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Ombudsmans Office Cost Avoidance Analysis

Category Examples Potential Cost Avoidance


Low Level Increase Employee Engagement $35,146
Often involve only one
individual Absenteeism $5,000
Generally Limited in scope
Usually not likely to
Managers Time Savings $4,000
become a part of a formal
complaint processing
program

Low Level Average $14,715

Medium Level Workplace Injury $70,000


Have a likelihood to Untapped Potential due to Poor $14,058
escalate to formal Leadership
complaint processing Restructuring or Reassigning $17,572
programs Missed Deadline/Failed Project $40,200
Often times multiple
individuals are similarly
impacted

Medium Level Average $35,457

High Level Fraud $200,000


Likely Has already EEO Complaint $175,000
elevated to formal Employee Quitting $263,589
complaint processing
program
Departmental liability is
high
Financial liability to the
Department is high
Departmental National
reputation at stake

High Level Average $212,863


Low Level Cost Avoidance Measures
Increasing Employee Engagement
-Fully engaged employees return 120% of their salary in value
-Engaged employees return 100% of their salary in value
-Somewhat disengaged employees return 80% of their salary in value
-Disengaged employees return 60% of their salary in value.1
-By helping resolve the workplace issue, employees can usually return to full
productivity, with full focus and motivation returning.
-the average total cost of an employee is $175,729* using 80% return of their salary for
someone somewhat disengaged, the 20% value not being contributed is potentially
$35,145 that could be brought by an engaged employee. That is the potential cost
saving in employee engagement.

Missing Work
-25% of employees said that avoiding conflict led to sickness or absence from work.2
-Absenteeism and presenteeism account for an average of 3.2 days lost productivity per
worker per year.3
-According to the Bureau of Labor Statistics Workers who must take time off work
because of stress, anxiety, or a work conflict will be off the job for about 21 days.4
-Using the average salary of $175,729 for a federal work year of 262 days worked per
year. That is $670 per day to an employee on average.
-Even using a conservative number of $500 per day and 10 days missed for workplace
conflict (average being 3 days a year and average because of conflict being 21days), the
potential costs to the organization would be $5,000 per employee.

Managers Time Saving


-According to a study conducted by Accountemps and reported in Fortune, managers
and executives at Fortune 1,000 firms spend 13% percent of their work timethe

1
http://www.halogensoftware.com/blog/the-dollars-and-sense-of-employee-engagement
2
https://www.entrepreneur.com/article/207196
3
http://www.workforceinstitute.org/wp-content/themes/revolution/docs/Absenteeism-Bottom-Line.pdf
4
https://www.workbestconsulting.com/statistics
equivalent of seven weeks a yearmending employee relationships and otherwise
dealing with the aftermath of incivility.
Cost savings contributions can also be looked at from the point of view of the senior
management time savings that would occur if an Ombudsperson would diffuse a serious
personnel problem that would have consumed senior managers time. It is realistic to
estimate that managers at all levels would collectively spend 2 to 4 days on a case. This
would be about two percent of one senior managers annual working time. If we
assume a full cost of a senior managers time to be $200,000, the annual cost savings
attributable to the Ombudsman office would be $4,000 per case.

Low Level Totals per visitor


Increase Engagement-$35,145
Absenteeism-$5,000
Managers Time Saving-$4,000
TOTAL: $44,145
Average-$14,715
Medium Level Cost Avoidance Measures
Restructuring/Reassigning
Guideline: 10% of the combined salaries of employees whose relationship was
restructured for the time the restructuring is in effect. Example: Estimate $8000 if four
employees, each of whom is paid $40,000 annually, were reassigned to different task
groups for a six month period, i.e., (($40,000 X 4)/10)/2).5
If the average DOE Salary is $175,729, restructuring or reassigning just one employee
because of a workplace conflict would potentially cost 10% of that employees salary in
lost productivity. That potential would be $17,572.

Workplace Safety/Injury-BO Nueman for stats*


According to OHSA, the combined direct and indirect costs of even a simple muscle
strain or sprained ankle can cost $70,000.6

Untapped Potential due to Poor Leadership

5
http://www.smartbiz.com/article/view/26
6
https://www.osha.gov/dcsp/smallbusiness/safetypays/estimator.html
A study showed that the organization achieved a 5%-12% increase in productivity
among direct reports of managers who attended the leadership development training
and became better leaders using the new skills they had learned.7
If we use a conservative number of 8% increase (between 5-12%) in productivity of an
employee due to manager training, based on average salary of $175,729 an 8%
increase would be $14,058.
Missed Deadline/Failed Project
10% of people reported that workplace conflict led to project failure.8
The average salary at DOE is $175,729, based on a 262 day work schedule the average
salary per day is $670. If for example a 3 person team was working on a project for 6
months, it is fair to assume that each team member is contributing in value to the
organization in ways other than that single project. If we assume that 1/6 of the 3
employees time during that 6 month project is spent directly and specifically on the
project that would be 1 month or 20 working days.
That is $13,400 per employee on the project. Even with just a 3 person team that totals
potential $40,200.

Mid-Level Totals
Workplace Injury-$70,000
Untapped potential due to manager training-$14,058
Restructuring or Reassigning-$17,572
Missed Deadline/Failed Project-$40,200
Total-$141,830
Average-$35,457
High Level Cost Avoidance Measures
EEO Complaints
- The reality is that defending a discrimination or other employment lawsuit is
expensive. Defending a case through discovery and a ruling on a motion for summary
judgment can cost an employer between $75,000 and $125,000. If an employer loses
summary judgment (which, much more often than not, is the case), the employer can
expect to spend a total of $175,000 to $250,000 to take a case to a jury verdict at trial
Even using a conservative estimate, one EEO case can cost on average $175,000.
Fraud, Waste, and Abuse

7
http://www.kenblanchard.com/img/pub/Blanchard_The_High_Cost_of_Doing_Nothing.pdf
8
https://www.entrepreneur.com/article/207196
ACFE Report to the Nations: Fraud in the federal government costs nearly $200,000
each time it occurs9
Employee Quitting
-With the added costs of covering the vacant position, finding a replacement, and
training and orientation for the new employee; replacing an employee will cost you 150
to 200 percent more than that employee's salary and benefits. This means that losing an
employee making $100,000 a year could cost your company $150,000 or more to
replace.10

With total cost averaging at $175,729 per employee, resolving one issue that kept an
employee from quitting would potentially save the organization $263,589

High Level Total


Fraud-$200,000
EEO Complaint-$175,000
Employee Quitting-$263,589
Totals-$638,589
Average-$212,863

Totals
Low Level-$44,145 Average Low Level-$14,715
Mid-Level-$-$141,830 Average Medium Level-$35,457
High Level-$638,589 Average High Level-$212,863

Total: $824,564

9
Association of Certified Fraud Examiners
10
http://www.whatishumanresource.com/it-costs-how-much-to-replace-an-employee