The Business Cost Of Declining Employee Engagement

2 min read
May 17, 2024 8:42:04 AM

It’s no secret that employee engagement is one of the keys to business growth. Companies with engaged employees experience many benefits, including:

  • Higher productivity
  • Lower turnover rates
  • Improved customer satisfaction
  • Enhanced creativity and innovation

But if your company has run into engagement hurdles recently, you’re not alone. Employee engagement is trending downward.

According to a recently published Gallup survey, only 30% of full- and part-time employees reported feeling engaged by their work in Q1 of 2024. This figure is down from 34% in 2021 and 36% in 2020. This is the first time employee engagement has been regularly trending downward in a decade.

So, why is this happening? Let’s explore some common causes and how it might be impacting your business.

Why Is Employee Engagement Trending Downward?

Identifying the root causes is crucial for addressing this issue effectively. Here are some common reasons companies are experiencing a dip in employee engagement. If any of the following resonate with your business, consider them as starting points to enhance engagement:

The leadership trust gap

When employees feel disconnected from leadership or perceive a lack of transparency, their engagement tends to suffer. With only 23% of workers in the U.S. indicating that they strongly trust in the leadership of their organization, rebuilding trust will be a critical factor. Bridging the growing trust gap between leaders and employees is essential.

Not adapting to remote and hybrid work

Remote work provides employees with greater autonomy and flexibility and reduces stress. However, it isn’t without challenges. Some negative aspects include feelings of isolation, difficulty collaborating, and an eroding connection to the organization’s mission or purpose. Organizations must proactively and specifically address remote employee engagement.

Lack of investment in employee engagement

During turbulent times, it’s tempting to cut costs, but investing in employee well-being pays off in the long run. Organizations need to prioritize investments in employee engagement and employee experience. When employees feel valued and supported, their engagement levels improve.

What Is the Financial Impact of Low Employee Engagement?

Companies with poor engagement scores earn an operating income that is 32.7% lower than companies with more engaged employees. Here’s why:

Reduced productivity

Disengaged employees tend to underperform, which directly impacts overall productivity. When employees lack motivation or commitment, they may not put in their best effort, leading to suboptimal results. Tasks take longer to complete, projects may be delayed and efficiency suffers.


Low engagement levels are associated with higher rates of absenteeism. Disengaged employees are more likely to call in sick or take unplanned time off. Frequent absences disrupt workflow, strain other team members and reduce overall productivity. Moreover, absenteeism can lead to missed deadlines and increased workloads for the remaining staff.

Turnover costs

Disengaged employees are prone to leaving their jobs. High turnover rates have several financial implications for organizations:

  • Recruitment costs: Finding suitable replacements requires advertising job openings, conducting interviews and screening candidates. These processes incur costs.
  • Training and onboarding expenses: New hires need training to get up to speed with their roles. Organizations invest time and resources in onboarding programs.
  • Lost institutional knowledge: When experienced employees leave, they take valuable institutional knowledge with them. This loss can impact productivity and hinder innovation.

Healthcare expenses

Stress-related health issues are more prevalent among disengaged employees. Chronic stress can lead to physical and mental health problems, resulting in increased healthcare costs for both employees and employers. These costs include medical treatments, counseling and absenteeism due to health-related issues.

Break the Trend — Improve Your Employee Engagement

Whether you’ve been feeling the impact of disengaged employees or want to stay ahead of the curve, we’re here to help.

GO2 Partners develops custom employee engagement strategies within your organization to ensure your team works collaboratively toward a common goal. If you want to improve how you communicate, engage with, and understand your employees, contact us today to learn more.


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