The Hidden Costs of Employee Burnout

Employee burnout is a huge problem for everyone involved. And as a business owner or manager, it’s something you have to be constantly on the lookout for. Because when your workforce is running on empty, it impacts everything from productivity and workplace safety to your employee retention and bottom line.

Most organizations recognize burnout when it’s already festering. The goal is to understand what it costs you before it reaches that point so you can make smart moves to address it.

Declining Productivity

A burned-out employee who shows up every day and sits at their desk for eight hours isn’t giving you eight hours of productive work. They’re giving you a fraction of that, as their focus is fragmented and their motivation has disappeared. 

For burned-out workers, tasks that used to take an hour take three. And as the quality of their thinking deteriorates, they do the minimum required to get through the day. This phenomenon is sometimes called presenteeism, and research suggests it costs employers more than absenteeism does. That’s because a person who is at their desk operating at 40 percent capacity can go largely undetected. (Whereas an empty desk is obvious to others.)

High Turnover

Burned-out employees always end up leaving. It doesn’t always happen immediately, but it will eventually. The resignation might come as a surprise to the manager who didn’t see it building, but the employee has usually been disengaging for months before they submit their notice.

The cost of replacing an employee varies by role and seniority, but most estimates put it somewhere between 50 and 200 percent of the departing employee’s annual salary when you account for recruiting, interviewing, onboarding, training, and the productivity gap during the ramp-up period. For specialized or senior roles, the cost can be even higher.

Healthcare and Benefits Costs

Chronic workplace stress has measurable health consequences. That’s one of the reasons the World Health Organization formally recognized burnout as an occupational phenomenon in 2019. And over the past few years, the research connecting chronic workplace stress to serious health outcomes has grown substantially. Employees experiencing burnout use more sick days, file more short-term disability claims, and generate higher pharmaceutical costs than their non-burned-out colleagues.

For self-insured employers, these costs hit the bottom line directly. For fully insured employers, they contribute to premium increases at renewal. Either way, the health consequences of burnout translate into financial consequences for the organization.

Workplace Accidents and Injuries

Tired, mentally depleted workers are more likely to be involved in workplace accidents than engaged ones. In fact, this connection between burnout and safety is pretty well documented.

Burned-out employees have much slower reaction times. They’re less attentive to their surroundings and they take shortcuts they wouldn’t normally take because they lack the mental energy to follow procedures. Their judgment is impaired and they simply don’t care as much as they should

In manufacturing, construction, transportation, healthcare, and any other industry where physical safety is part of the daily operating environment, burned-out workers are a huge injury risk. A forklift operator who’s running on four hours of sleep because work stress keeps them up at night is a much greater liability than one who’s well-rested and fully engaged. The same goes for a nurse working their third consecutive overtime shift.

Customer Service and Support

Burned-out employees interact with your clients and customers differently than engaged ones. They don’t have as much patience or attention to detail. Plus, they no longer have any willingness to go beyond the minimum. 

Client retention is harder to connect directly to employee burnout than internal metrics like turnover or productivity. However, the relationship is no less real. A client who starts receiving slower responses and less attention gets easily frustrated and no longer feels connected to the organization as much as they should.

What to Do About Burnout

Addressing burnout requires a lot more than just wellness programs and meditation apps. Those things have value, but they treat symptoms rather than causes. The causes are structural. You have to deal with what’s happening behind the scenes, like unsustainable workloads, insufficient staffing, unclear expectations, poor management, etc. You need to start building a culture that prioritizes the right things.

Fixing the structural causes requires honest assessment. You have to look at how your organization operates and be willing to make changes that may affect short-term productivity in exchange for long-term sustainability. This usually includes some combination of the following:

• Reasonable workloads
• Adequate staffing
• Managers who are trained to recognize burnout and intervene
• Policies that protect personal time
• Regular conversations between managers and team members about workload

When you start to address these issues, it eliminates the areas where burnout is able to breed. As a result, everyone feels better equipped to handle whatever comes their way.

Putting Your Employees First

The organizations that manage burnout well don’t treat it as an individual employee problem. Instead, they treat it as an organizational issue. In other words, they roll up their sleeves and figure out how to make changes at a root level so that the entire company can operate more efficiently and effectively. 

Ultimately, they decide to put their employees first and prioritize what matters most.