- Disengagement costs the German economy 96.1B to 113.9B euros a year
- German managers desperately need help to engage their people
- Highly engaged work cultures are more resilient in a crisis
Gallup has been tracking workplace experiences in Germany since 2001. As a result, our database reflects the impact of the most influential economic and workplace events of the 21st century, including recessions and transformative digital advances. You might even say we have the world's richest database of employee experiences in times of disruption.
But the German economy has never experienced disruption like COVID-19. You could predict that this disruption would massively change the working experience in Germany.
In some ways, it did. The rates of stress, worry, and burnout are up, predictably. But surprisingly, it had no effect on the employee experience of being engaged at work.
In fact, the engagement rate in Germany has shown practically no change for the past 19 years with the percentage of engaged sitting somewhere between 11% and 17%. Nothing has touched it -- not the Euro crisis, not a global recession, not even a pandemic.
This doesn't indicate that workers have been insulated from the worst the 21st century has thrown at them. It indicates that, in general, companies have not progressed in fulfilling the fundamental, human needs of their workers.
The Costs of Disengagement Are High
This failure to meet fundamental employee needs may seem irrelevant in the context of German productivity. Germany is one of the largest exporters in the world and German products are coveted for their quality. However, many of Germany's most successful industries are currently coping with skills gaps, high turnover, and the transformative effects of automation.
So, when 68% of the workforce is not engaged -- not putting energy or passion into their work, not emotionally attached to their employer -- German businesses become dangerously vulnerable to disruption in ways they may not see. Meanwhile, 15% of Germany's workers are actively disengaged, which could mean they are so frustrated they could be out to damage their company.
This segment of actively disengaged workers alone is costing the German economy between 96.1 billion to 113.9 billion euros annually according to Gallup estimates. Exemplary cost drivers that inform this estimate are:
Burnout: The actively disengaged are significantly more likely than their engaged counterparts -- 50% vs. 26% -- to say that they felt burned out due to work stress in the last month.
Absenteeism: This is 37% higher among actively disengaged employees when compared with engaged workers (7.1 days versus 5.2 days). Gallup estimates that German companies lose 288 euros for each day an employee is absent from work.
Bad ambassadorship: Only 8% of actively disengaged workers strongly agree that they would recommend their company as a place to work to friends or family, which is a real cost to the company's brand. And fewer than one in four actively disengaged employees would recommend their company's products or services.
Turnover: This has been increasing for years, yet 82% of engaged employees strongly agree they plan to be with their company a year from now, compared with 41% of actively disengaged employees, 19% of whom are actively looking for a new job.
In general, companies have not progressed in fulfilling the fundamental, human needs of their workers.
Because actively disengaged employees are so harmful to an organization, leaders might be glad they want to leave. But many of these workers are highly trained experts, practitioners and professionals -- employees whose skills are desirable as well as expensive and time consuming to replace.
It took 131 days to fill a vacancy with a qualified employee in 2020, on average, according to the Bundesagentur für Arbeit, Germany's federal job agency. That's 47 more days than it took to fill a vacancy in 2015 and 76 more days than it took to fill a vacancy in 2010. The number of unfilled positions in 2020 was just under 600,000, on average, according to the same source. And replacement costs can be 1.5x the employee's annual salary.
How Can Germany Begin to Fix This? It Starts With the Manager
All those costs have been adding up, year after year, for decades. The tally doesn't account for the untapped performance potential of the disengaged, the toll frustration and feeling uncared-for takes, or the impact of low worker wellbeing on business outcomes. These numbers are in the red these days.
To get more companies out of the red and into the black on more workplace measures, German leaders need to make employee engagement as meaningful as all the other metrics on the P&L sheet. The best place to start is with managers.
Engagement is fundamentally local, which is why managers affect 70% of the variance in team engagement. The best managers maintained or increased engagement during COVID-19 because they supported their employees' individual needs. They communicated clearly, kept people informed and accountable, and made it possible for workers to contribute what they do best every day, even under challenging circumstances.
Those are valuable attributes, but the traits most valued in German managers -- reliability and efficiency, being straightforward and structured -- don't necessarily equip managers to develop the emotional bonds that create engagement.
The best managers maintained or increased engagement during COVID-19 because they supported their employees' individual needs.
Most German managers, 51%, said they were moved into management for their experience and tenure, and 47% said it was due to success in a previous non-managerial role. Sixty percent say they have not participated in training meant to improve their people management skills.
Experience, tenure, and previous success, however, are not the same as managerial talent. And as most managers receive no formal training around managing people, it's no surprise German engagement levels haven't improved.
The bill for that approach to management is going to come due when more agile and innovative competitors take advantage of opportunities that German businesses cannot with a workforce that's largely not engaged. They're already paying a substantial amount in lost potential, performance and productivity.
Envision a Future Where Employees Are Engaged; Here's How it Looks
For Germany to remain an economic powerhouse, German companies need to invest in solid managerial education to help managers change their behavior from process and structure orientation toward the type of coaching relationships that engage workers. Companies need to teach managers how to drive engagement, hold them accountable for engaging their people, and establish recognition and performance management systems that reward an employee-centric approach to management. And because engagement is correlated with willingness to support change, that approach will prime employees to support the many disruptions the 21st century has in store for Germany.
For Germany to remain an economic powerhouse, German companies need to invest in solid managerial education to help managers change their behavior from process and structure orientation toward the coaching relationships that engage workers.
There's nothing to stop us. In fact, many German companies have already begun. Their focus on engagement helped them achieve extraordinarily high rates of engagement. Gallup's German clients are, on average, seeing four engaged employees for every one actively disengaged worker, compared with a ratio of 1-to-1 among the German employee population overall.
They're also seeing profits other companies lack -- the median percentage differences for highly engaged companies is 81% in absenteeism, 64% in safety incidents, 14% in productivity, 18% in sales, and 23% in profitability.
Those companies, incidentally, had employee engagement in hand long before the pandemic. It sheltered them. Indeed, Gallup's rich database of disruption shows that highly engaged companies tend to weather crises better than less-engaged companies.
Leaders should take heed of that. The 21st century will bring yet more disruption. Companies that commit to manager education and achieving progress on the most fundamental needs of their workers will be protected from that disruption. In some cases, they'll be able to take advantage of disruption. But in all cases, their employees will experience work in the kind of positive, resilient way that too few do -- but should. And could.