Engagement Tax

Quantify the risk of leadership gaps

This diagnostic tool estimates your Engagement Tax—the penalty you pay for untrained, ill-equipped leaders who aren’t aligned up the chain and with senior leadership. Operating like this frustrates employees and causes them to disengage…then they quit.

Use the tool as a sanity-check against what you’re already feeling. When your Cognitive Infrastructure is fractured or misaligned, the result is a heavy tax on productivity, focus, and margin.

Cognitive Infrastructure

How an organization is wired to think, decide, and communicate in concert. Especially within the context of its Cultural Ethos.

8 of 10

employees cite poor leadership as the primary cause of workplace toxicity.

2025 iHire Toxic Workplace Report

10x

A healthy culture is 10 times more important to employees than pay.

2022 MIT Sloan Management Review

The Calculator

Number of Employees

• Full-time and part-time headcount averaged over the last 12 months
• Exclude executives and commission-heavy roles (where commission > 50% of income)
• Include all departments and locations

Average Annual Salary

• Exclude executives and commission-heavy roles (where commission > 50% of income)
• Use the average annual salary or hourly wage across your workforce
• Be sure to include overtime pay

Voluntary Turnover

• Number of employees who voluntarily quit during the same 12-month period used in Step 1
• If unsure, reference the Bureau of Labor Statistics website for your industry's "Quits" rate
• Or use 30% as a conservative benchmark

Replacement Cost

Replacement Cost: 50%

• Gallup research shows replacing an employee costs at least 50% of their annual salary
• This cost rises significantly with the level of expertise being replaced
• Indicate your company's estimated cost to replace an employee as a percentage of the average salary from Step 2

Fully Engaged Employees

Percentage: 20%

• As a percentage, identify the personnel you believe are fully engaged at work
• "Fully engaged" = you pay them a dollar and receive a dollar's worth of commitment and productivity
• According to the ADP Research Institute, only 20% of the U.S. workforce is fully engaged

Employee Output

Percentage: 55%

• Of the remaining percentage who are NOT fully engaged, estimate the average commitment/effort you feel they deliver
• Express this as a percentage (e.g., 55% means they give roughly half effort)
• This reflects the productivity gap caused by disengagement

Your Estimated Engagement Tax

While this number can represent unproductive payroll, it certainly represents friction when executing the mission—the energy lost when decisions slow, standards drift, and senior leaders are pulled back into the daily minutia.

In most organizations, this friction shows up as:

These symptoms are rarely isolated—they’re connected.

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.

0 %

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.

0 %

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.

0 %

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 $3,500 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.

If this number feels directionally accurate—or uncomfortably close—it’s worth pressure-testing.

This is a short, executive-level conversation to validate (or invalidate) your Engagement Tax and determine whether it’s something worth addressing now.

At Tribe&Trust, we work with organizations where execution lives—at the front lines. We work with construction, manufacturing, and other high-consequence environments to align their front line execution with the front office vision.

When thinking and communication aligns, execution accelerates—and senior leaders get out of the weeds.