Metrics Will Purge Hidden Human Capital Costs on Your Income Statement

© The Gulas Group 2010

There is an epidemic in the US workplace. No it is not swine flu. This epidemic is hidden within an organization’s income statement. The hidden cost relates to human capital and is known as disengaged workers. Disengagement can come from many sources some as simple as a closed door meeting in tough economic times. Here is some interesting information that bolsters that point:
The U.S. telephone survey of 1,000 respondents, 18 years of age or older, was conducted by a national independent research firm. The study concluded that employees averaged 2.8 hours (168.8 minutes) a day worrying about personal job concerns, such as mass lay-offs or losing their own jobs. Respondents were deeply suspicious of boss behaviors such as keeping office doors closed. When asked how often they think a boss's closed door was a signal of lay offs, the respondents said:

"Changes in manager behavior, such as a closed door, more private conferences, or less direct communication all represent potential 'exit signs' to many employees," said Lynn Taylor, adding that while managers have to deal with more sensitive personnel issues today than in previous decades, they can counter employee concerns at a critical time with more proactive communication.”

You may be thinking but I do not hold closed door meetings and our communication is very proactive. Then start to think about in what other ways your organization is creating disengaged workers and how that is impacting your costs.

Recent studies show the average employee is disengaged for up to two hours per day.  Simple math would indicate that a company with 500 employees with an average wage of $25.00 per hour loses $6,000,000.00 per year due to disengagement.  No, that is not a typo. It is $6 million per year.
 
Have you measured and computed what disengagement is costing your organization?

Still feel that your organization does not have any disengaged workers in your workplace? If you do then stop and ask yourself this question, “what is the Emotional Quotient of each member in my workforce?” Not sure what Emotional Quotient is, then consider the last time some one sent you an e-mail that you took the wrong way. You know the one that says, “I need this by today” and you had no clue what the person was trying to get you to do let alone have it done today.

You may still not be 100% sure that you have hidden costs of human capital on one of your largest line items on your Income Statement.  If that is the case then consider the cost of not knowing what motivates your employees to come to work each day. What if the personal interest, attitudes and values of your team members are not in alignment with the corporate culture? Will those team members maximize their potential in your workplace? If you believe that I have some ocean front property in Nevada I would like to sell you.

Another point to consider is to understand the cost of human capital lost by having tools such as Microsoft Outlook, Lotus Notes and GroupWise information management software systems working only at 9% of their capacity. This 9% number came from a survey conducted by Microsoft Corporation of 19,000 people using Microsoft Outlook. Do you think that might impact organizational consistency and the ability to field a proactive team of players?

Still not convinced that you have a tremendous opportunity to recapture the human capital costs on your Income Statement with proper metrics? Perhaps you should explore excuse making and conditional commitment as an area you could find disengaged workers. Why do you think two books “Question behind the Question”, by John G Miller and “Excuses Be-gone”, by Wayne Dyer are two best sellers in the halls of corporate amerce.  In over 36 years as an Owner Executive and now Professional Development expert for organization across America I can truly say, “excuse making is a cancer eating away at today’s workforce potential every hour”. One great way to justify my point is by looking at how much money is spent on ineffective training. The reason for such ineffectiveness is the difficulty to improve any workplace where excuse making has become a corporate value by default.

In addition there are other more obvious issues that cause disengaged workers such as desk stress, poor communication linked to not knowing behavior styles, command and control bosses, lack of accountability and finally integrity to self. Perhaps this article stirred enough emotion to consider the point made regarding the hidden costs of capital that impacts your income statement. Future articles from me will dig down and elaborate on each individual issue while offering some timely tips to stem this human capital surge in costs.

The one thing you should consider today is the saying “you can not manage what you can not measure” The Gulas Group has twenty return on investment measurement metrics that we are offering the reader of this article. These metric reports consist of cost of disengaged workers to unwanted employee turnover analysis. Till the end of 2009 the Gulas Group is making these reports available to the reader of this article for no charge. Just contact us at to discuss which of these measurement systems is right for you before you set on a course to recoup those hidden cost of human capital dollars on your income statement.