Rebuilding India’s Workplaces for the Future

Foreword

As businesses navigate technological disruption, geopolitical uncertainty and rising stakeholder scrutiny, the ability to align people around a shared purpose and enable them to perform at their best has become one of the defining responsibilities of corporate leadership.

At the Institute of Directors (India), we have believed since our founding in 1990 that good governance extends beyond compliance. It requires visionary boards, accountable leadership and ethical decision-making, but it also requires a real understanding of the human dimension — how strategy gets executed, how culture is experienced, how resilience is built. Over three decades, that conviction has become a shared view across our community of directors, independent directors, policymakers and corporate leaders.

The Institute of Directors is pleased to partner with Gallup on this report. It combines Gallup’s research on India’s workplaces with the perspectives of 181 IOD members and extensive conversations with senior leaders, offering insight into how organisations can strengthen employee engagement as workplace and leadership expectations continue to shift.

Employee engagement is often treated as an HR responsibility. It is better understood as a strategic indicator of organisational health — whether employees know what’s expected of them, feel connected to the organisation’s purpose, trust their leaders, and are able to contribute meaningfully. These conditions shape an organisation’s ability to execute strategy, retain talent and deliver sustainable performance.

Boards don’t manage the day-to-day employee experience, but they shape the conditions in which it takes place — leadership quality, culture, succession planning, and the governance frameworks that enable performance. Their role isn’t just to oversee engagement initiatives; it’s to ensure the organisation has the leadership and operating conditions for people and performance to thrive together.

Ultimately, governance is about performance, performance is driven by people, and people are inspired by purpose. Sustainable value creation lies at the intersection of all three. This report is a reminder that organisations investing in engaged people and purpose-driven leadership are better placed to build resilient institutions and remain competitive.

The evidence here is compelling, and the direction is clear. What remains is the resolve of leaders to act on it. We hope this report encourages directors and executive teams to look past engagement metrics and treat employee engagement as a boardroom priority rather than an operational one. Today, Indian boards must be prepared to lead their organisations in an era characterised by rapid AI adoption, constant change and an increasingly diverse, multigenerational workforce.

Manoj K. Raut

CEO & Secretary-General, Institute of Directors (India)

For more on the Institute of Directors and Gallup partnership, download the press release.

Executive Summary

State of the Global Workplace: 2026 Report

India is not facing a sudden surge of employees working against their organisations. Rather, a major risk to India’s workplaces arises from the growing number of employees who are present at work but not psychologically invested in their role, team or organisation. Gallup’s State of the Global Workplace: 2026 Report shows that 23% of Indian employees were engaged in 2025 — the lowest point in four years — while 18% were actively disengaged (based on three-year rolling averages). The majority of the country’s workforce (59%) consists of “not engaged” employees who are physically present but psychologically detached from their work and employer.

For the country’s CEOs and executive teams, this lack of workforce engagement is an issue affecting their organisations’ capacity to execute. When employees become psychologically detached, organisations lose more than enthusiasm and commitment; disengagement dissipates employee initiative, adaptability, resilience, discretionary effort, and the willingness to solve problems beyond the minimum requirements of the role.

India’s managers are feeling the pressure, and it is affecting their own engagement. Engagement among Indian managers fell from 39% in 2024 to 30% in 2025 — a steeper decline than among individual contributors. Yet managers are the essential link between organisational priorities and the employee experience. They clarify team expectations, coach performance, recognise individual contributions, manage trade-offs, and help employees connect the work they do to a larger purpose. Organisations cannot expect managers to strengthen the engagement of their teams unless they are provided with adequate support.

This report combines Gallup’s national workplace findings with the perspectives of 181 IOD members and leadership conversations representing multiple sectors. We examine three critical questions: What is driving “quiet quitting” in India’s workplaces? What do stretched managers need to engage and lead their teams effectively? Finally, what should senior leaders change to strengthen manager engagement? Our report findings indicate the necessity of one connected people-performance system rather than a collection of isolated human resources initiatives.

Four Findings for Leaders

The report’s insights also echo the discoveries revealed in Gallup’s India Culture Risk Report 2025. Many Indian organisations benefit from a strong foundation of ethics, inclusion and purpose. The challenge facing leaders is to build on this foundation by ensuring consistent employee experiences of clarity, feedback, accountability, growth and leadership inspiration.

Employees experience culture less through a values statement than through everyday decisions and experiences: how managers are selected, how performance is evaluated and discussed, how individual contributions are recognised, where employees can apply their strengths, and whether leaders’ actions match their words.

Four Priorities for Action

1. Select, equip and support great managers. Treat management as a distinct role requiring talent, training and support.

2. Put talent where it performs best. Design roles and careers around employee strengths, fit and accountability.

3. Bring culture to life every day. Translate values into clarity, feedback, recognition and team habits.

4. Turn engagement into stakeholder value. Track the progress of customer, productivity, quality and retention outcomes.

Taken together, the findings and leadership priorities identified in this report assert that engagement is an operational imperative that must be managed continually, not as an annual programme. The Gallup Path illustrates how people create organisational value: Great managers ensure that individuals are in the right role and are able to boost their performance by harnessing their natural strengths, and engaged employees deliver positive customer experiences and increase customer loyalty. These experiences contribute to greater, sustainable organisational performance.

