America’s Employee Engagement Crisis
Two Numbers: 90,000 Hours + 150 Million
These two numbers give us an accurate picture of the scale and scope of our modern workforce.
The average American worker will work 90,000 hours over the span of their life from the age of 18 - 67.
Within those working years, roughly 35% of your life will be spent at work, and that’s only calculated at forty-hour work weeks.
There are roughly 150 million Americans who will end up working 90,000 hours or more over their lifetime.
Just to give you perspective, 150 million is the total population of France and Germany combined. Every day we hear that the workforce is expanding, the economy is booming, wages are increasing and unemployment is low.
We have nothing to worry about right? Wrong.
A much greater problem lurks beneath the facade of wage growth and low unemployment rates. Using data collected from more than 195,600 U.S. employees, and more than 31 million respondents, Gallup's The State of the American Workforce study accurately describes the crisis of low engagement across the workforce.
Only 33% of the American workforce is engaged in their work.
These individuals are top performers who practice a growth mindset, are eager to contribute and take initiative regularly. This group wakes up every day excited about their work and are fulfilled by what they do. Their engagement in their work fosters engagement in all other spheres of their life; with their family, friends, children, and community.
51% of the American workforce is currently disengaged in their work.
These individuals are "sleepwalkers'" who put in their time but are mentally and emotionally disengaged from their work. With the right approach, this group can transform into highly engaged workers. On the flip side, if this group is ignored, they will become actively disengaged or seek to work elsewhere. These individuals wake up often complacent about the day ahead of them, and this disengagement in their work creates dissatisfaction in all other spheres of their life; with their family, friends, children, and community.
16% of the American workforce is not only disengaged, but are actively undermining the organizations, companies and teams they work for.
This group can easily undermine the good work being done by an organization as they can sow seeds of disengagement across the employee base. Frustration and anger is the sentiment of a disengaged worker. Resentment at work creates detachment in all other spheres of their life; with family, friends, children, and community.
These numbers ring true regardless of age, education level, size of the company, type of work, industry, or region of the United States. Imagine the impact when 100 million individuals are going home everyday unfulfilled by the hours they spent at work. This lack of engagement costs companies millions of dollars each year in lost productivity, personnel issues, and a host of other negative impacts.
This is the most important conversation for any leader, manager, or employee who desires to love their work and see their teams and organizations thrive. We all have an opportunity to help realize a better future, but to do so, we are going to have to think radically different from the leadership and business principles that got us to where we are today.
Let’s take a closer look at what’s really going on here with employee engagement. We will debunk common myths, define engagement, and lay out the roadmap to creating a culture of high engagement.
Employee Engagement Myth #1
“Millennials lack work ethic.”
For the very first time in history, five distinct generations from the age of 17 - 70 are present in the job market. Each generation has their own worldview, experiences, skill sets, context and expectations of an employer. But these distinctive qualities don’t make any generation worse than the previous one.
According to a 2017 study by the Pew Research Center, here is the composition of each generation in the current workforce:
Silent / Greatest (1945 or earlier) - 2%
Baby Boomers (1946 - 1964)- 25%
Gen Xers (1965 - 1980) - 33%
Millennials (1981 - 1996) - 35%
Gen Z ( 1997 and Later) - 5%
Five generations represented in the workforce presents a unique challenge for any organization serious about increasing engagement and growing its people. One of the most common sentiments we hear from organizations is that the Millennials are less engaged than previous generations. However, we know that Millennials have learned, to adopt an innovative approach to the job market through gig working, in part due to the economic fluctuations of 2009. Many became their own bosses out of a desire to do work that really matters to them, or because of the risk of layoffs they witnessed in their parent’s generational loyalty to a single company. Digital storytelling, making technology aid productivity, and creating a work life that suits one’s values are all aspects Millennials have shared with the wider workforce.
While someone from a previous generation might mistake a Millennial’s love of flexibility as restlessness or lack of attention, we know that unpredictable events like the pandemic and other geopolitical crises have made flexibility a hallmark of the best companies and leaders.
While it may feel as though Millennials are more disengaged than previous generations, the data simply proves this to be a myth.
As you can see, Millennials are slightly more disengaged than Gen Xers and Baby Boomers, but not by much.
