Worldwide, employees are as engaged at work now as they were the year prior. Notably, engagement is driven more by having great managers at the business-unit level than by macroeconomic factors such as countries’ labor policies and the vibrancy of their job markets.
The percentage of engaged employees globally -- those who feel involved in and enthusiastic about their work -- remains at 23%, matching the record high recorded in 2022, according to Gallup’s State of the Global Workplace report. But most employees are not engaged (62%) -- those who show up, do the bare minimum and are uninspired by their work -- or actively disengaged (15%) -- those who have a bad manager and a miserable job and are actively seeking a new one.
Not engaged and actively disengaged employees, in aggregate, account for $8.9 trillion in lost productivity worldwide.
Measuring and monitoring employee engagement is crucial: Three decades of Gallup research have demonstrated a strong association among engagement, the quality of managers and critical business outcomes.
Gallup’s latest meta-analysis of more than 183,000 business units across 53 industries and 90 countries finds that teams in the top quartile of employee engagement achieve 23% higher profitability than those in the bottom quartile. This is because they are better at retaining top talent, serving customers, achieving higher-quality output and accomplishing numerous other outcomes that lead to profit. Organizations that reach world-class levels of employee engagement steadily improve the effectiveness of management at all levels of the organization.
But no organization operates in a vacuum, unaffected by macroeconomic trends and government policies outside of their control. The interplay of micro- and macro-level factors is important for leaders to reflect on as they navigate the constantly changing workplace. Here are three such factors for organizations everywhere to consider:
1. Countries with better job markets have a lower proportion of miserable workers, but they do not differ significantly in the proportion of highly inspired workers.
More than half of employees worldwide say it is a good time to find a job, up slightly from last year and varying considerably across countries. Gallup has found lower levels of active disengagement in countries where respondents report it is a good time to find a job. Other published research supports this association between poor job markets and disengagement.
Notably, the relationship between perceptions of the job market and the percentage of engaged employees is much weaker. In aggregate, improving economic conditions may shift workers from anger to indifference -- from actively disengaged to not engaged -- but not from indifference to inspiration. Actively disengaged employees in a tough economy, with fewer choices, may be trapped in jobs they don’t like. Job opportunities allow bitter workers to leave bad situations and find better ones.
2. During challenging times, employee engagement is an even greater predictor of the performance of business units.
Gallup research has shown that the relationship between employee engagement and business performance is somewhat stronger during economic recessions. This is likely because engaged employees double down in their efforts during tough times while those who are uninspired feel they are victims of circumstances and have no agency to make things better. Business units with more engaged employees are more resilient in turbulent and uncertain environments.
Employees with higher engagement are also more committed to their organizations when the going gets tough, as found in Gallup studies of engagement and employee retention conducted after 2020. With substantial changes in how and where work is done post-pandemic, leadership and management are more challenging than ever.
Gallup’s updated meta-analysis finds an even stronger relationship between employee engagement and employee retention rates. For example, for companies that average 40% or lower overall turnover rates, business units in the bottom quartile of Gallup’s employee engagement database have 51% higher employee turnover than those in the top quartile -- a difference that has increased significantly since 2020.
3. Government labor policies and employee engagement are not an either/or proposition.
As part of this year’s State of the Global Workplace report, Gallup analysts dug deeper into understanding the relationship between countries’ labor protections, employee engagement, and the wellbeing of workers.
Labor laws have a stronger relationship to current life satisfaction than they do to optimism about the future. Employee engagement, as opposed to labor protections, more strongly explains optimism for the future: Having a great job gives people hope.
The labor rights categories most highly correlated with current thriving in life were in areas of maternity, fair wages, social security, employment security, fair treatment, and safety. A key finding is that employees who work in countries with strong labor laws and are also engaged in their jobs have the highest overall wellbeing.
People often contrast Western Europe’s “work to live” culture -- which is seen as more balanced -- with America’s “live to work” mindset, which many perceive as more of a stressful grind. The reality is that not all labor laws in places such as Europe relate to wellbeing in the same way, and there is massive variance within countries in the engagement or disengagement of individual workers.
For example, engaged employees within countries with work-hours laws reported lower levels of daily stress. Yet, this relationship was strongest for laws restricting working hours to up to 56 hours per week and those aimed at a minimum of three weeks paid annual leave.
In summary, Gallup has found there is an important interplay between factors at the business-unit level and factors at the macroeconomic and government-policy level that are associated with higher or lower employee wellbeing.
Highly inspiring and engaging jobs are driven by what happens locally, driven by great managers. Macro-level job markets and policies have little to do with high levels of employee engagement. On the other hand, the broader job market and specific labor laws can reduce the probability of worker misery. A combined mix of the right labor laws and engaging workplaces reaches the best wellbeing outcomes.
