The Cost of Disengagement: Exploring Productivity in the Modern Workplace

Introduction

Employee disengagement and productivity are key factors in determining organizational success. Unfortunately, recent data reveals that disengaged employees significantly reduce productivity, leading to a decline in overall performance. However, it is crucial to note that only 31% of U.S. employees are engaged at work, marking a significant decline in workforce motivation (Gallup, 2023). Nevertheless, this decline is primarily due to factors such as post-pandemic burnout, lack of recognition, limited growth opportunities, and a disconnect between leadership and employees. Consequently, this widespread disengagement not only hampers productivity but also incurs substantial financial losses for companies. For instance, a Tableau visualization using data from the Economic Research Institute and Gallup’s statistics highlights these monetary losses due to disengagement.

Employee engagement has always been a challenge for businesses; however, the pandemic ushered in a seismic shift in how organizations view and approach engagement. Currently, with many employees working remotely or in hybrid models, engagement has become more complex than ever. This shift has prompted a reevaluation of workplace structures, employee support, and leadership strategies. In fact, more than ever, companies realize that engagement is not just a matter of motivation—it’s a matter of survival. Therefore, organizations must prioritize engagement if they wish to avoid financial consequences.

This case study delves into the financial ramifications of disengagement. It examines both direct and indirect costs while demonstrating how companies can avoid these losses by fostering a culture of engagement. Additionally, this Tableau visualization provides a clear connection between disengagement and decreased profitability while addressing roles in which traditional engagement metrics may not fully capture the impact on productivity. Furthermore, research from Driving Engagement (Liechty & Williams, 2022) and Productive Work Environments: Key Benefits & Strategies (Liechtyb, 2025) reinforces the necessity of rethinking engagement strategies, particularly in professions where the human variable plays a significant role.

The Financial Impact

Employee disengagement and productivity loss pose a significant financial burden on organizations. Moreover, Gallup estimates that disengaged employees cost the global economy approximately $8.8 trillion (Pendell, 2022). As a result, these companies face annual losses ranging from $450 billion to $550 billion due to disengaged employees (Backman, 2019). However, these figures only scratch the surface of the problem. In fact, these numbers only represent a fraction of the issue, as they fail to capture indirect costs like damage to brand reputation, loss of customer loyalty, and increased recruitment expenses. As a result, organizations that fail to address employee disengagement and productivity loss are left paying a hidden price that affects their long-term sustainability.

Breaking Down the Costs

To further illustrate the severity of these losses, we use the Tableau visualization based on a salary dataset, which was created with salary estimates provided by the Economic Research Institute (2023). The visualization calculated estimated monetary loss by applying Gallup’s U.S. employee engagement statistics (77%) across a range of job roles. For example, a disengaged Chief Executive Officer may cost an organization over $2.4 million in lost productivity, annually. In addition, even mid-level roles, such as human resource managers or IT analysts, can lead to losses exceeding $100,000 each year per employee if disengaged. Thus, it becomes evident that addressing disengagement is a necessary investment rather than an optional initiative.

Real-World Case Snapshots

Disengagement Case: Wells Fargo Scandal

At Wells Fargo (2016), widespread employee disengagement contributed to a scandal involving the creation of millions of unauthorized accounts. The root cause was linked to toxic performance pressures and a lack of purpose alignment, which ultimately resulted in over $3 billion in fines and a lasting blow to the brand’s reputation.

Engagement Success Story: Southwest Airlines

At Southwest Airlines, a strong culture of employee engagement has been credited with industry-leading customer service, low turnover, and profitability. Because leadership invests heavily in listening to employees and giving them ownership in decision-making, the company has sustained long-term success. Consequently, this highlights how a strategic focus on engagement can yield tangible business benefits.

The Human Variable

While quantifying employee disengagement and productivity loss is straightforward in many roles, certain positions—such as those in healthcare, social work, education, emergency response, and customer service—pose unique challenges. In healthcare, for example, employee disengagement has a direct impact on productivity. However, traditional metrics often fail to capture the full value of employees in these roles. Moreover, the “human variable”—the unpredictable reactions and complexities of people—accounts for the inapplicability of these metrics (Liechtya, 2025). Given the significant role this human factor plays, engagement in these professions cannot be measured solely by quantitative output.

