Employee Engagement Strategies: Fixing the World's $8.8 Trillion Problem

Employees who are not engaged or who are actively disengaged cost the world $8.8 trillion in lost productivity, according to Gallup's State of the Global Workplace: 2023 Report. That's equal to 9% of global GDP.

In 2022, 23% of the world's employees were engaged at work. This is an increase of two percentage points from 2021, and surpasses the prior high point of 22% recorded in 2019.

Employee engagement had been rising for the past decade, but the pandemic has stalled that steadily increasing trend. Leaders are now responsible for creating new work environments that are more resilient and adaptable to global shocks. The future trajectory of employee engagement will be one measure of their success and, with increases recorded for the past two years, it appears to be showing signs of recovery.

Why Engagement Matters

The term "employee engagement" describes a psychological commitment to one's work, team and organization. It's a mental state that fluctuates all the time, influenced by workplace relationships and events. Engaged employees are mentally in the zone, ready for action.

Engaged employees are the engine that moves your organization forward on every level:

• The employee-leader relationship: Leaders have the power to set priorities and convene talented teams. But it's individual employees, often far from the boardroom, who make leadership initiatives a reality. Do those employees know what they're supposed to do? Do they have what they need? Are they aware of the mission? Do they see the purpose of their work? The answer to these questions is the difference between organizational success and failure.
• The employee-employee relationship: Business runs on relationships, and relationships run on trust. Employees need confidence that their coworkers are looking out for each other and that their manager cares about what happens to them. Creating a sense of flow in a restaurant kitchen, in a classroom, in an office or online requires social bonding and connection gained together through positive performance experiences.
• The employee-customer relationship: Engaged employees are knowledgeable and attentive. They take personal ownership for making customers happy, and they are willing to go the extra mile. They believe in what they are selling. In short, they create remarkable customer experiences. They create "Wow!" moments that make customers buy more, spend more and come back for more.

Engagement as a Strategic Advantage

Engaged employees sound like great people. Who wouldn't want more of them? But here's the catch: Engagement is not a characteristic of employees, but rather an experience created by organizations, managers and team members.

Engagement is not the default position. Every organization engages some employees, but most organizations fail to engage the majority of them. It's the exception, not the rule.

Engagement cannot be created through financial incentives. Employee pay is the "easy button" for attracting, retaining and motivating employees. But it doesn't create psychological ownership for one's work. Moreover, competitors can raise their wages at any time and steal those employees away.

Creating a culture of engagement is not easy. Building a highly engaged organization takes intention, investment and effort over several years. But the results are worth it. Gallup's most recent employee engagement meta-analysis of 112,312 business units found that teams scoring in the top quartile on employee engagement saw the following benefits compared with bottom-quartile teams:

• 10% higher customer loyalty/engagement
• 23% higher profitability
• 18% higher productivity (sales)
• 14% higher productivity (production records and evaluations)
• 18% lower turnover for high-turnover organizations (those with more than 40% annualized turnover)
• 43% lower turnover for low-turnover organizations (those with 40% or lower annualized turnover)

Engaged cultures are valuable and difficult to copy -- the very definition of a competitive advantage. Organizations that make engagement the controlling factor in day-to-day operations stand out from their competitors. They are also more resilient to shocks: A Gallup study of organizations during the Great Recession found that engaged business units or teams outperform their peers even better during hard economic times.

Global engagement numbers show that while many employers are doing employee engagement surveys, few have really tapped into the power of engagement as a strategic asset. It's worth far more than most organizations realize.