If you’re like most small business owners, you watch your bottom-line closely. Payroll is typically one of the largest expenses in a small business. It’s also the source of a significant hidden cost—employee disengagement. During the Pumpkin Plan 1-Day Kickstart, I walked our participants through calculating the cost of employee disengagement in their small businesses.

Costs of employee disengagement ranged from several hundred thousand dollars to millions of dollars—ANNUALLY. OUCH! 

Why Does Disengagement Happen?

Most experts blame immediate supervisors for employee disengagement. Certainly a bad boss who yells and belittles employees will lead employees to become ticked off, apathetic and disengaged. However, in my experience, most of the owners with whom I work are not bad bosses. In fact, they care considerably for their employees. Yet, they still have problems with disengaged employees.

So, I want you to stop beating yourself up for the problems in your business that are caused by disengaged employees. It’s not your fault! You’re doing the best you can to get by with the team you have–good quality people are hard to find in rural areas, especially if you don’t know where to look.

There are 5 primary reasons for employee disengagement. By the way, only one of these is related to being a “bad boss.”

#1 Most employees don’t understand their role in the story of serving your Ideal Client.

FACT: Most business owners don’t take time to create a compelling story about their business, much less consider how to make this story appealing to their Ideal Employee.

To help you with this, here are some questions to get you started:

•  Why do you do what you do for your best clients or customers?

•  What are the greatest, most important problems you solve for your best clients or customers?

•  How can each of your employees be a hero in the story of how your business solves these important, urgent problems for your best clients or customers?

Take the time to create your compelling story about why you do what you do for those you serve. Then, make your employees heroes in the story! Tell the story every chance you get, starting with the initial employment interview, and continuing on from there.

Your employees need to know their hero role. Most don’t. We all like to be heroes. Give your employees the chance to be a hero and watch them do their best for your customers!

#2 Letting too many slackers hang on for too long. Let’s face it, in rural areas, it’s hard to find great quality people to fill open positions. A warm body is better than nobody, right? WRONG!

Letting too many slackers hang on for too long drags down morale. Your best people get tired of cleaning up messes made by the slackers. Plus, word gets out. A-Players do not want to work with a bunch of C or D-Players. By keeping warm bodies around you are actually repelling A-Players. Yikes!

Allowing slackers to hang on too long leads to the third underlying cause for employees to become disengaged…

#3 Bad Behaviors by the Boss. (Notice, I did not say “bad bosses.”)

Putting up with employees who consistently make mistakes and who do just enough to get by is maddening for even the most patient of bosses. We all have our breaking points. When bosses lose their patience with bad employee behaviors, at the worst, the boss yells and screams, which not only ticks off the employee he or she is yelling at, but word gets out and morale goes down for everyone. You feel guilty. Your guilt eats at you and makes you even grumpier. It’s a vicious cycle.

But long before you lose your cool, something more insidious happens. It’s our human nature to notice and focus on problems. Once you see one problem, you see more and more. It becomes much more difficult to acknowledge what your team is doing right. You become a boss “on patrol,” continually noticing and commenting on their mistakes and oversights, feeling like you are always lecturing your team about what they are doing wrong.

A good rule of thumb is to strive for a 5:1 ratio of positive to negative comments to your employees. When you get out of balance by focusing more on the problems, rather than what your team is doing right, morale goes down and even the best employees will become disengaged.

#4 A mismatch between the employee’s Immutable Laws and yours

Many new hires are excited to work for you. They start out engaged, even though they are relatively ineffective because they are still learning the ropes. Once they are trained and have been with you for awhile, they are exactly the kind of employee you want–engaged AND effective.

However, some of those who start out excited, then go on to learn the ropes and become top performers, will become disengaged. This has nothing to do with anything that you, the boss, has done to them. It’s simply due to a conflict between the employee’s Immutable Laws and yours.

Surprisingly, the most damaging employees to keep around are top performers whose Immutable Laws are not aligned out with yours. These employees are poison to your business. Even though they perform well, they demonstrate a very different set of values from you.

For most rural business owners, this presents quite the dilemma. It’s hard enough to find great quality people. If you have a top performer, but that employee consistently handles situations in ways that make you cringe, you have a conflict based on Immutable Laws.

What should you do with them? Terminate them.  They damage the integrity of your business — in the eyes of your other employees and your customers. By keeping them around, you end up sending mixed, confusing messages that drive away your best employees and customers.

#5 Failing to intervene quickly when a good employee shows the first sign of disengagement. When you have a good employee, who typically performs well and makes you proud, yet one day you observe them doing something out of character, intervene as quickly as possible. Get curious about what is going on with this employee. Express your surprise at this sudden change in their behavior.  Be curious not only about the underlying cause, but also what the employee will do to immediately turn it around.

Too often, owners are inclined to overlook the problem, hoping it will go away. It won’t. Chances are, you’re seeing the first sign of a more serious problem to develop. Address it quickly and hold the employee accountable for improvement.

Employee disengagement is costly to your bottom-line. Take action to address the 5 underlying causes of employee disengagement and watch your team thrive, while profits soar!