A note from the series editorDidier Elzinga, Founder & CEO, Culture Amp.
In uncertain times, we know that employee engagement is crucial for organizational stability, and also a source of hope for the future. That’s why we felt the time was right to turn to our data for a clearer picture of the engagement landscape.
In this article, People Scientist Kenneth Matos explores the current trends, what employees need to connect with their work, and how companies can step up.
Employee engagement – a key organizational success metric measuring how committed and connected your employees are – has long been known for being fairly static. Nevertheless, our data reveals that employee engagement as a whole has experienced meaningful changes in 2023.
Join us for a deep dive into the data to examine and understand the state of employee experience in 2023.
*Note: Charts 1, 2, 5, 6 and 7 were updated on December 7th, 2023 to correct some data errors. The analysis for 'Largest declines' (Chart 7) was also updated to reflect significant drops in employees' perceptions of their organizations' quality and improvement focus and their performance management systems.
Chart 3 was updated as of November 17th, 2023 to include Learning and Development as a key driver for Australia, US, and the UK.
Employee engagement levels in 2023
Let’s start by looking at what employee engagement survey results reveal about the current state of employee engagement globally and how engagement has been trending over the last year.
Globally, we found that about 7 out of 10 workers (72%) are engaged with their jobs. Engagement by country varies - workers in the US have the highest ratings, with 74% of employees reporting that they are engaged with their jobs, while countries such as Australia (71%), Germany (64%), and the UK (69%) have more modest employee engagement scores.
When we look at the data by industry, we find high scores are driven primarily by industries filled with well-paid knowledge workers like New tech, Professional services, and Science and research, which are all at or above 71%. By comparison, industries with many service and manual roles, such as Government (66%), Entertainment (68%), and Food and beverage (69%), have a median engagement score that is below 70%.
How is employee engagement changing? We found that between 2022 and 2023, engagement scores across most industries and regions declined, with a global decrease of 1.2% points. Of the countries included in this sample, Germany experienced the greatest decline (-3.3% points), followed by the UK (-2.4% points).
While the lower scores for Germany and similar countries might be explained by a more restrained culture of survey responding, changes in scores within a country are a better indicator of trends than cross-country comparisons. For example, we see that the drop in overall engagement scores in Germany is skewed by the significant declines in the New tech and Professional services industries. Something similar can be seen in the UK, with the Education and Nonprofit sector driving the greatest declines.
The data suggests that some of the causes of employee disengagement stem from the current, downturned economy. Moreover, this economic instability may have had an outsized, global impact on tech and organizations with constrained budgets that allow little flexibility in financial rewards.
On the other hand, improvements in industries like Sports clubs and Hospitality may reveal that employees now feel more secure in their work after the challenges created by COVID-related shutdowns.
What is driving engagement in 2023?
Executives worried about the declines in employee engagement may assume that the problem is fueled primarily by economic instability. To see whether this is true, we investigated which factors are most affecting engagement – and what the most engaged companies have been doing right to keep engagement up during this tumultuous period.
Globally, the number 1 factor most correlated with engagement is confidence in company leadership.
The data suggests that employees are looking for companies where they feel confident that their leaders are able to deliver both culturally and tactically. From a cultural management perspective, it is important that leaders can communicate an inspiring vision and illuminate how their people contribute to that mission. From a tactical angle, employees expect leadership to make strategic decisions that effectively allocate resources, and recognize and drive high-quality service and products.
Leaders should remember that some of the right decisions for the organization can be painful for employees (e.g., layoffs, salary cuts, slowing down promotions) and, therefore, seem like bad decisions from the employee’s vantage point. Communications departments may need to do more than usual to help employees understand how these painful choices and hopefully short-term sacrifices in the employee experience can lead to long-term benefits for both the organization and employees.
After leadership, we find that learning and development remains a top-line contributor to engagement across the globe, which continues the trend we have seen in the last few years. The data is consistent – if you want to engage employees, create a place where they can learn and grow.
Learning and development helps employees enhance their skills, satisfying their desire for self-improvement while at the same time increasing their chances of remaining employed and earning advancement opportunities.
Collectively, the message is clear: in 2023, employees are looking for employers who inspire confidence in the future of both the organization and their individual career journeys.
How do ‘Engaging Growth companies’ (top 33% of engagement and headcount growth compared to average) manage to balance an influx of new hires while maintaining high engagement?
We found that compared to the average company, Engaging Growth companies generally do better across the board. Where they excel, however, is in the areas that indicate strong management:
Effective application of resources and talent
Strong decision-making
Communicating a motivating vision
Executives will be excited to know that better perks aren’t what employees are looking for. Rather, employees want to work for companies with a strong leadership team that makes effective and sustainable use of their talents and places their contribution in a meaningful context – all of which executives should already be striving for in their daily work.
