Five Big Causes of Employee Disengagement

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Engaged employees are enthusiastic about their work. They do their best to contribute positively to their employer’s reputation and the achievement of company goals. They don’t make excuses, take excessive time away from the office, or often say, “That’s not my job.” Unfortunately, engaged employees are also fairly rare. According to a study conducted by Dale Carnegie Training, 71 percent of employees are not fully engaged. Employment experts consider the following the five biggest causes.

1. Loss of Job Security

Since the Great Recession, many employees feel they no longer have job security. They’ve seen staff cuts, and their managers have asked them to work harder to compensate—generally without any additional earnings. There is a sense that their employer is holding all of the cards, and they have little to no room to bargain for what they want. They may jump ship to a competitor for a minimal increase in pay or decrease in workload as a result.

2. Loss of Trust

According to a study by Towers Watson, less than 40 percent of employees have any confidence in the senior leadership at their employing organization. Executives have told them too many lies (such as “our company is doing great” right before mass layoffs), and they have developed a wait and see attitude as a result. It’s difficult to feel engaged in the future of the company when you no longer trust or believe in the individuals leading it.

3. Changing Demographics

Today’s workplaces are in the midst of a demographic shift. Baby Boomers are retiring, Generation X employees are struggling to balance their work and home life under increasing pressures, and Millennials are moving in. They’re bringing their impatience with them. Many Millennials expect to move up the corporate ladder quickly, and they will move on if an employer does not meet this expectation. In fact, they spend an average of only 3.2 years in any one job.

4. Top-Down Hierarchies

Corporate organization has changed little since the 1950s. Most of the decision-making still happens at the top—with the c-suite executives and company owners—and employees on the ground floor rarely have any control over the way the business runs. When an employee who has an idea for improving workflow or another aspect of the company feels powerless to affect change—or sometimes even get their idea to someone who can—it easily leads to disengagement.

5. Lack of Work-Life Balance

Many companies operate with a 24/7/365 mindset. Their employees are always on the job and never quite feel like they can shut down to unwind. This increases stress, affects their health, undermines their relationships and basically obliterates any work-life balance they could have. It also causes them to feel disengaged. In one study, 80 percent of employees said that a flexible work schedule is essential to achieving a positive work-life balance.

Disengagement costs employers $11 billion dollars every year. If you’d like to turn the tide—and enjoying more enthusiastic, inspired, empowered and confident employees as a result—contact your benefits professional for information on improving employee engagement at your organization.

The High Costs of Employee Misclassification

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You hire a graphic designer to work in your office on a short-term project and pay him as an independent contractor rather than a temporary employee. Your bookkeeper—whose workflow you also direct and control—asks to work from home, so you pay her as a freelancer. You’re now guilty of employee misclassification—whether you intended to break labor laws or not.

Since the onset of the Great Recession, the Department of Labor (DOL) and the Internal Revenue Service (IRS) have seen a surge in worker misclassification. With the rollout of the employer-sponsored insurance mandate under the Affordable Care Act (ACA), they expect to see even more—as companies deliberately misclassify employees as independent, temporary or contingent workers in order to come in under the full-time employee limit requiring coverage.

According to the National Employment Law Project, 10 to 30 percent of employers—possibly even more—misclassified employees as independent contractors in 2012. This is equal to millions of misclassifications and billions of dollars in lost tax revenue for state and federal governments. They want that money back, and they’ve stepped up their litigation and enforcement efforts as a result. But that’s not all; in addition to various federal and state penalties an employer may have to pay, there is the potential for expensive individual and class action lawsuits.

Consider the case of Vizcaino v. Microsoft. Initially, the IRS discovered that Microsoft was misclassifying temporary employees as independent contractors and ordered them to correct this error. Microsoft complied, reclassifying its workers according to the law—and in some cases, assigning them to temporary staffing agencies. The term “temporary” implies a short duration of time. However, many of these so-called temps had worked with the organization for years. They decided to sue Microsoft for equal treatment with the “permanent” employees—including the benefit plan with stock purchase options. Microsoft ended up settling the case for $97 million dollars. This was in addition to the millions they had to pay in back payroll taxes.

How can you avoid a similar situation? Experts recommend the following:

  • Seek legal or other professional assistance to ensure your employees are properly classified.
  • Stay current on federal, state and local agency standards for employment status.
  • Limit the length of any “temporary” assignments.
  • If you regularly use the same temporary workers, require a period of non-employment between assignments.
  • Ensure your employee handbook addresses the issue of contingent employees
  • Ensure your benefits information is specific about which workers are not covered by the employee benefits plan.

Would you like additional insight on classifying your employees, or to learn more about the ACA’s employer-sponsored insurance mandate? Contact me today!