The Hidden Cost of Turnover
How Disengaged Employees Impact Small Businesses
Turnover is often seen as a normal cost of doing business, but for small business owners, where every team member plays a crucial role, turnover can be especially costly. Losing one disengaged employee doesn’t just mean finding a replacement; it means spending valuable time and energy on hiring, onboarding, and rebuilding team momentum.
Actively disengaged employees not only slow productivity and morale while they’re still on the team — they also set off a chain reaction of lost time, missed opportunities, and hidden expenses that few small businesses calculate.
Losing one disengaged employee doesn’t just mean finding a replacement; it means spending valuable time and energy on hiring, onboarding, and rebuilding team momentum. And when disengagement spreads, the impact can quietly drain productivity, morale, and revenue.
The State of Engagement: A Wake Up Call
According to Gallup’s 2025 State of the Workplace report, global employee engagement in 2024 dropped from 23% to 21%, marking only the second decline in more than a decade. In the U.S., only 31% of employees consider themselves engaged, meaning that roughly only one in three employees feels genuinely connected to their work. Even more concerning, 17% of U.S. employees are actively disengaged — meaning they’re unhappy at work and may be spreading that disengagement to others.
Gallup estimates that disengaged employees cost the global economy $9.6 trillion in lost productivity, the equivalent of 9% of global GDP. For small and mid-sized organizations, those losses translate to delayed projects, uneven customer service, and turnover that disrupts entire teams.
For small businesses, these isn’t just statistics — they are the difference between growing sustainably and constantly playing catch-up.
The Real Cost of a Disengaged Employee
When a disengaged employee leaves, it’s easy to assume the worst is over. But every resignation triggers a costly cycle:
Time spent hiring: Job postings, interviews, and reference checks can consume 20–40 hours of staff time per role.
Training and onboarding: New employees often take three to six months to reach full productivity, drawing on existing staff for guidance and correction.
Team adjustment: Each departure affects collaboration, client relationships, and morale — especially if turnover becomes the norm rather than the exception.
If the root cause of turnover is disengagement, those can perpetuate into a toxic work culture where new hires burn out or disconnect.
What Can Change the Narrative?
The good news? Small businesses are uniquely positioned to create engagement quickly. With a direct line to employees, small business leaders can build connection and purpose into everyday work:
Celebrate wins and recognize effort regularly.
Communicate transparently and include team members in decisions that affect their work.
Offer clear development and growth opportunities, even if budgets are small.
The Bottom Line
Employee engagement isn’t a “nice-to-have” — it’s a smart business strategy for success. Reducing disengagement can save time, money, and stress while building a stronger, more stable team that stays. When your people are invested, your business runs smoother, serves clients better, and grows stronger from the inside out.
Need help engaging your team?
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