How Much Does Low Morale Cost?

The predictions of economists right now are dire. However, that's the current role of economists - to put numbers on the potential fallout from this crisis. Our resilience calculator reveals that the cost of ignoring team morale will accumulate quickly over the coming months.

April 24, 2020 3 mins read

This is not business as usual.

Economists are falling over each other with strong statements about what’s happening at the moment. With good reason too — Goldman Sachs thinks the U.S. economy will shrink by 24% in the next quarter, and that’s just the beginning. From the “fastest, deepest economic shock in history” to being a ‘generation-defining moment’, the pandemic has economists worried.

Yet, that’s the role of economists — to help us navigate the greater economic trends of the marketplace by assigning a monetary value on choice and consequence. The question now is, will our generation be defined by entering a prolonged economic slump or will we be able to display a resilience, the like of which we’ve never seen before?

Before the pandemic hit, I was designing an interactive calculator to help people understand the impact that team morale and resilience has on the bottom line. In these extraordinary times, it is an even more imperative exercise. The cost of ignoring team morale will accumulate quickly over the coming months.


The resilience calculator

The calculator cashes out the costs in terms of productivity and innovation, as well as the effects of increased staff turnover and sickness absence. Though the estimates are conservative, it looks at what a half-point shift on our five-point scale, which assesses employee wellbeing and team morale, and the fallout of allowing morale to drop.

For example, in a 200-person organization that half-point change results in a $1million loss this year alone. In the weeks when the fears and anxieties of coronavirus hit our Friday Pulse™ clients, we saw falls of two or three times that size. In other words, a sharp shock to employee experience to match the sharp shock to the economy. Though the calculator is a useful tool for estimating the financial impact on your company, the Friday Pulse™ tool is what will help your organization come through this crisis with your morale intact. As well as giving you a real-time feel for how your teams are coping, its weekly rhythm supports team leaders to have better conversations with their teams.


Surviving even the direst of economists

It’s understandably tempting to think that it is all about survival, that human dynamics concerns can wait until we are through the acuteness of this crisis. However, there is a greater danger on not focusing them now.

Resilience at the firm level is dependent on the creativity and innovation of the employees and teams within your organization. Resilience is often described as the ability to bounce back, and there will be plenty to bounce back from once this pandemic has passed. However, merely bouncing back may not be optimal as the world post-coronavirus will be incredibly different from the world before. Indeed, this is where true resilience is needed — to be creative and adapt to the situation your organization finds itself in.

In my opinion, the only way that businesses can display resilience is by having a sense of togetherness, an alignment in purpose through the organization built on the ability to be creative. This kind of creativity only comes from being psychologically safe and free to collaborate without fear (more on this in a future post).


Here to help

We are all in this together. I know that everyone’s budgets are tight now and under pressure. That’s why I have decided to offer Friday Pulse™ for free to any small to medium-sized enterprise. Togetherness and creativity will get us through this crisis.

If you are interested in learning more on how Friday Pulse can help your organization weather the pandemic, please contact my colleague Clive Steer, Head of Helping People, at [email protected].