Managers Are Expected to Fix India’s Engagement Crisis. They Are Struggling.

In 2025, 30% of Indian managers were engaged, down sharply from 39% in 2024. Engagement among individual contributors also fell, from 24% to 19%, possibly attributable in part to the lower engagement of their managers. This matters because managers translate organisational strategy into day-to-day work: They clarify expectations, coach performance, recognise contributions, manage trade-offs, and help employees connect the work they do to a larger purpose.

The pattern in India is part of a wider manager strain. Globally, manager engagement fell by five points between 2024 and 2025, from 27% to 22%. Managers are being asked to reconcile growing executive demands with changing employee expectations, organisational restructuring, AI adoption and tighter resources — often without additional support or a redesign of their role.

Larger spans of control may be one factor in declining manager engagement, although expanded team sizes do not necessarily undermine manager engagement. Talented and well-supported managers can lead larger teams while remaining engaged. The critical factors include managerial talent, team collaboration, time, authority and empowerment, technology, process design, and ongoing support.

Key IOD Member Insights

Gallup’s workplace research highlights the scale of India’s engagement challenge. Company leaders must now decide what actions to take to address it.

Gallup and the Institute of Directors (India) surveyed 181 IOD members, including board members and senior business and governance leaders, to share their perspectives on three interconnected issues affecting India’s workplaces:

• What is weakening employees’ psychological commitment?

• What conditions do stretched managers need in order to lead effectively?

• What can senior leaders change upstream to strengthen manager engagement?

These are not three separate workforce questions. Together, they connect the employee experience, manager capability and capacity, and the leadership decisions that shape both.

According to leaders, organisational culture is the primary cause of quiet quitting, not employee attitude. Culture affects the degree to which employees are invested in their work. Team design and clear operating procedures determine whether managers have the capacity to lead effectively. And manager selection determines who should be entrusted with shaping the daily employee experience to improve team engagement.

2. Stretched Managers Need Support

Fostering a team culture in which employees support and rely on one another is the leading priority identified by IOD members, cited by 43%. Three other priorities were selected by 40% of members: Build manager capability for meaningful coaching conversations, use technology to simplify work, and streamline processes to reduce complexity. Enabling managers to drive accountability and performance follows closely, identified by 39% of IOD members.

These findings reveal that respondents do not expect managers to lead larger teams through personal heroics. Rather, leaders describe a system that optimises managerial capacity and capability: collaborative teams, meaningful performance conversations, reduced workflow friction and clearer accountability. Technology creates value when it frees up manager time and delivers greater insight and focus; however, it becomes counterproductive when it adds administrative burden or weakens human collaboration and relationships.

As team sizes increase, organisations should redesign the workplace environment around the manager: Simplify routines, remove low-value approval processes, create clear team operating procedures, strengthen peer support, and equip managers to coach their teams. A larger span of control is more likely to work when managerial capacity and capability grow with it.

3. Manager Engagement Starts With Talent

Forty-one percent of IOD members surveyed say senior leaders should select managers based on talent and role fit rather than simply past performance. Respondents also prioritise recognising and elevating the manager role (38%), strengthening communication between senior leaders and managers (35%), investing in manager development (34%), and providing clear career pathways for managers and individual contributors (33%).

Being promoted to manager should not be an automatic reward for strong performance or technical excellence. People management is a distinct role requiring the ability to build relationships, create accountability, individualise support, communicate with clarity and inspire others. A strong individual contributor may understand the work deeply without having the talent or motivation to help other people perform at their best.

Selection based on manager talent is only the beginning. The manager’s role also requires clear expectations, focused training, a strong connection to enterprise priorities, targeted development and visible recognition. When organisations choose the right people to be managers but place them in an untenable position, they waste managerial talent.

1. Select, Equip and Support Great Managers

Employees do not experience culture in the abstract. They experience it through decisions about priorities, workload, recognition, development and fairness — many of which are made by their manager. A great manager makes strategy understandable, builds trust during times of change and helps people see how their contribution matters. In contrast, bad managers often create ambiguity, increase friction, weaken trust and undermine team engagement.

Leadership’s first decision is selecting the right people for manager roles. Great management requires a set of talents that differ from those needed for technical expertise: the ability to motivate people, build relationships, make sound judgements, hold people accountable and offer individualised support. Promotion history and subject-matter knowledge may be relevant, but these do not provide sufficient evidence of manager potential.

Leadership’s second decision is about improving manager capability. Even naturally talented managers need role training, coaching skills and a positive operating environment. Gallup's global research shows that effective coaching can be learned. Participants in coaching-focused manager training have experienced up to 22% higher engagement than non-participants; their teams have seen engagement rise by up to 18%; and manager performance metrics have improved by 20% to 28% nine to 18 months after training.

