For leaders, 2022 was defined by a war for talent and the office.
Slumping employee engagement and wellbeing painted a grim picture of disrupted workplaces across the world. Some workers reevaluated their work lives, and others rethought their careers entirely. Some even took to social media and voiced their frustrations through testimonials about “quiet quitting,” “coasting at work” and “quiet firing.”
Many workers transitioned into “hybrid work,” splitting time between working from home and the office. Debates ensued about how often they should be in the office -- and who should make those decisions. Employee-employer relations frayed. In extreme cases, leaders demanded all workers return on-site full time, and employees simply ignored the rules.
Leading teams and organizations to calm waters has never felt quite like this. With continued economic headwinds on the horizon and flailing consumer confidence comes a great deal of uncertainty about the future of the workplace.
One thing is certain: How we work and live has changed … and we must adapt.
What’s next for 2023, and where should leaders and managers focus our efforts?
Here are six of Gallup’s most important findings of 2022 to follow in the new year:
1. The employee engagement slump continues.
Employee engagement is critical to the productivity, morale, development and retention of every organization’s workforce. Engaged employees are invested in and enthusiastic about their work and workplace -- they consistently outperform and stay longer than less-engaged employees.
Employee engagement in the U.S. had been steadily increasing for a decade when the COVID-19 pandemic hit. Amazingly, engagement continued to reach record highs in 2020 amid efforts to save businesses and support employees. But as the pandemic wore on and leadership efforts waned, engagement began to decline in mid-2021.
By early 2022, U.S. employee engagement slumped to a seven-year low with 32% of employees engaged and 17% actively disengaged at work. The slump continued throughout 2022 as engagement levels remained relatively unchanged.
Looking forward, the stagnation of employee engagement is one of the biggest threats to organizations and entire economies as we transition to 2023 and beyond. Gallup research has long tied engagement to important organizational outcomes, such as profitability, productivity, customer service, retention, safety and wellbeing. In fact, employees who are not engaged or who are actively disengaged cost the world $7.8 trillion in lost productivity (11% of global GDP) last year, according to Gallup’s State of the Global Workplace: 2022 Report.
The good news?
Organizations dedicated to improving employee engagement have long weathered these storms and outperformed their less-engaged competitors in the process. Not only can progress be made on engagement in 2023, but our Gallup Exceptional Workplace Award winners currently cultivate more than twice as many engaged employees as the national average.
2. Hybrid work is here to stay -- the office will never be the same.
In 2023, the “Great Global Work-From-Home Experiment” will likely find its equilibrium. Approximately 56% of U.S. full-time employees are remote-capable, and about half of those employees are now working as hybrid workers. Only two in 10 are fully on-site, and a mere 6% of remote-capable workers want to be fully on-site going forward.
Long term, organizations are planning for their remote-capable workforce to include:
- 55% hybrid workers
- 22% fully remote workers
- 23% fully on-site workers
Despite some leaders’ wishes, remote work flexibility is here to stay. Nearly one-third of hybrid workers and six in 10 fully remote workers say they would be “extremely likely” to look for opportunities with other organizations if their employer decides not to offer remote work flexibility in the future.
Going forward, asking employees where they work best will be an important piece to the “making hybrid work work” puzzle. When their preferred work location does not match their actual location, employees are substantially less engaged, more likely to burn out and more likely to leave their employer.
Hybrid teams must also learn to coordinate their schedules in a way that optimizes team collaboration and ensures customer needs are met. Gallup recently discovered that hybrid workers are most engaged when their team (vs. the company or individuals) collaboratively sets work schedules and policies.
3. Don’t confuse being in the office with culture.
One of Gallup’s most striking findings from 2022 was that hybrid workers feel closer to their organization’s culture than do fully on-site workers. This challenges the idea that “the office” is synonymous with “culture.” In-person interactions are powerful, but hybrid workers are likely getting something else -- more intentional in-person experiences and online experiences. They may also feel that, when they are given greater flexibility, their organization cares about and trusts them more, which strengthens the bond with their employer.
Hybrid work can help move organizations out of “default mode” and clarify employer and employee expectations. Today’s new hybrid workplace will challenge many leaders to reinvent the meaning, purpose and experience of their workplace culture. They will have to redefine the “why” and “how” behind their work strategies, practices and norms. Above all, we recommend encouraging employees to be more involved (and feel more included) in what that new culture will be. After all, a workplace culture is ultimately defined by “how we work together.”
4. The hybrid workplace will challenge managers in new ways.
Managers are the lynchpin that hold your teams together. The pandemic, remote work and, now, return to the office transitions have made their jobs more difficult than ever. Managers are constantly stuck between frustrated leaders and team members. They are the translators and scapegoats.
