. 40% of women tend to leave a job if it is not family-friendly or flexible. Job satisfaction varies across industries. Some of these include:
  • Banking, security, and financial services had the highest at 52% 
  • Travel, transport, and logistics at 44% 
  • Non-healthcare insurance at 35%
  • Telecommunications and technology are the least satisfied at 25%.

A new trend that is emerging is the tendency of associating job satisfaction with a broader purpose whereby the meaning of daily activities is derived from something greater than just a paycheck. However, one obvious hurdle is the ineffective communication from leaders to their employees. Only 38% of leaders say that their employees understand their purpose, commitment, and core values. Research has shown that 70% of employees are not involved, lack enthusiasm, and are uncommitted to their work. 9 out of 10 American employees are not consistently productive in their workplace.

Millennials comprise 30% of the population. However, by 2025, they will represent 75% of the global workforce. It will be paramount to ensure that one meets their needs and expectations. The new term coined for employee retention is EX which stands for employee experience. Paying attention to employee needs is paramount to the success of the company.
Sources
Sources

Boosting contact-center performance through employee engagement

mckinsey.com
Publication Year: 2018
Quotes
  • "Failure to retain these talented employees can have significant repercussions: employee attrition can erode customer satisfaction while increasing operating costs. Each new agent hire is estimated to cost the contact center $10,000 to $20,000 in training, direct recruiting costs, and lost productivity during ramp up."
  • "Employee satisfaction and retention are naturally intertwined. In all, 38 percent of contact-center agents are extremely satisfied with their job, and another 43 percent are more satisfied than not (Exhibit 1). The levels of satisfaction varied across industries: for example, banking, securities, and financial services had the highest proportion of respondents who reported being extremely satisfied at 52 percent, followed by travel, transport, and logistics at 44 percent and nonhealthcare insurance at 35 percent (which also had the lowest overall percentage of dissatisfied employees). Meanwhile, telecommunications and technology earned the lowest marks, with just 25 percent indicating that they are extremely satisfied."
  • "The survey highlighted the impact of employee satisfaction on retention. According to the survey, 61 percent of all respondents expect to be working with their company a year from now, while 19 percent indicated that they were likely to leave their current job within this time period.1 Among those likely to stay, nearly 60 percent are extremely satisfied with their job and company. For respondents who expect to change jobs, 62 percent are notably dissatisfied with their current situation. When it comes to the likelihood of retention, healthcare insurance; travel, transportation, and logistics; and nonhealthcare insurance have the highest expected retention rates. The survey identified five factors that had the greatest influence on retention as well as the top drivers of satisfaction (Exhibit 2)."
  • "The top factor, wages and job security, is largely determined by industry and market dynamics, so executives are limited in their ability to differentiate salaries from the competition. "

Making work meaningful: A leader’s guide

mckinsey.com
Publication Year: 2018
Quotes
  • "By now, it is well understood that people who believe their job has meaning and a broader purpose are more likely to work harder, take on challenging or unpopular tasks, and collaborate effectively. Research repeatedly shows that people deliver their best effort and ideas when they feel they are part of something larger than the pursuit of a paycheck. "
  • "...in one survey of senior executives around the world, only 38 percent of leaders said that their staff had a clear understanding of the organization’s purpose and commitment to its core values and beliefs.1 US and global Gallup polls confirm this, finding that about 70 percent of employees are not “involved in, enthusiastic about, or committed to their work.”2 Another study showed that nearly nine out of ten American workers believe they do not contribute to their full potential, because they don’t feel excited about their work."
  • "Employee experience is the new evolution from employee engagement for defining how companies should interact with their people."

Employee experience: essential to compete

mckinsey.com
Publication Year: 2018
Quotes
  • "Millennials are certainly a factor. They comprise 30 percent of the population and by 2025 will represent 75 percent of the global workforce. What they seek most from their jobs is meaningful work, flexibility and autonomy, and connection and mentoring. This shift to EX, as we refer to employee experience, parallels the changing nature of work. With today’s technology, 45 percent of activities people are paid to do could be automated, and 60 percent of jobs could have 30 percent or more of their activities automated."