Leadership’s third decision is about sustainability. Managers need someone who actively encourages their development, ensures access to useful data, empowers them with the authority to act, and allows sufficient time to have meaningful conversations with their team members. Ongoing development greatly increases the chance that managers themselves will be engaged and thrive. And a manager who is engaged and thriving is better positioned to create the right conditions for others to perform.

Great Management Is Defined by Moments of Truth

Seemingly minor management decisions can build enduring trust and loyalty.

2. Put Talent Where It Performs Best

Great managers do not treat their people like interchangeable components. They look for individual patterns of talent, energy and learning, and they match those patterns with the requirements of the role. This is not about allowing employees to do only what they enjoy. Rather, it is about matching talents and skills with accountability and opportunity.

Role fit affects both performance and engagement. People who work against their natural talents may still be able to perform, but at great expense and with much less consistency. An employee whose talents are a good fit for their role is more likely to learn faster, use their judgement to solve problems and sustain a high level of effort. Leadership’s task is to identify individuals who demonstrate a near perfect fit, show how their performance can be improved, and decide whether a different role or team would deliver greater value.

Strengths-based development transforms talent into consistent performance through knowledge, practice and feedback. It does not ignore weaknesses but rather distinguishes between areas of weakness that must be managed to reduce risk and those areas where additional energy or investment is unlikely to lead to meaningful improvement. The goal of strengths-based development is not to create well-rounded employees but to foster well-rounded teams in which complementary strengths combine to achieve a common purpose.

This approach becomes especially important during times of change or transformation. As technology reshapes how work is done, leaders should avoid redesigning jobs around yesterday's requirements or to accommodate technology alone.

Effective role design seeks to answer three questions:

1. What must the role accomplish?

2. Which individual strengths will matter most?

3. How can technology automate low-value tasks so employees can apply their judgement and creativity, build relationships, and create the greatest value?

Retention Begins With Better Role Design

Challenge, recognition, growth and ownership can be more effective and durable than a counteroffer.

4. Turn Engagement Into Stakeholder Value

The true value of employee engagement is much more than a score. It is a measure of how involved, enthusiastic and committed employees are to their work and their organisation. Engaged employees use judgement, take ownership and contribute beyond the minimum. They are more likely to notice a customer problem before it escalates, share pertinent information across functions, make extra efforts to improve quality, adapt quickly when circumstances change and persevere through difficult work.

The first stakeholder to feel the impact of employee engagement is often internal. When coworkers treat each other like internal customers, collaboration is more fluid, work moves with greater speed, and there is less defensive behaviour. Trust makes it easier to identify a mistake, ask for help or challenge an assumption before it becomes a costly error. This internal customer experience then travels outward in the form of project execution, product and service quality, and brand reputation.

Managers create the conditions that determine the quality and impact of the customer/stakeholder value chain. They either foster or discourage team collaboration, signal whether people will be praised or blamed for pointing out a problem, determine the importance of delivering on customer promises, and decide who is empowered to make decisions. When employees work in a culture of fear, they hide risk and stay well within their own protected boundaries. When employees experience encouragement and support from their manager, they are more likely to work in ways that create value for the whole organisation.

Gallup’s most recent Q¹² meta-analysis establishes correlations between team engagement and 11 performance outcomes, including customer loyalty, profitability, productivity, employee turnover, safety incidents, absenteeism, quality defects, wellbeing and organisational citizenship. The relationships are substantial and highly generalisable across organisations. This does not imply that engagement is the only driver of performance. Engagement differentiates between top- and bottom-quartile teams or business units within a typical organisation.

How Transparency Can Benefit Both the Customer and the Company

Psychological safety and transparency matter most when commercial considerations are at stake.

One Integrated System, Not Four Initiatives

Gallup's additive effect research shows how four workplace components combine to boost revenue per employee. Selecting and deploying the right managers is the largest single component, contributing a net gain of up to 27% higher revenue per employee. Selecting employees based on their role-specific talent adds a further 6% of net gain, an engaged workforce contributes another 18%, and strengths-based development adds a net gain of 8%. A comprehensive best-practice implementation would result in a combined 59% net gain in revenue per employee. The maximum potential impact is made attainable when the four components are implemented as a fully integrated system.

What Leaders Can Do Now

Start with a few high-impact decisions, and then build a leadership system that sustains engagement at scale.

Diagnose the system

• Review how managers are selected and promoted.
• Identify the processes that consume manager time without creating value.
• Examine manager engagement, span of control, training and support by business unit.
• Choose three business outcomes to link to engagement.

Redesign the experience

• Train managers in role fundamentals and coaching conversations.
• Simplify core routines, approvals and meeting workload.
• Pilot strengths and role fit reviews in mission-critical teams.
• Identify the leadership behaviours that make culture tangible.

Scale and govern

• Build a manager talent pipeline and expert individual career paths.
• Embed frequent performance conversations and team accountability.
• Track engagement scores alongside customer, productivity, quality and retention metrics.
• Review culture as a strategic asset and operational risk.

Which part of the system is currently limiting performance most? Manager selection, manager capacity, role fit, the daily employee experience, or the connection between engagement and business outcomes?