The Real Cost of Burnout — On Your People and Your Bottom Line
Burnout is real—and it costs your company money.
The problem is not unique. In a 2020 survey from Spring Health, 76% of American workers reported experiencing burnout. While Harvard Business Review estimates that the annual healthcare spending due to workplace burnout is anywhere from $125 billion to $190 billion. Gallup also found burned-out employees cost $3,400 out of every $10,000 in salary because they are disengaged in their work. We’re talking about high turnover and lower productivity.
And replacing workers is expensive. The replacement cost for the average worker is one-half to two times the annual salary.
Company leaders will never entirely solve the problem, but they need to understand the causes of burnout and know what to do about each of them.
Here’s the good news for executives: Companies don’t necessarily need to pay workers more. Most of the causes of burnout have nothing to do with compensation. We’re talking about company culture, from the C-suite to the interns.
Alina Vandenberghe, CXO and Co-Founder of ChiliPiper, has identified eight primary causes of burnout:
- Absence of a good communication channel with your manager
- Misalignment between your skillset and your work
- Lack of community
- Separation of work and everything else
- No clear path for growth
- Not prioritizing mental health
- Not dreaming big
- Misalignment between your company mission and your personal beliefs.
Insights from other leadership, including Pavilion Member and Divvy CRO Sterling Snow, agree, noting that lack of alignment, winning, incentives, trust, and ownership can burn people out more quickly than any volume of work ever could. Research from leading university scholars identifies six main causes of burnout.
We’ll tackle each category and solutions to think about.
Problem No. 1: Work overload
Solutions: There are at least two avenues to address here. One is the employee schedule. The other is the volume of work employees have to do.
If the pandemic taught companies nothing else, it’s that employees prize flexibility. Employees want to be valued and work hard, but they don’t necessarily want to do it from 9 am until 5 pm. Companies might normalize four-day workweeks, giving employees the option of a three-day weekend. Google has added additional holidays to the vacation calendar. ChiliPiper and Sendoso are renowned for their benefits, which include unlimited PTO; Sendoso also gives employees time off to do volunteer work.
It’s not just about days off. It’s about defining when people are expected to work. Monitoring burnout is especially challenging as hybrid and remote work continues to take hold (pw: ^R$1Fr^k), Chris Hatfield, founder of Sales Psyche and a Pavilion member, says monitoring burnout comes down to trust and relationships. “I think it all comes down to the relationship and the level of trust you have with them. If someone feels like you’re trying to force that conversation, they can become even more withdrawn,” he said.
When it comes to work volume, it’s management’s job to ensure teams are properly resourced. Are there enough people to do the job the right way? And is the work distributed roughly equally on that team? Companies can ask both middle management and employees what they think to get an idea of where there might be a problem.
But as organizations continue to struggle to fill open roles and address talent gaps, there is not an easy solution to hiring. Expect companies to try to get by with fewer people, and be prepared to address what that added workload could look like for your team.
Problem No. 2: Lack of control
Solutions: Everybody’s working for somebody. That is to say, very few people control their destiny at work. Employees want the ability to influence decisions that affect their jobs, regardless of how high up the corporate ladder they are. We’re talking about scheduling, assignments, and workload. A lack of resources can also be a problem for workers.
This is a cultural problem. The CEO might be listening to what the top managers need, but is there a system in place to hear what everybody in the organization has to say? This means more than conducting SurveyMonkey queries to gain general feedback. Managers need to contact their direct reports regularly, down to the interns. What’s working? What’s not working? What do you want to do that you’re not doing? Those are all questions managers should be asking. Employees should be rewarded for speaking their minds, perhaps coming up with a way to be more productive in the process.
If you’re interested in learning more about effective 1:1s, we cover best practices extensively in Frontline Sales Manager School.
Problem No. 3: Insufficient Reward
Solutions: Now we’re talking about money. Although, it’s not necessarily about throwing money at employees. Income does affect job satisfaction, but there’s no strong correlation between higher salaries and employees sticking around.
Instead, think about giving employees what they want. In his book Payoff: The Hidden Logic That Shapes Our Motivations, behavioral scientist Dan Ariely found that free pizza was more rewarding than a $30 bonus to increase productivity. For example, a Maine semiconductor plant was having problems getting employees to work overtime shifts before plant leaders started offering raffle spots to win tickets to a Boston Red Sox game.
This advice comes with a warning: It’s about what the employees want. Companies need to understand what motivates workers. Don’t build a beach volleyball court that nobody will use, and don’t buy everybody pizza if they want ramen noodles.
Another way to address this without adding to base salary is through bonuses or milestone payments. Milestone payments are cash payments due to you for achieving major milestones, like hitting ARR targets. Payouts should be tiered, say from 75% achievement, so you will receive payments correlated to your success at the company up to the full payout. This helps align company goals with employee reward, helping to address two causes of burnout in one solution.
Milestone payments are a key piece of executive compensation, and we recommend negotiating for them when you sign on with a company.
Problem No. 4: Breakdown of community
Solutions: At its core, this is about people getting along.
A baseball manager will tell you this: you don’t want your catcher playing in center field. Catchers have great skill sets and are some of the smartest people on the team; they just can’t run very fast — a prerequisite for playing center field.
Company leaders have to put employees in a position to succeed. What defines your company, and how does each team member fit into that puzzle? Do the employees know the answer? And is their good work being cited for everybody in the company to take notice?
Consider having a donuts-and-coffee listening session with your teams. Listen to what employees say about what they like and don’t like. And find a way to cheer their good work, so everyone in the company hears about it.
Problem No. 5: Absence of Fairness
Solutions: This isn’t about the fair distribution of work.Instead, employees feel like their workplace is fair when there is trust, openness, and respect between workers and management.
How do you bridge the gap? Show up for people. Shadow a worker in a department you know nothing about. Spend time with employees and learn about their challenges. They won’t expect you to fix everything, but they will see that you are engaged and care. That’s how you build trust. Then you can enlist their help to help deal with their challenges.
Problem No. 6: Value conflict
Solutions: Let’s say you’re running a healthcare organization. The providers are upset because they feel like the company is just trying to make a buck; they got into healthcare to make a difference and help people. They wonder if they’re in the right place and lose motivation or look for new jobs.
It’s leadership’s job to make sure everybody is on the same page before they are even hired. If the goal of that healthcare organization is to run a tight financial ship so they can expand and take care of more low-income patients, for example, providers might be more tolerant of cost-cutting measures or busy schedules because they understand the goal.
There are other kinds of value conflicts, often between co-workers. One wants to work first thing in the morning; another works late at night. Or there can be political differences. Managers need to spot when differences between teammates are causing problems. And they might need training in how to resolve conflicts. Value conflicts can be tricky. They sometimes involve politics, and they are emotional. But just like all of these problems, they can be dealt with by caring for your employees as human beings and valuing their contributions to your organization.
CTA: To learn more about how burnout can hurt your company’s bottom line, join our upcoming session, The Real Cost of Burnout: Why Investing In Employees’ Mental Health Is The Best Investment on May 11.
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