Tailoring Measurement Approaches

Insights from Driving Engagement emphasize that engagement should not be measured solely by quantitative output. Instead, it advocates for assessing job satisfaction, employee well-being, and impact on stakeholders. After all, no one expects a car to run without proper care—similarly, employees cannot be expected to work effectively if they are not taken care of. Consequently, employees need to feel valued and safe in the workplace (Liechty & Williams, 2022). In light of this, engagement should be viewed as an ongoing process of nurturing employee well-being, job satisfaction, and long-term impact. Thus, businesses must rethink how they measure productivity in human-centered roles.

Professions Affected by the Human Variable

1. Healthcare Professionals (e.g., Nurses, Doctors, Therapists)
   • Impact: There is a direct correlation between engagement and patient outcomes.
   • Alternative Productivity Measure: Patient Satisfaction Scores, Safety Metrics, Treatment Adherence Rates.
   • Research Support: The Brookings Institution (Sheiner and Malinovskaya, 2016) notes that high-performance work systems in healthcare—teamwork, shared decison-making, and employee involvement—are linked to better patient outcomes, lower error rates, and increased satisfaction.
2. Teachers and Educators
   • Impact: Teachers influence both academic performance and emotional/social development of students.
   • Alternative Productivity Measures: Student Growth Over Time, Instructional Quality, Student Engagement and Satisfaction, Peer and Administrator Evaluations, Emotional Intelligence and Relationship-Building, Student Retention and Attendance, Contribution to School Culture.
   • Research Support: Schalock et al. (1993) argue that teaching outcomes like motivation and self-efficacy are as important as test scores.
3. Emergency Responders (e.g., Firefighters, Paramedics, Police Officers)
   • Impact: Effectiveness lies in crisis resolution, community trust, and long-term outcomes.
   • Alternative Productivity Measures: Response Time & Case Resolution, Service Referral Success, Reduction in Law Enforcement Involvement, Repeat Encounter Rate, Community Feedback and Satisfaction, Responder Well-Being.
   • Research Support: Harvard Kennedy School (Torres and Narayanan, 2025) recommends using stakeholder-centered metrics to gauge effectiveness.
4. Customer Service Representatives
   • Impact: Customer service representatives influence customer satisfaction, retention, and brand perception.
   • Alternative Productivity Measure: Customer Satisfaction (CSAT), Customer Effort Score (CES), Net Promoter Score (NPS), First Response Time.
   • Research Support: Qualtrics (2018) advocates for analyzing customer service metrics to improve experiences and loyalty.
5. Social Workers and Mental Health Counselors
   • Impact: These professionals support clients’ mental and emotional well-being.
   • Alternative Productivity Measure: Relative Value Units, Indirect Care Activities, Patient Progress and Outcomes, Client Retention Rates, Peer and Supervisor Evaluations.
   • Research Support: Greenwood (2014) suggests combining RVUs and indirect care metrics for fairer assessments.

Creating a Culture of Productivity

Creating a culture of engagement and productivity goes beyond traditional metrics like output and efficiency—it fosters collaboration, innovation, and employee well-being. According to Productive Work Environments: Key Benefits & Strategies, organizations that cultivate positive workspaces see reduced turnover rates, higher job satisfaction, and increased profitability (Liechtyb, 2025). Furthermore, fostering a culture that encourages engagement at every level not only boosts individual performance but also strengthens the entire organization. Moreover, it enhances long-term business resilience and employee loyalty.

Strategies for Enhancing Engagement

1. Leadership Visibility:
   • Promotes trust, transparency, and sense of security.
   • Increases employee commitment to organizational goals (Mclain & Pendell, 2023).
2. Recognition Programs:
   • Boost morale and satisfaction when contributions are acknowledged meaningfully (Mayer, 2024).
   • These programs should be authentic, timely and value-driven.
3. Professional Development:
   • Fosters a growth mindset and enhances retention through mentorship and career path clarity (Cornejo, 2023).
4. Flexible Performance Metrics:
   • Accommodate the diversity of roles and allow personalized goals.
   • Enhance autonomy and holistic performance assessments (Pulakos, 2004).
5. Workplace Autonomy:
   • Empowers decision-making and increases motivation (Deci & Ryan, 2000).
   • This autonomy enhances creativity, ownership, and job satisfaction.