According To Research, Here’s The Single Key To Improving Employee Engagement

forbes.com
Publication Year: 2017

The Impact of Employee Engagement on Performance and Results

careermetis.com
Publication Year: 2018
Quotes
  • "Raising employee engagement can help improve your operational efficiency. The same Aon Hewitt findings referenced above indicate that organizations with higher engagement levels tend to have 75% fewer quality defects, along with 26% fewer workers’ compensation claims related to safety."
  • "Perhaps the most compelling evidence of employee engagement’s impact on performance is its link to stock performance. Forbes describes a 3.9 times earnings per share growth rate between companies with employees who have the highest engagement levels versus the lowest."

Quick Take: Turnover and Retention - Catalyst

catalyst.org
Publication Year: 2019
Quotes
  • "Older employees (ages 55 to 64) have a median tenure of 10.1 years—over three times longer than that of younger workers (ages 25 to 34), whose median tenure is 2.8 years.28 In 2016, slightly less than half (44%) of Millennials surveyed expect to leave their current employer in the next two years.29 A majority of Millennials believe they will leave their current company by 2020 across all of the various countries and regions surveyed, including: the United Kingdom (71%), Latin America (71%), the United States (64%), Canada (61%), Western Europe (60%), and Japan (52%).30 High‐Performer Turnover Negatively Impacts Firm Performance31 Organizations with a strong reputation attract higher quality talent, but they are more impacted by the loss of that talent—high performers are more difficult to replace."
  • "Workplace flexibility often leads to talent retention, cost savings, job satisfaction, reduced stress, and fewer negative employee behaviors such as absenteeism and accidents.34 Family-friendly workplaces offer a competitive edge for companies. Women who don’t have flexibility or a family-friendly manager report dissatisfaction with their work, and 40% plan to leave their job within a year"

Cost of Employee Turnover vs Retention Proposition

thehrdigest.com
Publication Year: 2018
Quotes
  • "According to Josh Bersin of Deloitte, the total cost of employee turnover can range from tens of thousands of dollars to 1.5-2X of their annual salary.Forbes stated that for entry-level employees, mid-level employees, and highly skilled-level employees, the associated cost comes to 30-50 percent, 150 percent, and 400 percent of their annual salary respectively. In US companies, employee turnover already costs $160 billion a year. Tragic statistics!"
  • "According to Harvard Business Review, 80 percent of employee turnover is poor recruitment decisions. The Society for Human Resource Management reports that on average: 36% of new hires fail within the first 18 months. 40% of senior managers hired externally fail within 18 months of being hired. It costs on average one-third of a new hire’s yearly salary to replace them."

What Is Employee Retention and What Factors Contribute to It?

business.dailypay.com
Publication Year: 2018
Quotes
  • "Employee turnover and employee attrition cost your business money. Employee retention is how you combat turnover."
  • "It’s natural for organizations to experience turnover. Also, some industries are prone to higher turnover rates than others due to wages, difficulty of work, and benefits they traditionally offer to employees. These industries include: Staffing - 352% turnover rate Cleaning professionals - 75-400% turnover rate Logistics - 50% turnover rate Call centers - 33% turnover rate"
  • "Some studies calculate that entry-level employees who make an average salary of $40,000 cost 40% of their annual salary to replace. Improving retention is the only way to negate this expense, therefore an organization needs to track retention to see if there is room for improvement - and subsequently room to protect their bottom line. "
h

Harvard study.

hks.harvard.edu
Publication Year: 2018
Quotes
  • "Costs of Turnover to Employers High turnover is a problem for the type of large, consumer-facing companies that tend to employ low-wage workers. The annual turnover numbers in these occupations can be staggering:  30% among bank tellers  30-45% among call center employees  100% in fast food/QSR outlets  60-300% in hotels  100% in supermarkets  59% in retail generally"
  • "High turnover rates impose significant financial costs on employers. Each time an employee leaves the workplace, a company loses the investment it has made in that employee and must incur the costs of recruiting and training a replacement employee."

How to Calculate the Cost of Employee Disengagement

learning.linkedin.com
Publication Year: 2017
Quotes
  • "Gallup, through extensive research, found that, on average, 17.2 percent of an organization’s workforce is actively disengaged."