By Karen Hsu

When companies fully engage their workforce, they perform better. Research indicates that companies with engaged workers grow profits three times faster than peers with low levels of employee engagement. On the flip side, employers with a disengaged workforce pay a huge toll in lost productivity: A Gallup survey shows that disengaged employees cost the US economy $350 billion every year in lost productivity.

If you’re looking for a way to close that alarming productivity gap at your company, you are probably considering a gamification strategy, and if so, you’re not alone: Companies have adopted gamification and digital motivation strategies to engage employees worldwide. In fact, industry analyst Gartner Research projected that gamification will soon be the key operational improvement strategy for 40% of Global 1000 companies.

But before you can roll out a gamification and digital motivation program on a companywide scale, it’s essential to build a strong business case that demonstrates potential ROI. Here are four steps you can take to estimate gamification ROI, assuming a model company with 1,000 staff and an average annual cost of $68,750 per employee:

  1. Productivity gains: The average employee spends slightly more than 24 hours each week communicating or collaborating internally. According to McKinsey research, companies that use collaboration technology can ramp up productivity 25% to 35%. Advanced gamification programs have even increased collaboration by up to 55%. Improved collaboration means staff are working with more colleagues and sharing content and best practices to serve customers more effectively. That creates a virtuous circle that expands the positive impact of sharing. With this strategy, a top global company realized annual benefits of $5,661,562.50 via improved collaboration.
  2. Absenteeism reductions: SHRM research shows the broad impact of absenteeism, including the cost of replacing staff and the productivity hit for teams that have to pick up the slack. Gamification can be the answer. A peer-to-peer study that compared companies with a gamification engagement strategy to businesses that don’t use gamification found that gamified workplaces have a 24% higher attendance rate. That means employees working in the businesses without gamification worked an extra day per week than staff in gamified workplaces. In a workplace where employees work 240 days a year, companies that use gamification to reduce absenteeism can realize $595,200.00 in savings.
  3. Learning and development optimization: In the information economy, staff knowledge is vitally important. But there’s a misalignment between candidate skills and company needs: Research indicates that only 15% of hiring managers said almost all or most job seekers had the qualities they are looking for in a new hire. In-house training and a culture of learning is the key, and gamification and digital motivation strategies can help companies achieve it. Large organizations have shown the way: Accenture increased Computer Based Training (CBT) completions 1020% with digital motivation and gamification, and Deloitte experienced a 50% increase in the speed of course completion. If you assume the addition of 100 new employees who spend 100 days a year in training, you could save the company $390,437.20 annually with a gamification and digital motivation solution that optimizes learning and development.
  4. Addressing attrition: In addition to employee performance, engagement levels also have a significant impact on retention.  According to a Corporate Leadership Council survey, highly engaged employees are 87% less likely to leave their company, and that translates into reductions in hiring and training expenses. Gamification and digital motivation solutions that measure employee engagement levels can identify staff members who are most at risk for turnover and alert managers and HR to take steps to prevent valuable employees from leaving.  Making the assumption that average turnover costs are 38% of annual salary, the current turnover rate is 25%, and improving staff engagement reduces turnover by 66%, a company of 1,000 could realize $4,310,625.00 in savings.

Real-world gamification and digital motivation deployments back up what models like the above calculations indicate: The right solution can be a breakthrough for companies that are struggling with low levels of engagement and the productivity, absenteeism, training and attrition problems that go along with it. The investment will pay off, but it’s important to create a sound business case before embracing the cultural shift involved.

Using models to calculate potential productivity increases, savings due to reduced absenteeism, improved agility with more efficient training and a reduction in costly attrition is an essential building block toward a new employee engagement approach. If you’re ready to deploy a solution that will profoundly transform your workplace, now is the time to do the calculations and create your best business case for change.

Karen Hsu is vice president of marketing at Badgeville, a business gamification solution that combines award-winning products and industry-leading expertise. Stay connected at Badgeville.