Solutions

The Engagement Tax

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Calculate the Cost

of employee turnover and engagement

Understand the Solution

to reduce the cost

Validate the ROI

to justify the investment

When employees are not fully engaged they’re not earning their full pay; it also means they’re more susceptible to adversity and change. As a result, they quit more easily. The delta between what you pay them and the productivity you receive is called an Engagement Tax…and it’s “a lot.”

The Calculator

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Number of Employees

How many employees have you averaged over the course of the last year? (Not including executives and those whose commissions are greater than 50% of their income)

Average Annual Salary

Not including executives and those whose commissions are greater than 50% of their personal income, what is the average annual salary/hourly wage in your organization? (Be sure to include overtime pay).

Voluntary Turnover

During the same time period used in step 1, how many employees voluntarily quit the organization? (If you are unsure, go to the Bureau of Labor Statistics website for specific industry "Quits," or use 30% as a conservative factor).

Replacement Cost

Replacement Cost: 50%

Gallup polls shows that the cost to replace an employee is at least 50% of the salary/wage being replaced. This cost rises significantly with the level of expertise being replaced. Indicate your company's cost to replace an employee as a percentage of the average indicated in Step 2.

Fully Engaged Employees

Percentage: 20%

As a percentage, identify the personnel who you believe are fully engaged at work. You pay them a dollar and you receive a dollar's worth of commitment and productivity from them. (According to the ADP Research Institute, only 20% of the US workforce is FULLY engaged).

Employee Output

Percentage: 55%

Of the remaining percentage who are NOT fully engaged with the organization, indicate the average commitment/effort you feel the organization receives as a percentage.

Return on Investment

Developing your employees will increase retention and productivity through a higher level of engagement, and putting new leaders through a structured leadership development program will increase their leadership behaviors.

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Leadership Behaviors

The Journal of Applied Psychology reports that individuals who go through a structured leadership development program increase their leadership behaviors by 28%, which has a positive impact on everyone.

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Retention

HR Digest reports that companies who invest in employee development see a 58% increase in employee retention. By retaining employees longer, your turnover costs go down significantly.

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Productivity

HR Digest also reports that companies who invest in employee development see a 24% increase in productivity. The only way that productivity can increase is by employees becoming more engaged.

Would you pay $3,000 per leader for this kind of ROI?

* This calculation is based on logic using the research data obtained through the referenced studies. Results will vary, but research proves a noticeable positive change in the culture.