Budget for employee engagement


I have heard from a lot of founders, HRs and even in articles about the budget that has been assigned for employee management. I have few questions on the same,

  1. Should there be a budget? Is it a necessity?
  2. For a team sized between 20-50, what should be the budget?
  3. Is it framed on per employee basis or as a group?
  4. What factors could be covered under this?
  5. Does it vary on the experience or work period of the employee in the company?


I deem it necessary to have a budget set aside for employee engagement because people need to be taken care of and it does pay back in form of revenue and saves you a lot of money lost in attrition and unproductively. Now that is covered, let’s get to the math:
When you consider attrition costs per employee is almost worth 9 months of the same employee salary. Say, you are paying your employee $7000/month. So, that’s $63,000 for just one employee. For a team of 20-50, the scale tips close to $300,000. With employee engagement, employee attrition drops by 40%, the savings is upto $120,000 for a team of 50. But, this is just money saved after implementing an effective employee engagement system. The returns also reflect in forms of revenue because of higher satisfaction and employees’ commitment to the organisation.
So, Decide on a budget for employee engagement based on these facts. All employees should be a part of employee engagement program because it is important at every stage of their time with the organisation. However, it is also important to have tailored programs for the employees because they face different difficulties depending on their time with the organisation,