Skill Underutilization Costs $23,600 Per Employee — What River Country Businesses Can Do About It

Underutilized employees are one of the most expensive problems a business can have — and one of the hardest to spot. According to HRD America, 85% of workers believe they could be more efficient at work, yet skill underutilization costs employers roughly $23,600 in lost productivity per employee each year. For Newaygo County businesses in manufacturing, healthcare, and professional services, that's a hidden drain with serious cumulative effect.

The problem is rarely about motivation. It's about structure, communication, and management habits that make untapped potential easy to overlook. Here's how to identify it — and do something about it.

Why Underutilization Is So Hard to Catch

A peer-reviewed study in SAGE Open introduced the concept of "chronic relative underperformance" (CRU) — a condition in which managers fail to spot talent going to waste precisely because performance targets are still being met, allowing the problem to quietly entrench itself. The employee stops pushing because nothing changes; the manager doesn't look because the numbers look fine.

According to ActivTrak's 2025 analysis, the most common root causes are poor role alignment, managers being unaware of employees' full skill sets, and overly rigid job structures — not a lack of effort or ambition on the employee's part.

Bottom line: What looks like a stable, productive team may actually be a quietly disengaged one — and that gap is harder to close the longer it goes unaddressed.

A Quick Audit: Signs Your Team Has More to Give

Run through this before your next round of one-on-ones:

• [ ] An employee consistently finishes work early and rarely asks for more

• [ ] Someone defers in meetings despite having clear relevant expertise

• [ ] A team member has mentioned skills or interests that have never come up in their role

• [ ] You haven't discussed their goals or growth in the past six months

• [ ] They've been doing the same tasks for years without a new challenge

• [ ] You only hear from them when there's a problem

Two or more of these? That's your signal to start a different kind of conversation.

Two Managers, Two Outcomes

Imagine two managers at similar manufacturing firms in West Michigan, each with a strong employee who's been in the same role for two years.

Manager A holds bi-weekly check-ins. She asks what's going well, what feels repetitive, and — once — "Is there anything you wish you had more time to work on?" She learns the employee has project coordination experience that's never been used. She assigns a cross-functional project. The employee re-engages.

Manager B connects only at annual reviews. No touchpoint surfaces the hidden interest. By month eight, the employee is interviewing elsewhere.

The difference isn't effort — it's frequency and curiosity. U.S. employee engagement fell to a 10-year low in 2024, with only 31% of employees engaged and 17% actively disengaged — a decline researchers trace directly to broken feedback practices and unclear priorities.

In practice: One question about where someone wants to grow is worth more than an annual review that only looks backward.

Build Internal Paths Before You Recruit Externally

The instinct when a skills gap opens is to hire. The data increasingly points toward developing talent from within — 38% of organizations are now training existing employees to fill hard-to-fill roles, and internal talent marketplace adoption rose from 25% to 35% in just one year.

If an employee has expressed interest in a function adjacent to their current role, start with a stretch assignment or co-lead opportunity — low cost, tests fit before any formal move.

When the gap is more significant, pair the assignment with a senior mentor who can coach in real time and help the employee build confidence alongside skills.

When internal development isn't immediately feasible, enroll them in external training with a clear plan to apply those skills on a defined timeline.

Exposing employees to different parts of the business signals genuine investment — and that signal alone improves retention.

Build Training That Leaves Something Behind

Formal training works best when it produces something employees can return to. A well-organized reference document — what was covered, how it applies to the role, and what comes next — turns a one-time session into a repeatable tool.

Saving training materials as PDFs keeps formatting intact across devices and makes sharing with teammates or outside partners straightforward. Adobe Acrobat is a document tool that lets you convert, compress, edit, and reorder PDFs online from any browser, without installing software.

A clear, well-packaged training guide also signals confidence in the employee — especially when you're asking them to take on a function they haven't owned before.

Bottom line: Training that produces a usable reference guide compounds over time in ways a one-off session cannot — build the artifact, not just the experience.

Conclusion

Gallup's 2025 State of the Global Workplace report found that 70% of team engagement traces directly to the manager. That's both a weight and an opportunity. Managers who stay curious about their people — who ask the right questions and create clear pathways for growth — consistently build stronger, more loyal teams.

The River Country Chamber's Business Resource Luncheon series gives Newaygo County managers a practical head start. Sessions on topics like generational differences offer frameworks for understanding what motivates different employees, which makes every one-on-one conversation more effective. Upcoming joint networking events with the Howard City Area and Fremont Area Chambers are also worth attending — peer perspective on workforce challenges is one of the most underrated resources available to local business owners.

Frequently Asked Questions

What if an employee doesn't want more responsibility?

Not every team member wants to move up — and that's a valid choice. The goal isn't promotion; it's fit. Ask what they find most satisfying, then look for ways to build more of that into their role. Deeper mastery of a familiar function can be just as engaging as a new title.

Engagement comes from fit, not just upward movement.

How do I raise underutilization without implying someone is underperforming?

Frame it as investment: "I think there are skills we haven't had a chance to use yet, and I'd like to change that." That's fundamentally different from "you could be doing more." Start with what they enjoy and where they feel stuck — not with what they're missing.

Approach underutilization as opportunity, not critique.

What if budget limits formal training or promotions?

Visibility and autonomy are often more motivating than compensation changes — especially for employees who feel overlooked. Assigning someone to a cross-functional project, asking them to present their work to the team, or involving them in a planning discussion costs nothing and can re-engage a disengaged team member faster than a raise.

Internal ownership is a free lever most managers underuse.

How do I prevent underutilization from developing in the first place?

Make it a habit to ask — in every regular check-in and at the start of new projects — whether the work feels appropriately challenging. Catching the mismatch early, before someone mentally disengages, is far easier than re-engaging them afterward.

The best time to address underutilization is before the employee notices it themselves.