Financial oversight oversight reveals inconspicuous cost associated with employee disengagement, termed as a hidden tax on revenue, as reported by the CFO.

Financial Oversight Lapse: Unaccounted Disengagement Factors Leading to Unforeseen Revenue Costs for the CFO

In today's dynamic business landscape, the companies that are poised to outperform in the next market cycle are those whose Chief Financial Officers (CFOs) and Chief Human Resources Officers (CHROs) share a common language. They treat human capital as a compounding asset rather than a cost center.

The transformative power of culture is evident, with significant gains possible in just one quarter. This transformation is achieved by making team progress visible, monitoring and rejuvenating manager engagement, and making engagement a business outcome.

Leaders should view disengagement as a measurable, reducible tax on revenue, much like any other major expense. The solution for low manager engagement begins with role clarity, realistic spans of control, and systems that give managers agency over results.

Heather Yerrid, the Founder of SelfcessfulTM, an ICF-Credentialed Performance Coach, and a Certified Positive Psychology Practitioner, underscores this point. She emphasises that replacing an employee costs between 90% to 200% of their annual salary, considering lost productivity, recruiting, training, and ramp time. The cost of turnover also includes the loss of relationships, delayed projects, and institutional knowledge.

For instance, at $250,000 revenue per employee and 40% disengagement, the potential loss per disengaged employee is $100,000. Scaling this across the organisation can result in a substantial amount that's too large to ignore.

The 2024 global workplace report by Gallup estimates that low employee engagement costs the world $8.9 trillion annually, roughly 9% of global GDP. This alarming figure is a testament to the financial impact of high turnover, which is often underestimated by leaders.

Gallup's 2025 report shows a drop in manager engagement. When managers check out, they unconsciously set a low-energy and low-accountability tone that cascades across the team. Threat states triggered when employees experience a loss of status, certainty, autonomy, relatedness, or fairness push the brain into defensive mode, causing creativity to shrink and execution to slow.

From a neuroscience perspective, engagement depends on consistent access to the prefrontal cortex, where problem-solving and decision-making happen. Visible progress activates the brain's reward system, and the "goal-gradient effect" shows that people work harder as they perceive themselves closer to a target.

Basic manager training can cut active disengagement in half, and ongoing development support can boost manager well-being significantly, elevating thriving from 28% to as high as 50%. Engagement isn't just about morale; it's about efficiency and directly correlates with higher productivity, profitability, and sales.

The Forbes Coaches Council, an invitation-only community for leading business and career coaches, is a testament to the growing recognition of the importance of employee engagement and leadership development. While the specific individual members of the council are not listed in the provided search results, it is clear that diverse business leaders and experts in coaching and leadership are actively engaged in this conversation.

In conclusion, the hidden cost of low employee engagement is substantial and should not be overlooked. By treating human capital as a compounding asset, investing in manager training and development, and fostering a culture of engagement, businesses can unlock significant gains and position themselves for success in the next market cycle.