The real cost of the ‘Great Resignation’ and ‘Quiet Quitting’ is greater than we think.
It’s a generally accepted principle that the cost of staff turnover is somewhere between 50% and 200% of an employee’s salary.
Gallup estimate that the cost of a disengaged employee is around 18% of their annual salary.
They’re significant numbers and the recent trends suggest that the cost being borne by organisations and their people are much higher than we might care to admit.
People leave for a variety of reasons, including:
1. They have a better opportunity for growth, development, and progression elsewhere;
2. They’ve come to a decision that they’d like to do something else; and
3. They’re totally disengaged and can’t get out the door quickly enough.
It’s not uncommon for the separation in the first 2 reasons to be an amicable separation, however, when it comes to a disengaged separation, it’s anything but.
Disengaged leavers decided sometime before their departure that enough is enough, they believe they’re not valued, they’re overworked and overwhelmed, are no longer enjoying what they’re doing and desperately want any change. At this point, any opportunity is better – especially if that opportunity comes with a hefty monetary incentive.
The ‘Great Resignation’ and ‘Quiet Quitting’ trends are major signals of disintegrating engagement levels and they’re inextricably linked, magnifying the cost of the churn as we start to compound the cost of churn and disengagement. The cost of a disengaged employee comes before the cost of the separation.
The challenge is that the estimated costs of churn are somewhat predicated on the needs of a new starter being met – that they’re being developed, are able to be successful, they see an attractive path for progression – and that they’re engaged, productive, and retained.
In an article written by the AFR, it indicates that one-third of those who’ve been part of the ‘Great Resignation’ is already exiting their once-greener pastures. The opportunity they saw or hoped for didn’t exist.
The very real cost to employers who are seeing a second wave of resignations, or an increase in quiet quitting, is now a multiple of the compounded estimates of churn and disengagement. The ‘cost-chain’ has had a couple of additional links added – the cost of leaver disengagement, cost of leaver separation, plus now the cost of new-starter disengagement and the cost of new-starter separation.
When the costs of disengagement and churn impact quality, customer service & relationships, corporate knowledge, risk and innovation, the cost of recovery compounds as well.
The headline here is that enterprise value is eroded and when left unchecked, it starts to erode at an ever-increasing rate.
The only way to break this cycle of value erosion is to address the cause of disengagement.
It’s not a question of more money – it’s a challenge of more humanity.
As the pendulum starts to swing back from the growth & high-remuneration phase into the restructure & reorganisation phase that we’re starting to experience, we have a choice – to do what we’ve always done or to look for a new way to move forward.
Learning & development budgets are often not insignificant, yet given the trends of disengagement, churn, and rising costs of attraction, it’s time to reflect on how effective they are. It’s time to explore whether they’re really moving the needle or meeting an activity KPI.
We have much to learn from and about our dissatisfied and disengaged workforces and it’s likely that we won’t like what we hear – but we need to hear it.
We need to hear it because there’s an opportunity for the organisations who are listening to create a new, sustainable way forward.
An engaged workforce is a committed workforce – a workforce with clarity, committed to quality and each other, where people will work hard because they know they’re valued and where innovation thrives.
The cost of engaging your workforce is significantly less than the cost of disengagement and churn.
The opportunity and benefit of engaging your workforce can be a significant multiple of the cost – improved quality, improved relationships (internally and externally), retention of and growth in customer value, increasing productivity, increasing efficiency, continual improvement & innovation.
The discussion moves from containment of unplanned & default costs to revenue, product, and efficiency opportunities.
Growth and sustainable advantage starts there.
The ROI is overwhelmingly positive. The very real cost of avoidance is too high.
Now is the time to harness the dissatisfaction with the status quo.
What do you choose?
Shoot for the stars, choose Extraordinary,
Sandy