Why is Employee Engagement a Lingering Problem?
Gallup recently released its annual State of the Global Workforce Report[i], widely considered as the gold-standard measurement of employee engagement. The key finding in this year’s report is that only 20% of the global workforce is currently engaged, with this number dropping in consecutive years for the first time in the report’s 16-year history. In fact, since Gallup started tracking this metric in 2009, the highest result they uncovered was a mere 23%.
Why is this? What does this say about our current working environment that this is considered the norm? Why are companies not aggressively pursuing this as a means of improving their bottom line?
There is an abundance of evidence demonstrating that employee engagement has a clear link to overall business performance. Gallup’s data indicates that highly engaged organizations achieve 14% higher productivity, 32% fewer quality defects, and perhaps most importantly, 23% higher profitability.[ii] A Willis Towers Watson study showed that businesses with higher engagement levels have three times higher operating margin than those with low engagement.[iii] A Corporate Leadership Council study conducted in partnership with the Harvard Business Review revealed that higher employee engagement led to a 57% improvement in discretionary effort and a 20% increase in individual performance.[iv]
So why is this still a lingering problem that businesses can’t seem to fix? We believe that among the many factors contributing to this pervasive issue, there are a few that represent the root causes.
#1: Managers are not engaging their teams
For any team, the leader sets the standard for how the team operates; establishing the norms for how they communicate, collaborate, and approach their day-to-day responsibilities. A high-performing manager (among other things) empowers their team, seeks their input, and puts them in the best position to make use of their unique skills. This in turn, should lead to engaged employees who feel respected, recognized, and enabled to make a real difference.
While this sounds simple on paper, it is clear that the majority of managers either lack the necessary skills for creating this type of empowering environment, or are too busy with their own responsibilities and deliverables to devote the necessary effort into managing their teams. A 2024 research study from Gartner revealed that 85% of managers receive no formal management training prior to entering their role.[v] This lack of formal preparation, combined with the tendency to promote based on role-specific performance rather than managerial skill, means that most managers understand what good performance looks like, but do not understand how to motivate that behavior from their teams.
Perhaps unsurprisingly, Gallup’s data has shown that over the past few years, manager’s engagement levels have similarly declined, dropping from 31% in 2022 down to 22% in 2025. Their data also demonstrates that managers account for at least 70% of the variance in employee engagement scores[vi].
If a team’s manager isn’t engaged in their role, and setting the standard every day for how to collaborate, overcome obstacles, and deliver on team goals; it’s not a far stretch to wonder why the members of the team wouldn’t be fully engaged.
#2: Companies are not incentivizing employees to go above and beyond
People take pride in their work. To many of us, work represents our primary source of self-satisfaction and personal accomplishment. No one starts a new job and says to themselves, “I can’t wait to phone this in and take it easy.” So how does this sense of enthusiasm from a new hire fade over time?
We believe that companies are not providing sufficient incentive for employees to strive to deliver beyond what is expected of them. One culprit for this dynamic is arguably the most important incentive of all, money.
Payscale, a leading provider of compensation intelligence solutions, noted in its annual Compensation Best Practices report that only 48% of organizations are planning to give merit increases in 2026, and of that group, 44% are giving “peanut butter pay” increases, a uniform increase given across the board regardless of performance.[vii] An employee is less likely to “give it their all” if they do not believe they will receive a raise, or if they do, will get one that barely beats the inflation rate and is not tied to their personal accomplishments.
Compounding this, promotions themselves are not a guarantee. ADP’s Today at Work report found that only 4.5% of workers are promoted within two years of being hired.[viii] Lacking this clear growth trajectory, employees are more apt to work at the minimum level required for them to maintain their established level of output, rather than seeking to innovate, improve processes, uncover inefficiencies, and demonstrate all the other hallmarks of a fully engaged worker.
#3: Job insecurity of the AI era
The ubiquitous headlines of the past few years have incited a growing fear that AI is out to take your job. This feeling isn’t exactly unfounded.
Up until the last few years, the traditional dynamic was that a successful business relied on growth. Whether it was customers, employees, office locations, or operating revenue – if it had the word growth next to it, it was a good thing. Wall Street would smile upon the organizations adding to their headcount, seeing this as a sign of a healthy business that is poised for future growth.
However, this doctrine has seemed to flip on its head as of late. The biggest companies in the world are now touting their own job losses[ix]. Business leaders are eager to show off their slimmed-down organizations, seeing employees as overhead to cut for the sake of reduced payrolls and insurance bills. These are often the same companies that are aggressively pushing for AI to automate their business[x].
Employees are not blind, they see the writing on the wall. If they believe that their organization is eager to erase their contributions by giving their responsibilities to an AI agent, you can see why they would be reluctant to be fully engaged in their roles.
How To Solve This Issue
Clearly there are a number of dynamics that are impacting this overarching (and longstanding) employee engagement issue. Fortunately, there are many approaches that can alleviate these issues and bring the best out of your staff.
In the conclusion to this two-part series on employee engagement, we will outline our thoughts on how to address these issues and create a highly engaged business.
[i] https://www.gallup.com/workplace/349484/state-of-the-global-workplace.aspx
[ii] https://www.gallup.com/q12-employee-engagement-survey/
[iii] https://employeeengagement.com/wp-content/uploads/2012/11/2012-Towers-Watson-Global-Workforce-Study.pdf
[iv] https://hbr.org/2004/12/the-things-they-do-for-love
[v] https://www.fastcompany.com/91088693/85-of-new-people-managers-receive-no-formal-training-this-is-why-you-cant-fake-it
[vi] https://news.gallup.com/businessjournal/182792/managers-account-variance-employee-engagement.aspx
[vii] https://www.payscale.com/featured-content/cbpr#pay-increases
[viii] https://www.adpresearch.com/wp-content/uploads/2023/08/TaW_Q32023v1.pdf
[ix] https://www.wsj.com/lifestyle/careers/layoff-business-strategy-reduce-staff-11796d66
[x] https://www.theguardian.com/technology/2026/apr/06/tech-layoffs-ai-work