May 15, 2009

How much do unmotivated employees cost you?

By DC Velocity Staff

For years, business has tried to quantify the hard-dollar benefits of a motivated workforce and the liabilities of a workforce that's not engaged. At WERC, two speakers—Elijah Ray of UTi Logistics and Brian Childs of Kohler Co.—shed some light on the issue.

Ray and Childs cited statistics from The Gallup Group showing that organizations with four or more engaged employees for every one disengaged worker produced 2.6 times more earnings-per-share growth than companies with a one-to-one ratio. Childs, however, is not convinced of the accuracy of those findings. Based on his experience at Kohler, Childs thinks that the improvement in earnings-per-share growth could actually be much higher than industry data suggests.

One of the results of unmotivated employees is poor quality of work. The speakers noted that the costs of "poor quality" could account for between 15 and 40 percent of a company's total business costs. While this data is not specific to the supply chain, Ray said it is on par with what he has seen in the industry.