No matter what the Gen Z influencers on TikTok say, “quiet quitting” is nothing new. It’s just a trendy name for an old concept: employee disengagement. You’re hearing about it more these days because when the economy slows down, employee disengagement goes up. That’s why, when looking to shore up their bottom line, employee training and investment should be the last place companies cut.
A different name for the same thing
“Quiet quitting.” “The Great Resignation.” They’re both trendy names for a much older concept: employee disengagement.
That’s right, no matter what the Gen Z influencers on TikTok say, “quiet quitting” is nothing new. In fact, according to Gallup, the percentage of “actively disengaged” employees—ones who’d consider themselves quiet quitters today—has held fairly steady between 13 and 18 percent for the last 20 years.
But, if you take a closer look, you’ll see the higher end of the range came during the Great Recessions, and was lowest during the boom times before the pandemic. These trends provide valuable insights as our current economy takes a downward turn and companies take a closer look at their expenses, especially employee training and development.
Good data, bad logic
On average, U.S. companies spend about $1,000 per year, per employee on training and development. Compared to the average U.S. salary of $51,000 per year, that works out to costs of about 2 percent per employee. And, oddly enough, that’s where companies so often choose to cut budgets. While no company can cut all training costs, many companies will do all they can to cut back one or a half a percentage point per employee, often at much higher costs than what they think they’re saving. Here are the true costs of cutting employee training:
First, it leads to employee disengagement. And disengaged employees cost more, way more. In another Gallup analysis, companies with higher levels of employee engagement saw a 21 percent increase in productivity. On the flip side, actively disengaged employees cost the U.S. economy $483 billion to $605 billion each year in lost productivity.
Second, it leads to higher turnover. According to one survey, engaged employees are 87 percent less likely to leave their current employer, while more than half of disengaged employees would consider leaving their jobs for a better offer. This turnover has real costs. According to the Society for Human Resource Management, the average cost of losing an employee and hiring someone to replace them is 6 to 9 months of an employee's salary. In other words, losing just one person wipes out the savings of cutting 50 percent of the training costs for 50 people.
Breaking it down
Let’s do some quick math on the above. If your company cuts training and development from 2 percent of an employee’s salary to 1.5 percent, and it results in that employee becoming disengaged in their work, your company has cost itself 20 percent in productivity. That’s a negative 4000 percent ROI, and potentially more if they eventually, and not-so-quietly, quit. The math works out. The logic doesn’t.
Bottom line: disengaged employees are more expensive, less productive, and less profitable than employees who are engaged. So it’s not hard to see that cutting training is not the right answer when trying to improve your bottom line. When study after study shows that training and investment in employee’s growth and development is the #1 factor for employee engagement, companies should instead be focused on driving greater engagement for their employees.
And one of the easiest ways to move the needle? Strengthen your managers.
Strengthening your managers to improve the bottom line
We know, we know, why would you offer just managers more training and investment and not your employees as whole? In part, because the second most important factor in employee engagement, behind training and investment in growth, is how employees are managed. A bad manager can create disengaged employees faster than a viral #quietquitting TikTok video. Conversely, a good manager can create a team of engaged employees who are highly productive, effective, and successful.
Some of this comes down to the definition of an engaged employee. Defined by Gallup, “Employee engagement is ultimately not about being obsessed with work or living to work. It's about having clear expectations, feeling connected to and supported by your team, and finding purpose in your work.”
So how do you create clear expectations, connections and support, and purpose? That’s the job of your managers — it’s what good managers do well, and what bad managers fail at time and time again.
Employee engagement truly lives at the team level, so creating a positive team environment matters more than anything. Without strong managers who know how to create such an environment, you won’t have engaged employees. And, while we’ve said it before, many times, it’s worth repeating. In order to create team environments where employees can be engaged, you need:
Psychological Safety: Managers must create an environment where team members are comfortable speaking up, challenging both their boss and fellow team members appropriately when necessary. This includes being able to ask questions about why something is being done a certain way, and being vulnerable about their own insecurities and areas where they need help.
Communication: When it comes to communication, managers set the norms for the team. Managers need to make clear and effective requests of their team, so the team can make clear and effective requests of each other. Engaged employees are proactive, so you need clear communication about what they should be accomplishing, or risk losing that engagement when they guess wrong.
Alignment: We often say that safety, communication, and alignment need to happen in that order, and all at once. But if you create a psychologically safe team, with clear communication, it’s hard to not find alignment. When you have a misaligned team, you often have people working in isolation without knowing how their work relates to each others’ or the larger organization. They may make assumptions and miss the boat. An employee can only put in so much effort toward work that doesn’t help the team or the organization before they become disengaged and stop trying. But when managers step in and show the team how their work is connected to both their own purpose and the broad mission of the organization, the result is engaged teams that are excited about what they’re doing each day.
Strong managers who know how to create a psychologically safe environment, and who use clear and effective communication to create alignment are essential to an engaged workforce. And you only get strong managers with training and investment.
The ultimate ROI = engaged teams
Enter: Lead Belay. We focus on managers because we know that good managers can create a huge ROI by creating engaged teams. How do we know? Because we asked.
As part of an analysis we piloted recently at several companies utilizing our program, we are consistently seeing results on the same levels of 1:1 coaching — at a fraction of the cost. This includes statistics like more than half of respondents agreeing there is less confusion and conflict on their teams after going through Lead Belay, as well as teams that are more likely to reach positive outcomes from challenging conversations. Even more positively, 100 percent of respondents reported that their teams are more accountable for their work and more likely to meet expectations — aka, engaged employees.
The old adage, and yes, it is old, is more true now than ever: people quit managers, not companies. What’s changed is how costly it can be, and what the consequences of those costs truly are.
In order to avoid these costs, companies must support managers in ways that are meaningful. It doesn’t have to be costly. And at Lead Belay, we offer an affordable solution that can not only create stronger managers, but pay dividends across your organization.
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