Replacement costs for disengaged employees $5 billion annually: Report

Highly engaged workers much less likely to look for new job
|hrreporter.com|Last Updated: 10/23/2014

Companies should do more to increase employee engagement and avoid the high cost of turnover, low workplace commitment and potential brand damage, according to Ceridian's 2014 Pulse of Talent survey.

Employers can improve upon employee engagement levels as one in four respondents are poorly engaged (22 per cent) or completely disengaged (five per cent) in the workplace

And only 44 per cent of respondents believe the work they do is valued by their employer, found the survey of 801 people.

The annual recruitment costs to replace disengaged workers who left their job adds up to $5 billion, according to Ceridian. This is calculated by looking at the number of employees who left, voluntarily or involuntarily, multiplied by average earnings, replacement costs — including advertising, search and agency fees, applicant screening, hiring bonuses and relocation costs — and the percentage of low-engagement or disengaged workers from the survey. 

High engagement levels play a critical role in improving retention rates and reducing turnover, said Ceridian. And a majority of highly engaged respondents (68 per cent) would like to stay with their current employer for five or more years, compared to 55 per cent for all respondents and only 14 per cent for disengaged employees

Only 14 per cent of highly engaged respondents are in some form actively looking for a new job with a new employer. This rate jumps to 63 per cent for disengaged respondents.

More than one-half (56 per cent) of highly engaged respondents are not considering a new job or position outside of their company. This rate is only 16 per cent for poorly engaged respondents and zero per cent for disengaged respondents.

"Organizations with high levels of engagement have less absenteeism and higher productivity than those with high levels of disengagement," says Dave MacKay, president of Ceridian. "Also, organizations with high levels of engagement have fewer concerns with retaining employees. Employers risk losing significant payroll dollars for every disengaged employee who is present at work but not invested in making the effort to produce results that advance the business. There is clear value in sustaining engagement over time."

Employers that provide an environment where employees can develop and be promoted internally are able to develop and retain more highly engaged employees, said Ceridian. Only 38 per cent of survey respondents believe their employers prioritize internal employees for available positions. And among highly engaged respondents, a majority (59 per cent) felt their employer focused more on internal promotions, four times higher than for disengaged respondents.

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