Sizing up a company’s return on talent has always been challenging, as calculating individual productivity over time is tough. Years of benchmarking have revealed notable disparities in employee productivity across companies, note senior partner Vincent Bérubé and coauthors. They pinpoint three measurable reasons for productivity loss: the skill gap, the will gap, and the time gap. Failure to address these root causes can trigger costly attrition and vacancies, potentially costing a median-size S&P 500 company around $480 million annually.
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A waterfall chart shows the value at risk annually from loss of employee productivity at a median-size S&P 500 company, measured in millions of dollars. The first bar indicates a total value at risk of roughly $480 million annually, followed by three bars representing the main components of lost employee productivity: lack of skills, with $116 million at risk annually; lack of engagement, with $91 million at risk; and inefficiency, with $47 million at risk. A fifth bar shows that if left unaddressed, these factors can result in an additional $226 million at risk annually at an organizational level due to attrition and vacancies.
Footnote: Employee salary, $50,000; organization size, 20,136; full-year revenue, $12.635 billion; frontline workers, 70%.
Source: Dr. Steven G. Rogelberg and Otter.ai research; S&P 500 company full-year 2022 database; US Bureau of Labor Statistics; McKinsey analysis.
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To read the article, see “Increasing your return on talent: The moves and metrics that matter,” April 15, 2024.