When it comes to ROI, revenue is at the top of the list for many executives. The Revenue section shows the projected increase you can have by boosting employee engagement in the workplace.
Engaged employees are more committed and productive, which drives revenue and efficiency. This is proven based on a study by Aon, which found a direct correlation between engagement and revenue. Companies that increased employee engagement by a mere 5%, directly increased their revenue by 3%.
To calculate the Projected Revenue increase, we just need the annual revenue for the company or department (this is one of the inputs for the Sparck Calculator).
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The second section is absenteeism. The most important thing to highlight here is that an increase in engagement can reduce the number of “sick days” which increases productivity and saves money.
Engaged employees take an average of 2.7 sick days per year while disengaged employees double that with an average of 6.2 sick days. This is important because when someone takes a “sick day," you are paying for their time off while losing their productivity. Lost time and money is never desirable!
Luckily, increased engagement saves about 37% in absenteeism costs by converting those disengaged employees into more committed and engaged individuals who won’t take as many “sick days.” This shift creates an opportunity to save money and increase productivity by keeping your employees excited about their work and invested in the organization.
To uncover these cost savings, we first look at the financial impact it has on a company when an employee takes a sick day. You lose productivity and money because you're still paying for that time even though no work is being done. In order to measure these two areas to get the total absenteeism costs, we have to see how much productivity (Revenue per Employee) and money (Average Salary) is being lost for each employee.
This is a quick introduction to the Absenteeism Costs section, but we have additional resources to share more insights and show how these calculations are broken down step-by-step.
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Turnover is the third section where you will get the greatest return on your investment. It’s especially intriguing because there’s a tremendous opportunity to increase retention by making engagement a strategy.
It's extremely painful, culturally and financially, when someone leaves. It takes an average of 42 days to fill a vacant position, and that doesn’t even include the time it takes to get a new employee trained and up to speed. There’s so much time and money that's wasted when losing an employee, and not to mention stress for the team! But here’s the silver lining, and the part that we are excited to share:
65% of the employees who quit do so voluntarily! You have a huge opportunity to win back a large majority of the 65% who are leaving!
Most often, great employees leave companies because their needs are not being met...yet! This presents a targeted engagement opportunity to retain this talent and save money, time, and productivity. When calculating the projected turnover savings, we zeroed in on this opportunity cost to spotlight what is possible with increased engagement.
This is a quick introduction to the Turnover Costs, but we have additional resources to share more insights and show you how these calculations are broken down step-by-step.
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- Calculating Turnover Costs and Projected Savings
- Step-by-Step Calculations for Turnover Costs and Projected Savings
- If you don't have your company's turnover rate, learn how the Sparck Calculator can help you
A great way to conclude this section of the Cost Analysis is to recap the total financial opportunity based on the impact that increased engagement will have on Revenue, Absenteeism, and Turnover costs.
This number is included on the far left of the Cost Analysis under the Business Name. We also include the Value Per Employee by dividing this overall number by headcount. This summarizes the potential opportunity cost.
By this point, most executives are interested, especially because these numbers are based on proven research from credible sources, but now they want to know how they can capture these financial savings. It’s the perfect segue into the next section of the Cost Analysis, your proposed solutions.
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"The Free Employee Engagement Cost Analysis Sparck provided was an easy and effective way to communicate how an increase in engagement can directly impact company performance. The customized one page overview was a great addition to the executive meeting to highlight our specific numbers and outline a solution. I highly recommend this tool to HR professionals who are mapping out their internal strategies."
Jennifer Hureaux, HR Manager
