The conflict, low morale, dissatisfaction and disruption that often go hand in hand with a mismatch in culture carries with it significant costs that may not be immediately apparent. However, they can be quantified. Here are a few examples of calculations used to quantify the costs:
· One study done by the American Management Association on the cost of conflict showed that a manager will spend between 20% to as much as 50% of his/her time dealing with conflict in the work place. In one particular healthcare system, the cost of conflict in managers’ time alone calculates out to
45 Managers x $85K/year x 30% = $1.147 Million
· The Gallup Organization calculates the cost of the loss of one employee at 6 times that person’s annual salary.
1 Nurse x $65K/year = $390K
· A business analyst uses the following formula to calculate the cost of dissatisfied employees:
Number of employees in the organization |
50 |
What percentage is dissatisfied? (for any reason) |
20% |
Motivation level of dissatisfied employees - (what is their productivity as a percentage of the productivity of satisfied employees or as an ideal employee?) |
60% |
De-motivated level of dissatisfied employee |
40% |
Average hourly salary of de-motivated employ |
$25 |
Average number of hours worked per week |
40 |
Dissatisfied employee weekly wage bill: |
|
(20% of 50 employees) x ($25 x 40 hours) |
$10,000 |
Dissatisfaction cost per week (40% x $10,000) |
$4,000 |
Annual dissatisfaction cost (50 weeks) |
$200,000 |
· The loss of one highly productive surgeon because of dissatisfaction with the service provided by disgruntled and inefficient OR staff will have a significant impact on revenue.
· A surgeon performing an average of 20 cases/month at an average of $900/case
will take $216K/year in revenue with him should he go to a competitor.
Over 5 years, the loss in revenue would total over a million dollars.
The Benefits of High Employee Morale
A study published in Fast Company, May 2001, “Maister Class: Transform Morale Into Money” by Jennifer Reingold found that a company could boost its financial performance by as much as 42% by raising employee satisfaction by 20%. In comparing financial performance of global offices, the top 20% of these offices significantly outranked the other offices by scoring one particular statement regarding employee satisfaction higher than their counterparts: "Enthusiasm and morale are high."
