The Financial Cost Of Unhappy People

Business owners know that they have to juggle two types of asset: their fixed assets, such as property – and people assets. While the former is a fixed cost, the latter is what drives profitability, and deserves most of your attention.

Therefore, it is perhaps peculiar that Human Resources professionals find it so hard to get on the board of major corporations. After all, they are the key stakeholders in people management, and their input is what helps drive motivation, engagement and therefore productivity. So, whether you own a small business or a medium to large-sized organisation, you need to understand the power of happy people – and the financial cost of unhappy people.

The cost of replacing someone
Imagine for a minute that you employee somebody at $8 an hour. At a base financial level, you could have to pay an average of $3,500 to replace that person, considering the time it takes to interview, any recruitment agency fees, advertising, etc. Add on top of that the lack of productivity within the notice period, and the time it takes to train the replacement to a satisfactory level, and you can immediately see the cost of replacing one employee is severe for your business.

The cost of reduced productivity
Productivity is a relatively vague metric for businesses, but it is an intangible that becomes tangible once it hits the bottom line. Reduced engagement implies reduced productivity, which implies a reduction in profit. Equally, negativity spreads through an organisation, and is hard to stem.

Making moves before it happens
You don’t have to be IBM to be able to pay up front for solutions that can have a positive impact. Employee Assistance Programmes, for example, are proactive – not reactive – answers to the employee engagement problem. It’s up to you how you promote it within your organisation, though. At their very cheapest, they cost at most the equivalent of a Christmas lunch per employee – and at their most mature, they include counselling sessions and wellbeing programmes.

This can be promoted as a ‘free’ benefit to your employees – a one-stop resource for all personal issues that may be hampering productivity, from legal and financial through to health, wellbeing and even childcare.

Working with an occupational health provider gives you a further opportunity to deal with engagement problems before they impact your bottom line. The cost, once more, is negated by the return on investment that comes with increased presence in the workplace (reduced absence, which costs the economy billions each year), and improved engagement and productivity.

Putting line managers in charge
Line managers are those first in line, making them perhaps the most important people in your organisation. They need to be able to pinpoint potential problems, deal with workplace stress and ensure that team members return to work after absence. In fact, they are the new Human Resources, and it’s up to your HR professionals – or outsourcers – to train them up to meet the challenges of the modern workforce.

The financial cost of unhappy people? You can’t afford to wait to find out, and the investment isn’t huge. The returns, however, present themselves as more than just cost reduction – the increased productivity from happy employees is enough to keep any Finance Director happy – and it might just get HR on the board!

About the author:
With a solid background in HR Outsourcing marketing, Gareth Cartman is an expert on Business Process Outsourcing, HR & Payroll, and Employee Well Being.
My website is at:


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