Note: While an increase in headcount is not a prerequisite for a high-engagement company, we have opted to incorporate positive headcount growth into our classification of an “Engaging Growth” company. We made this decision because growth is generally difficult to maintain as companies expand, and thus can be perceived as a sign of effective business practices.
What do employees feel most positively and negatively about in 2023?
In this final section, we examine employee sentiment towards different areas of the organization to understand how employees feel about work and the workplace in 2023. We also look at where favorability has improved and declined between 2022 and 2023.
Overall, we found that employees in 2023 feel most positively about the everyday aspects of work, like the value of their employer’s work, coworker relationships, and their role within the company. The majority also agree that their company has adapted well to remote work.
On the other hand, employees feel least positively around issues of stress, how their organization makes decisions about rewards and promotions, and how well accountability is enforced at their organizations.
While these are common challenges at any time, the current economic climate has pushed some organizations to double down on performance and productivity because they don’t have headcount to spare, especially if they’ve held layoffs. It’s likely that the sudden focus on performance has raised the stakes for struggling employees afraid of losing their jobs. Similarly, talented employees may be feeling increasingly frustrated as they watch resources go toward shoring up talent vulnerabilities, rather than rewarding their own contributions to the business.
While challenges remain in the world of work today, we see signs that wellbeing is significantly improving, contributing to half of the largest improvements since 2022.
Stress remains high, yet more employees are citing improved wellbeing cultures where they can take time off to rest, maintain a healthy work-life balance, complete what they need to each day, and know where to access wellbeing resources. Most notable was that the majority of employees felt that they spent enough quality time interacting with others – an improvement of 6.3% compared to the previous year.
Such improvements in wellbeing may be connected to the end of COVID-19 quarantines and the general continuation of flexible work options. Executives looking to drive return-to-office mandates will need to find a way to engage and motivate their employees if they want to sustain these increases in wellbeing.
Service and quality focus emerged as a top driver of employee engagement; conversely, our data shows that quality management has significantly declined since 2022 with a 10.4% drop.
Employee perceptions of performance management (PM) also declined significantly, with 5.7% fewer employees agreeing that their performance standards are consistently applied, and even fewer employees (8.2% less) agreeing that they would recommend their companies’ approaches to PM.
We also saw fewer employees in 2023 agree that they regularly have check-ins on their goals and that they receive appropriate recognition. This shows that organizations have an opportunity to improve their performance management systems to increase perceptions of consistency and fairness.
This is in line with the reality of today’s volatile economy, in which many performance expectations have fallen short, with employees finding it more difficult to hit goals based on past assumptions and targets. This has created some confusion in the performance management space, opening the door to risks like inconsistency. For example, managers may struggle to decide the extent to which they should allow “circumstances” to influence their ratings for suddenly underperforming employees. Companies may also be tightening their performance management standards in an effort to manage labor costs by retaining smaller teams of high performers. Leaders can improve scores around performance management by emphasizing the quality of performance calibrations and having a transparent method for determining goals that account for changing market dynamics.
In addition, leaders should ensure that managers are trained on practical methods for helping their teams improve their performance despite fewer resources and a difficult working environment. The answer isn’t to just tell employees to “work harder” – a position many less skilled managers may take – and it’s this type of management approach that may be fueling some of the stress and doubts around service quality we’ve seen elsewhere in the data.
What this means for employee engagement in 2024
Overall, our research indicates that the declines in engagement we’ve seen in 2023 are largely driven by the ongoing economic uncertainty. Moreover, one of the biggest drivers of engagement (service and quality focus) was also an area where we saw the biggest decline in employee sentiment between 2022 and 2023.
In a year of disruptions, it’s likely that employees are feeling a combination of doubts about how their leaders are making decisions. Layoffs, a volatile market, and the end of COVID-19 restrictions have created a strain between what leaders see as necessary for the business and employees’ expectations for humanity at work.
On the bright side, perceptions of wellbeing have improved with the subsiding of COVID-19-related anxieties and continued flexible working options. While these improvements signal a positive change for employees, it also demarcates a new conflict with many senior leadership teams, who wish employees to return to 2019 office usage and commuting norms.
Organizations looking to understand 2023 to plan for 2024 would do well to let go of old adages about engagement “perks” and focus their attention on presenting employees with reliable and trustworthy professional bastions against the ongoing chaos of a world and economy in the midst of radical change.
Learn more about our 2024 predictions
Hear from Culture Amp as we look ahead at the trends which will shape the HR landscape in 2024.
The data in this article is based on data collected from over 6,000 Culture Amp customers.
We compared survey results collected between July 2021-July 2022, and July 2022-July 2023.
For the 2021-2022 period, we analyzed survey results from 2,336,525 employees from 3,966 companies. For the 2022-2023 period, we looked at the responses of 2,942,940 employees from 4,681 companies.
To understand Culture Amp’s data and methodology in greater detail, you can explore the support pages for our survey templates and benchmarks.
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