Quiet Quitting: The Risk to Human Capital Value

“Quiet quitting” may be the latest slang in the disgruntled workforce but it is not a new concept. Its origin stems from economics and ?its association with risk, not work/life balance complaints as?many media sources stipulate. Quiet quitting goes beyond an ?employee’s ?desire for better balance and the rejection of poor management. Quiet quitting is a significant risk to an organization and the business community due to its impact on the performance and productivity of a society and?its components in all sectors– non-profits, small businesses, corporations, governments, associations, etc. The problem with this growing trend is its decrease in an organization’s workforce talent and capacity, i.e., the capacity to manage the workload. Human capital is an investment, and it is losing value.

For “Human capital” to have value as an asset, it must contribute to organizational health in some tangible way. A line of sight can be drawn between the efficiency of the organization and the duties performed by every position - otherwise, that position should not exist. Even an accounts payable clerk processing paper is contributing by performing work that must be done. When an employee reduces their work through quiet quitting, they impact capacity by decreasing productivity.

Logically, the workforce of any organization is a mixed bag – every human performs at a different threshold every day - some days giving 150% and other ?days only 25%. We humans are inconsistent that way in everything we do; we aren’t robots, so performance fluctuates. The goal for any organization is to strive for performance and productivity that achieves a consistency on average, such as 75-80% over time, where the highs and lows cancel each other out. Consider this simple mathematical example:

Suppose you pay someone $10/hour for work. This work is based on a certain amount of performance or productivity per hour, and this is your baseline of 100% performance. Some days you receive performance at 150%, a value of $15/hour. On other ?days you only receive performance at 25% or $2.50/hour. Under both scenarios, you pay $10 for that value. Over time, if a position’s workload is appropriate, performance should average around 87% or $8.75/hour. Based on HRPMO’s work with multiple organizations where we measure operational efficiency, a reasonable performance level is within the 70-80% range where the majority of work is accomplished in a timely, accurate manner. ?

Now, let’s eliminate the days of 150% because of quiet quitting. The highest productivity now peaks at the baseline because the employee has chosen not to perform beyond the minimum requirements. Your average productivity over time has now decreased to 62% because the employee has not – and probably cannot - eliminate the days of 25%. The organization’s fixed costs for salaries, benefits, and taxes have not changed, but now the organization is receiving productivity averaging 62% of every $1 of wage/hour. This simple gap analysis illustrates why quiet quitting is a large expense to an employer resulting in a theoretical drop in productivity of 25%.

NPR’s article, “The Economics Behind ‘Quiet Quitting’ – and What We Should Call It Instead," (https://n.pr/3SCnfz5) on 9/13/22, cites government data indicating, “an historic drop in productivity over the last two quarters.” A survey by Gallup indicates this is a symptom of poor management and they recommend developing a habit of having “meaningful conversations” with each staff member, once per week for 15-30 minutes. Gallup’s position is that lack of engagement may simply be part of the American work life and increased communications would help improve management. But are these meaningful conversations meant to cajole or measure? ?HR has been pushing these meaningful conversations for decades as motivation. But without information and measurement, what exactly are they motivating the employee to do?

NPR also refers to a recent investigation by the New York Times that finds 8 of 10 largest private U.S. employers track the productivity metrics of individual workers, many in real time, and there is a surge in companies investing in digital productivity monitoring (https://nyti.ms/3R22X0x). Given the above potential costs of quiet quitting, it is understandable why organizations might invest in some form of monitoring. But being a “Big Brother” has never bonded an employer with its workforce. After evaluating multiple organizations who have participated in micro-monitoring, we’ve learned the tracking processes feel burdensome and intrusive by the workforce. Working under the hovering eye of micromanagement does not promote greater productivity. Instead, it dilutes productivity because the employee is assumed?to be under-performing rather than being managed by results using a system of accountability. Micro-monitoring measures results based on accountability for time rather than tangible results through methods of accountability for employees AND managers, often while ignoring poor work environments that allow toxicity that reinforces quiet quitting.

If an organization is paying for the capacity and productivity to accomplish a certain volume of workload, then it is management’s responsibility to “trust, but verify results,” to constantly re-calibrate the workforce under their guidance to maintain productivity and performance by having those "meaningful conversations," and to create a work environment that is respectful and equitable for employees. ?If a manager defines results for an employee, then creates an environment for success and evaluates an employee’s performance based on tangible evidence rather than speculation, they create equity. What’s more, upper management can evaluate the quality of the supervision based on tangible results as well, removing preferential treatment for managers.

The risk of quiet quitting can be mitigated when managers define success for a position and then manage for results expected.?But managing for results requires more knowledge work by the manager, including understanding the work of each position?and defining “results” that are aligned with the organization’s goals. In order to reduce quiet quitting, an organization should develop strong, equitable and fair leadership with clear accountability. This is where Human Resources can be strategic using human capital risk management. Otherwise, employers will be stuck with talent that continues to produce at a subpar level.