Hybrid work brings a new wrinkle to their jobs with a unique set of communication and coordination challenges -- and no tried-and-true playbooks to fall back on.
Although the majority of employees prefer hybrid work, Gallup analysis shows that managers are facing new burdens from it. Hybrid work has simply put more on their plate, from the daily coordination of employees who are on different schedules and working from different places, to the challenge of not being able to observe all of the real-time interactions of the team they’re managing. As a result, hybrid managers are now more burned out than their direct reports and their bosses. In fact, they’re feeling more burned out and less connected to their company culture than managers who lead fully remote or on-site teams.
The problem is that the hybrid work transition has focused mainly on supporting individual contributors. And since individual contributors are more likely to benefit from executing their tasks alone, they also benefit from doing those tasks in a way that works best for them.
Managers are different. They are in charge of fostering things like productivity, collaboration, engagement and equity at the team level. They are tasked with embodying company culture and values. And they often rely on managers from other functions for help, advice and support. In the shift to hybrid, many managers may have lost some of the informal connections that made their job easier and more enjoyable. Providing managers with more support, training, communication, and opportunities to rebuild their relationships and networks will be imperative this year.
Read more: Manager Burnout Is Only Getting Worse
5. Burnout and mental health struggles are the new productivity killers.
Employee wellbeing is foundational to performance, engagement and longevity at work.
Yet, employee wellbeing has been dismal throughout the pandemic with 2022 being no exception. Three in 10 employees in the U.S. reported being burned out “very often” or “always” at work. Four in 10 employees revealed that their job had a negative impact on their mental health in the past six months. And individuals with poor or fair mental health missed nearly five times as many days of work as those with good mental health in 2022.
Further, employees are rapidly losing faith in their employer as only 24% of employees strongly agree that their employer cares about their wellbeing.
It’s no coincidence that “quiet quitting” was one of the most popular workplace catch phrases of 2022.
Between slumping employee engagement and rampant wellbeing challenges, many employees are withdrawing from their job in order to preserve their mental health.
Going forward, having a clear strategy for protecting people from burnout and addressing mental health issues is not just a defensive move -- it will be key to attracting, engaging and retaining talent. When we asked currently employed individuals what they wanted most in their next job, the No. 1 answer was more pay, but a close second place was “greater work-life balance and better personal wellbeing” -- a notable increase for these key factors since 2015.
Organizations that want to win this year’s war for talent will need a clear wellbeing value proposition.
6. Quiet quitting in the workplace threatens customer retention.
According to the famous father of modern management, Peter Drucker, workplaces ultimately exist to create and serve customers. Unfortunately, in recent years, both employees and customers have been losing trust in their organizations and brands. Customer satisfaction and confidence are in decline. At the same time, only 29% of employees strongly agree that they take pride in the quality of products or services they deliver, and 23% strongly agree their organization delivers on its promises to customers. The failure to win employees’ trust and commitment is harming organizations’ ability to win and keep customers.
This may be part of a broader societal trend toward greater distrust in institutions. However, there are organizations that still get this right -- they’ve built high-trust organizations that deliver exceptional customer experiences. When these organizations are able to engage employees and make them feel connected to their culture, the payoff is a workforce that’s four times as likely to take extreme pride in delivering the best possible products and services.
Ultimately, organic growth is fueled by customer acquisition and retention, and the brands that build a strong, customer-focused workforce will be the ones to watch and emulate.
2023’s Biggest Challenge: Workplaces That Work for Employees, Employers and Customers
It seems likely that for most organizations in 2023, workplace productivity will be a major hurdle to profitability and growth.
The good news is that the data paint a clear path forward. Reinvigorating your company culture with a focus on employee engagement and wellbeing -- particularly through better manager support and training -- will have the biggest positive impact on our disrupted workplaces.
In the new hybrid workplace, teams will have to learn to coordinate, collaborate and lead differently. Yet, engagement and wellbeing must still be the foundation of effective hybrid teams.
Naturally, making better use of virtual collaboration tools, practices and workspaces will be important, but evolving how you work will ultimately come down to strong leadership, clear expectations, exceptional teamwork, helping people play to their strengths and regularly having meaningful performance development conversations.
The best news is that we can learn to do this from organizations that have successfully built winning cultures and navigated major workplace disruptions.
Decades of Gallup’s research on organizational performance teaches us this:
Organizations dedicated to building a strong workplace culture that prioritizes employee engagement and wellbeing reap the rewards of better productivity, profitability and customer growth. They outperform their less engaged competitors -- especially during economic recessions.
How is your organization preparing to build a better workplace in 2023?