This calculator helps you determine the ROI of maintaining engaged employees by taking into account variables such as the cost of disengaged employees, the cost of lost productivity, and the potential increase in revenue from more engaged employees.
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With our calculator we take into account 4 variables: productivity, absenteeism, turnover, and onboarding. According to Gallup an engaged workforce can have (conservatively) around 21% higher productivity, employees are 5 times less likely to be absent from non-medical leaves, and an engaged environment fosters creativity and advocacy. Improving recruitment and retention efforts can therefore save companies millions of dollars annually in costs. Every one of those four components has a specific formula, which we get into in the next question.
The four variables above are added together to display a total annual amount.
The productivity savings multiplies the amount of employees, average yearly salary, the cost per benefits, and a 5% productivity gain.
The absenteeism savings multiplies the number of employees, the average annual salary, benefits costs, workdays per year, and the number of days of less absenteeism. The turnover savings multiplies the average salary, benefits costs, the current turnover rate, and the expected turnover reduction savings (66%).
Lastly, the onboarding savings takes into account all of the costs associated with onboarding, so it can get rather complex. First, we calculate the “onboarding savings per employee”, by getting the average employee salary, multiplied by benefits cost, divided by workdays per year, multiplied by 90 days of onboarding (according to strategists it takes 90 days to get fully onboarded) and a 15% increment in value. We then look at the average growth rate multiplied by the number of employees to show the new positions per year, and if you multiply the turnover rate by the number of employees, you’ll have the replacement employees per year.
Last part is getting the total amount of onboarding savings per employee and adding the costs associated with new positions and replacement employees per year and we give them the number — and this gives us a number around what AllVoices is likely to save you every year.
There are a few reasons why disengaged employees are more likely to be absent. Firstly, when employees are disengaged, they may not feel motivated to come to work or be productive. As a result, they may end up taking more sick days than other employees.Secondly, disengaged employees may feel disgruntled with their job and see no reason to come in to work. Finally, when employees are disengaged, they may feel isolated from their co-workers and feel that there is no point in coming to work since they are not getting the support they need.
Attrition can result in lost productivity and increased costs. When employees leave an organization, they often take their knowledge and experience with them. This can lead to a loss of productivity as the organization tries to rebuild its workforce.
Additionally, the cost of recruiting and training new employees can be significant.
Turnover can also be costly for organizations. When employees leave, the organization must find and train a replacement. This can be expensive and time-consuming.
There is a positive correlation between employee engagement and organizational performance. In fact, according to Gallup, companies with high levels of employee engagement outperform those with low engagement by 214%.
According to research from the DDI, companies with highly engaged employees had a 70 percent higher likelihood of success than those below the median levels of engagement. Success was a composite measure combining customer loyalty, turnover, and financial metrics within the study. Retention was one of the main focal points. Our calculator includes a 66% turnover rate reduction metric that is indicative of that score.
This number is used to represent a numeric value that is associated with the productivity gain and money associated with onboarding a new hire (or a promoted employee).
For this number, we had to think outside of the box a bit, and referenced the onboarding book “The First 90 Days” by Michael D. Watkins, as transitions into new roles can be challenging for most. Being that there aren’t any established working relations and most of the time, there isn't a complete mastery or understanding of the role. So, in reality the onboarding process has employees working at about 15% of their full potential.