Dear CEO: Unveiling the Hidden Costs Behind Employee Engagement

Dear CEO,

I’m reaching out to highlight a pressing issue within our industry — a problem that’s draining us of potential, demanding more than just quick fixes. It’s time to address the root causes affecting our people and our business. I’m sending this directly to you because you’re the one in charge. You’re the decision-maker.

What’s at the heart of the issue? It’s the widespread disengagement among our leadership, setting off a chain reaction of declining productivity and financial strain. Instead of seeing the people behind the numbers, we’re reducing them to mere cogs in a machine

Engaged employees bring their best to the table, while disengaged ones hold back. It’s a straightforward equation. Relying solely on reports from HR or direct reports won’t cut it. You need the full picture, unfiltered and unbiased, to make informed decisions. If your business is struggling, it’s a byproduct of your decision quality. Whether it’s a decision on what to do or not to do, or who should be placed in what position, the results fall on your decisions. Either directly or indirectly, thanks to your placement of leaders. If you get it wrong, I don’t want it to be because you were tasked with making a decision without all of the information.

You’ve allocated significant resources to consultants to streamline processes and reduce costs. But have you invested in truly understanding the engagement levels of our workforce? After all, your direct reports are primarily responsible for nurturing this engagement, which, in turn, drives financial performance — an aspect for which you compensate them generously.

You don’t necessarily need to break the bank on consultants. Turnover and engagement rates offer valuable insights. Compare them against industry standards. Are you bleeding talent, or are you fostering a culture of retention and growth? Take a cue from best-in-class examples like Costco, boasting turnover rates a fraction of the industry average (one seventh to be exact).

Let’s talk ROI. With your financial acumen, you understand the concept well. If you’re investing a dollar in employee productivity, why settle for a return of 60 to 65 cents? Disengaged employees are a drain on resources, costing you precious time and money. And it’s not just about those who are choosing to stay with you; what about those who are leaving? 

According to recent reports, retail turnover averages around 60% (Costco hovers around 8%, WOW!) Turnover of an entry-level employee costs you about 60% of what the salary for that role is. Highly skilled and leadership roles can cost you upwards of 100%-150% of the role’s salary. So essentially, you’re only getting back 60–65 cents on the dollar for each payroll dollar you’re spending on our actual employees, and you’re spending north of 100% of a person’s salary after they quit or you lay them off.

This vicious cycle is why we’re constantly having to cut budgets, eliminating not just people, but also products and marketing efforts, just to name a few. Remember the days before online business diluted the role of a merchant, when spotting a bad buy meant simply browsing the clearance racks in a store? Assessing leadership performance isn’t so different. Turnover and engagement results are like neon signs pointing to underlying issues. Here’s the roadmap:

Step 1: Conduct a comprehensive assessment of engagement and turnover, leveraging trusted agencies or meticulously chosen in-house methods. Engage only those willing to be brutally honest, even if it means self-examination.

Step 2: Dive into skip-level meetings to gauge engagement firsthand. Spend time with the teams led directly by your direct reports to assess performance and engagement levels authentically.

Step 3: Hold your direct reports accountable for similar assessments, creating a culture of transparency and accountability from top to bottom.

Yes, this process may ruffle some feathers, but discomfort often precedes growth. Armed with unfiltered data, you can steer us toward a path of optimal performance and a culture of well-being.

I understand that being a CEO can sometimes feel like a lonely position. However, it’s a role that comes with its compensations. While it may often seem like a thankless job, I want to express my gratitude in advance for you taking the time to read this and consider your next steps.

Let’s heal from within and pave the way for a thriving industry for years to come. Your customers, employees, and shareholders are all relying on you.

Warm regards,

You can refer to me as your committed and concerned employee.