LeadersEdge blog
Insights for Shaping Tomorrow’s Leaders
Burnout – The Impact to Your Bottom-Line Results and Organization
March 20, 2023

Last week, we explored the topic of burnout, the common causes of burnout in the workplace, and suggested some simple tips and approaches to combat it for yourself and your people.

This week, we are going to highlight the impact it has on bottom-line results and at the organizational level within companies. Some leaders, especially busy executives who are not as close to the frontlines within their organizations, may not be in tune with the amount of burnout that is occurring within their organization. As suggested, some senior leaders might not be as willing to raise the red flag on burnout because they may feel it reflects poorly on their leadership or fear they might be perceived as driving their people too hard. 

We take a firm stance on this and fundamentally believe that no matter your level of leadership, it is your responsibility to ensure you people are properly respected and cared for as human beings in the workplace environment.
We have written about it, and there are endless articles that have echoed how employee health and wellbeing must be a strategic priority for companies if you expect your people to perform and deliver their best performance.

To build on this notion, there is a definite advantage for organizations that focus on the health and wellbeing of their employees over those that don’t.
Sixty-seven percent of employees who work for organizations with wellness programs like their jobs more, and they are just as likely to recommend the company to others.  

So, let’s look at the financial impact burnout has on organizations bottom-line and overall performance.

Burnouts Financial Impact to Your Bottom Line

Burnout cost is the hidden internal tax you pay by not addressing low engagement and employee morale concerns. The cost of replacing employees can be enormous, ranging from one-half to two-times an employee’s salary, according to Gallup

Using Gallup’s numbers, if an employee’s salary is $50,000, the replacement cost could be between $25,000 and $100,000 per employee. Therefore, replacing an entry-level employee at $35,000 could cost $17,500. Doing some basic math, in an organization that has 100 entry-level staff members, where 15% of them suffer from burnout, the expense rises to approximately $1.7M annually.

Being precise in identifying the financial impact can be challenging at best, and we think it goes without saying that the financial impact is much larger than the replacement costs alone.  

Consider these insights that further emphasize the financial impact burnout has to your bottom-line results:

  • Corporate burnout includes $1.8 trillion in lost productivity in the U.S. alone, according to Forbes
  • 63% of employees take sick days due to burnout, according to Gallup.
  • Gallup research also reveals employee disengagement has a hefty impact with costs of nearly $350 billion a year.
  • Disengaged employees have 37% higher absenteeism, 18% lower productivity and 15% lower profitability. 

The bottom line is this, burnout comes with a sizable price tag if you are not proactive in getting in front of it. Your business cannot afford to ignore it, and more importantly, the detrimental impact it is having on your people is highly concerning. The physical and mental health impacts such as heart attacks, high/low blood pressure, mental health issues such as depression and anxiety, and personal challenges such as alcohol or substance abuse. The list is more extensive than we have noted, and you are at risk, too, if you do not manage your own work life balance and leverage effective self-care best practices.

To take a step back from the obvious root causes of burnout that we noted in our last blog, let’s explore the organizational impacts that contribute to burnout that stretch far beyond having an effective health and wellness program for your employees.

Organizational Impacts That Cause Burnout

A few key organizational impacts sited in McLean & Company's latest report on extinguishing burnout are:

  • Unreasonable workload demands - 44% cited requests to take on additional work.
  • Fairness & equity – 33% shared that the workplace culture is unhealthy (gossip, sexism, office politics and bullying).
  • Relationship with their leader – 20% shared they lacked support from their leader.
  • Role clarity & autonomy – 24% said they were micromanaged. 
  • Values alignment – employees are 11x more likely to experience burnout when they are less connected to their organizations culture and purpose.

We encourage you to think about how you, as a leader, might be contributing to the burnout some of your employees are experiencing and what you can do to address some of the opportunities noted above.

Are you being unreasonable with the demands you place on your people? Are you fair and equitable? How well do you know your people and are you supporting them to deliver their best performance or getting in the way? How connected do your people feel to the company and to you as their leader?

In next week’s article, we are going to further explore these topics and highlight what is within your direct control to ensure you are being proactive in managing burnout.  

What financial impact is burnout having on your organization? What do your employee engagement surveys tell you? Are you being proactive and on the right track? We want to hear from you. Please contact me at 416-560-1806 or email me at joanne.trotta@leadersedgeinc.ca.

Stay connected
Feel free to connect with me on social media.