Reframing Productivity

As organizations prepare for an increasingly digital and human-centered workplace, embracing flexible, empathetic engagement strategies will not just protect their bottom line—it will define their legacy. In addition, addressing employee disengagement and improving productivity requires a focus on creating a culture where employees feel valued and motivated. Recognizing the unique challenges of roles with significant human interaction is crucial. Ultimately, by prioritizing engagement through trust, communication, and recognition, organizations can enhance both productivity and employee satisfaction.

Supporting Research

Backman, M. (2019, March 25). Here’s how U.S. companies are losing up to $550 billion per year. Yahoo Finance. https://finance.yahoo.com/news/u-companies-losing-550-billion-111800446.html

Cornejo, J. (2023, September 15). Empowering employee growth: The key to retention. Attorney Aaron Hall. https://aaronhall.com/empowering-employee-growth-the-key-to-retention/

Deci, E. L., & Ryan, R. M. (2000). The ‘what’ and ‘why’ of goal pursuits: Human needs and the self-determination of behavior. Psychological Inquiry, 11(4), 227–268. https://doi.org/10.1207/S15327965PLI1104_01

Gallup. (2023). How to improve employee engagement in the workplace. https://www.gallup.com/workplace/285674/improve-employee-engagement-workplace.aspx#ite-357638

Gaffin, K. (2025, March 31). Why companies are losing their workforce’s motivation. Insightful. https://www.insightful.io/blog/why-companies-are-losing-their-workforces-motivation

Greenwood, B. (2014, February 10). How to calculate productivity for mental health counselors. Chron – Work. https://work.chron.com/calculate-productivity-mental-health-counselors-28946.html

Kelly, J. (2020, February 24). Wells Fargo forced to pay $3 billion for the bank’s fake account scandal. Forbes. https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/

Liechty, E., (2025, March 28). The human variable and leadership: understanding the mechanics of workplace behavior. Productivity Advocates. The Human Variable and Leadership

Liechty, E. (2025, March 18). Productive work environment: Key benefits & strategies. Productivity Advocates. https://productivityadvocates.com/article/productive-work-environments-key-benefits-strategies/

Liechty, E., & Williams, M. (2022, October 28). Driving engagement. Nevade, Williams & Co Publishing.

Mayer, K. (2024, November 19). Employee recognition can go a long way—but it has to be done right. SHRM.org. https://www.shrm.org/topics-tools/flagships/all-things-work/employee-recognition-can-go-long-way-but-has-to-be-done-right

Mclain, D., & Pendell, R. (2023, April 17). Why trust in leaders is faltering and how to gain it back. Gallup.com. https://www.gallup.com/workplace/473738/why-trust-leaders-faltering-gain-back.aspx

Pendell, R. (2022, June 14). Gallup.com. https://www.gallup.com/workplace/393497/world-trillion-workplace-problem.aspx?utm_source=chatgpt.com

Pulakos, E. D. (2009). Performance management: A new approach for driving business results. John Wiley & Sons.

Qualtrics. (2018). The top 10 customer service metrics to measure. Qualtrics. https://www.qualtrics.com/experience-management/customer/service-metrics/

Schalock, M. D., et al. (1993). Teacher productivity revisited: Definition, theory, measurement, and application. Springer Nature Link, 7(2), 179–196. https://doi.org/10.1007/bf00995302

Sheiner, L., & Malinovskaya, A. (2016). Measuring productivity in healthcare: An analysis of the literature. Brookings Institution. https://www.brookings.edu/research/measuring-productivity-in-healthcare/

Torres, G., & Narayanan, A. (2025, April 2). Essential metrics for alternative emergency response programs. Harvard Kennedy School Government Performance Lab. https://govlab.hks.harvard.edu/insight/essential-metrics-for-alternative-emergency-response-programs/

Data Source:

ERI Economic Research Institute. (2025). ERI assessors. ERI Economic Research Institute. https://online.erieri.com/SA/TotalCompensation

Data Visualization Source:

Tableau Software. (2025, April). The cost of disengagement visualization. Tableau Public. https://public.tableau.com/views/TheCostofDisengagement

Image Credits

AllBusiness. 12 productivity secrets of highly successful entrepreneurs. 12 Productivity Secrets of Highly Successful Entrepreneurs – AllBusiness.com

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Ragan. (2016). Southwest airlines: a case study in employee engagement. Southwest Airlines: A case study in employee engagement – Ragan Communications