The Negative Impact of Disengaged Employees on Germany

Germany's trade surplus is at an all-time high, unemployment rates are low and companies are flourishing. The country's economy is in good shape. Well-being is on the rise and has improved significantly in recent years: More than half of the workers in Germany (57%) currently rate their lives highly enough to be considered thriving; as recently as 2012, only 47% said they were thriving. Only 8% of employees say they are less secure in their job now than they were a year ago, and 77% of employees strongly agree or agree they are confident in their company's financial future.

Most German workers (73%) are satisfied or extremely satisfied with their company as a place to work. Almost six in 10 workers (58%) agree or strongly agree that they are paid appropriately for the work they do. And 64% of workers agree or strongly agree that their pay and incentives are fair compared with the market for those doing similar work.

Given these largely positive circumstances, do German companies need to worry about employee engagement?

Well, many companies don't appear to be concerned about it -- but they should be. Currently, companies in Germany employ 5.4 million actively disengaged workers. For these employees, a disengaging work environment may be the norm, and that has consequences for the country's economy, workers and businesses.

Engagement in Germany

Fewer than one-fifth of workers in Germany are engaged in their jobs in any given year. This finding has remained consistent since 2001 when Gallup began measuring and reporting on the country's workplace engagement. Employee engagement levels affect key performance outcomes, such as increased profitability and productivity, based on the conditions, mood and motivation of workers, and their responses to crucial workplace elements. And the news isn't good.

Gallup's latest measure of employee engagement in Germany found that 16% of workers are engaged in their jobs, or emotionally and behaviorally connected to their job and company. The majority are not engaged (68%), which means they aren't putting energy or passion into their work. And 16% are actively disengaged, meaning they are more or less out to do damage to their company. The percentage of actively disengaged employees had previously declined; it was 24% in 2012, and then dropped to 17% in 2013 and to 15% in 2014, before edging up in 2015.

	Engaged%	Not engaged%	Actively disengaged%
2001	16	69	15
2002	15	69	16
2003	12	70	18
2004	13	69	18
2005	13	69	18
2006	13	68	19
2007	12	68	20
2008	13	67	20
2009	11	66	23
2010	13	66	21
2011	14	63	23
2012	15	61	24
2013	16	67	17
2014	15	70	15
2015	16	68	16
Gallup

The Impact of Disengagement

Actively disengaged employees cost the German economy from 75.6 billion to 99.2 billion euros annually in lost productivity, according to Gallup estimates. And the economic damage caused by workers who are not engaged is an estimated additional cost to the economy of 139.1 billion to 187.9 billion euros. The total estimated cost would range from 214.7 to 287.1 billion euros each year.

There's a personal cost to disengagement as well. Employees spend most of their waking hours on the job, so their engagement level not only affects their work, but also their lives outside of work:

• Almost half of actively disengaged workers answered yes when asked if they felt stressed yesterday (48%), compared with just two in 10 workers who are engaged.
• Fewer actively disengaged employees (64%) answered yes when asked if they felt a "good and positive mood" yesterday, versus 92% of engaged employees.
• Nearly seven in 10 actively disengaged workers (69%) answered yes when asked if they felt fit and productive yesterday, compared with 94% of engaged workers.
• Only about one in 10 actively disengaged employees (11%) strongly agrees they had fun at work during the last week, compared with 81% of engaged employees.
• Actively disengaged workers (58%) are significantly more likely than engaged workers (15%) to answer yes when asked if they felt burned out due to work stress in the last month.

Disengagement Hurts Workplaces and Employment Brands

At the workplace level, disengagement hurts companies in many different ways. A key effect of low employee engagement is an increase in the annual absenteeism rate, which is 67% higher among actively disengaged employees compared with engaged workers (9.7 days versus 5.8 days). The accumulated impact of this absenteeism can be overwhelming: Gallup estimates that German companies lose 254.40 euros for each day an employee is absent from work, resulting in an estimated cost of more than 18.9 billion euros in lost productivity annually to German employers.

Failing to engage employees has an impact on a company's employment brand, too. Word-of-mouth is crucial to companies because people often trust their friends' recommendations more than classic advertising channels or job notices. Word-of-mouth is also important because digital technologies like social networks play an increasingly significant role in influencing purchasing and job-search behavior.

Yet just 3% of actively disengaged workers strongly agree that they would recommend their company as a place to work to friends and family members, compared with 75% of engaged employees. And actively disengaged employees are less proud of their company's products and services: 15% of actively disengaged employees strongly agree they would recommend their company's products or services to friends or family members, but 78% of engaged employees strongly agree they would.

Right now, an estimated 760,000 actively disengaged employees in Germany are looking for a new job. Because actively disengaged employees are more or less out to do damage to their company, many employers might be pleased that these workers are thinking about leaving. The problem is, these workers may be highly trained experts, practitioners and professionals -- employees whose skills are desirable and needed, even if their attitudes are not.

Studies have shown that costs related to replacing an employee can be as high as 1.5 times the employee's annual salary. It took 84 days to fill a vacancy with a qualified employee in 2015, on average, according to the Bundesagentur für Arbeit, Germany's federal job agency. That's 19 more days than it took to fill a vacancy in 2008. The number of unfilled positions in 2015 was just under 570,000, on average, according to the same source. These data underline the importance of retaining employees and avoiding the high cost of unwanted turnover in the future. Engagement offers a potent lever for companies to use to retain top talent as the persistent shortage of skilled workers becomes even more severe.

In fact, when Gallup asks employees if they plan to be with their current company three years from now, 87% of engaged employees strongly agree, compared with 30% of actively disengaged employees. Similarly, 84% of engaged workers strongly agree that they plan to spend their career with their current company, while only 21% of actively disengaged workers do. Fourteen percent of actively disengaged employees are actively looking for a new job, compared with less than 1% of engaged employees.

Strong Work Ethic Only Does So Much

Interestingly, when Gallup asked employees in Germany what they would do if they inherited so much money they'd never have to work again, about seven in 10 (74%) said they would continue working, a finding that has been consistent since 2001. And when workers get up in the morning and think of work, 66% of them look forward to the day, compared with 34% who look forward to the end of the workday. These responses are a testament to the German work ethic.

But a strong work ethic can only do so much, and the slow poison of disengagement costs German workers and workplaces and the country's economy. Businesses are less successful than they could be, and they are less able to face the challenges of the future than they'll have to be. The best time to improve workplace engagement is before disengagement damages companies and economies. Now is the time for German companies to turn their famous work ethic toward fixing disengagement.

Survey Methods

Results are based on telephone interviews conducted from March 25-April 27 and from Nov. 2-Dec. 4, 2015, with a random sample of 1,429 employed adults. All respondents were living in Germany and selected using random-digit-dial sampling. Interviews are conducted with respondents on landline and cellular phones. Samples are weighted by gender, age, region, profession (job type and role), employment status (full time and part time), and adults in the household. Demographic weighting targets are based on the most recently published data from the German Statistics Office.

To learn how Gallup's analytics and tools can help you transform your workplace, visit my.gallup.com.