The ROI of Employee Feedback & How to Take Proactive Action

By Claire Schmidt
November 30, 2020

It takes just one serious employee complaint to create havoc in an organization. Unfair and illegal business practices and behaviors can put employees in a difficult spot; do they tell someone they can trust or do they look for another job and try to move on?

In either case, if corporate leaders ignore and even condone harassment, discrimination, and unethical practices -- they can be sure that good employees will leave and they may face litigation and bad reputation issues.

Understanding the ROI of Employee Feedback

There is no better time than now to implement a feedback system for employees to safely and swiftly report problems. Need some convincing? The Equal Employment Opportunity Commission (EEOC) and the International Labor Organization (ILO) both reported a sharp increase in the number of harassment claims in the last ten years. One in three working women have been the victims of harassment during their careers, but men are also increasingly experiencing this issue. Bullying and violence are also a real problem in many workplaces. EEOC data from FY 2019 show that retaliation continues to be the most frequently filed charge.

As these risks abound, if you can prevent losing even one employee, an employee feedback solution's cost will often be less than the cost of replacing that employee.

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The Cost of Doing Nothing

All complaints require investigation, which can encompass costly legal fees and administrative hours. And as more serious issues escalate, suppose your organization cannot provide adequate proof that you've addressed a problem. You could be looking at steep fines -- not to mention embarrassing press and a damaged public reputation.

Unfortunately, often by the time a formal complaint reaches the HR department, the victim has already been negatively impacted by the experience. They are likely suffering from poor performance, lack of engagement, and complicated relationships with peers and management. It can be hard to put a figure on these costs, but if an employee spends time being stressed, disengaged, and dealing with challenging interpersonal issues, they are not focused on job duties. Over time, this short-changes the team and the company in terms of profits.

Providing a safe outlet for employees to make anonymous complaints about harassment or other related issues at work gives an employee hope that someone is listening and cares about their issue. They can resume their work and let company leaders deal with the offending person.

What are some other ROI factors to consider?

It should be the company's primary goal to retain workers long enough to realize an ROI. The cost to replace an employee who has decided to resign can be as much as 1.4 times the base salary range. Let’s calculate a few figures. For an employee earning a base annual salary of $70,000, the cost to replace them can be estimated somewhere around $100,000, between recruitment, interviewing, screening, onboarding, and training someone new. It can take six months up to a year for someone to become proficient in a new role, even for a seasoned employee.

It makes better sense to have an anonymous employee feedback product to field complaints and concerns to help catch issues that would otherwise drive some employees away. And don’t think that having an open-door policy with employees is going to be enough. People are extremely wary of HR these days due to company layoffs and furloughs in an uncertain economy. Even HR leaders at companies with some of the strongest cultures have serious issues that come up. No organization is immune, so each company must find ways to build trust with employees in order to solve these problems proactively.

The Complete Guide to Employee Feedback Programs

Taking a Proactive Stance on Employee Feedback

An always-on employee feedback system can provide the right outlet for employees to submit complaints early on. You should have a way to monitor and prevent employees from being mistreated as best as you can—proactive action here is much better (and cheaper) than reactive action.

A web-based system gives employees a sense of security to voice their concerns anonymously without retribution from another co-worker or manager. They may even have some suggestions for making things better for the company, which can be incredibly valuable and worth paying attention to.

When comparing the ROI of an employee feedback software to the astronomical costs involved in replacing an employee, the answer is clear. Having a subtle way to monitor employees and maintain a communication line with them has a higher ROI and is a better way to manage your people and protect your company's interests.  

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