This data from Gallup shows very clearly that the one thing that is similar between these three different generations is a lack of engagement and satisfaction with their work. One reason for the perception that Millennials are vastly more disengaged than the other generations largely has to do with the way in which each generation responds to their employers and reacts to their own sense of disengagement.
Here are a few characteristics of the Millennial generation’s expressions of disengagement:
A desire for quality of life - Millennials have grown up observing corporate business structures fail and in turn, Millennial-led businesses are oftentimes organized very differently from traditional corporate businesses. Millennials watched their parents sacrifice aspects of their own personal happiness for their career success including long hours, low upward mobility, and long tenures with a single employer. Because of this, they desire a different experience with work and relationships with their employers. Contrary to popular opinion, Millennials desire to work hard, but to do so in a place where that can honor this desire for a healthy work-life balance. This often means that Millennials advocate for flexible working hours, opportunities to be remote, greater collaboration, and other unique structures that create a greater quality of life. Organizations that can tap into this desire for a healthy work-life balance will gain highly engaged and loyal Millennial workers.
Most highly-educated generation - According to Pew Research, The Millennial generation is on track to be the most educated generation with almost 34% having a Bachelor's Degree. When Baby Boomers and Gen Xers were growing up, a Bachelor's degree was not a necessity to achieve a middle-class lifestyle. This means that there is a great deal of talent available in the marketplace, and this makes for increased competition in the marketplace. One of the symptoms of this characteristic is that Millennials often desire constant feedback from their employers and seek out additional opportunities for growth. Organizations that can provide effective and frequent feedback and opportunities for growth will gain highly engaged and loyal Millennial workers.
The Gig Economy - Millennials are defined as those born between 1981 and 1996. With the birth of the internet in 1983, this generation grew up in an interconnected and digital world. Out of this progress, the “gig economy” was born which means that we can now work for anyone, from anywhere. This trend has increased job mobility amongst Millennials, but it has also affected every generation in the workforce. This means that if a Millennial is not highly engaged in their work, they will explore other job options where they may experience higher levels of engagement. Organizations that can create highly engaging organizations will retain Millennial workers for a very long time.
These three unique characteristics of the Millennial generation have made it so that these individuals are highly vocal about their disengagement, and advocate consistently for a more engaging workplace.
In contrast, because of Baby Boomers’ unique characteristics, they respond to their own sense of disengagement by working harder, practicing loyalty, and finding ways to advance within an organization.
Regardless of how each generation responds to their disengagement, we can all agree on two facts; that America’s Engagement Crisis is affecting all generations equally, and that each of us desires to be highly engaged in our work. If we are going to truly understand the challenge of engagement in the workforce, we are going to have to look much deeper than generational differences to truly understand the root of the problem.
Employee Engagement Myth #2
“Increasing Engagement is my HR Departments’ Job.”
The very first Human Resource department, or what was at the time called “Personnel Management” was born during the Second Industrial Revolution in the early 1900s. During this time, the United States saw the expansion of industries such as electricity, petroleum, and steel. The new capacity in each of these industries fundamentally changed forever how traditional work was done. The accessibility of electricity allowed individuals to work non-traditional hours and many traditional products and processes were replaced with more convenient and less expensive ones.
While the economy was booming, this was not a favorable time for workers in these industries. Many of these jobs provided low wages, were long hours, and were often in very dangerous conditions. Because of this, trade sector labor organizations and unions begin to form to advocate for workers’ rights. No other text captures some of the nature of work at this time more than Upton Sinclair's seminal work, “The Jungle,” published in 1906. These new departments that were formed were largely compliance-based and focused on record-keeping, workplace safety, wage management, and employee grievances. They also worked on relations with unions and trade sector groups.
From this point forward, the set of roles and responsibilities that are associated with a Human Resource department has grown extensively. Google any job description for a Human Resource Manager and you will find some of these tasks listed:
Creating and maintaining job descriptions
Recruiting, interviewing, hiring, exit interviews
Employee orientation and training programs
Performance management systems
Organizational design and change management
Compensation and benefits
Ensuring legal compliance with employment law
Maintaining safety and risk management
Maintaining labor relations
Conducting investigations; maintaining records; representing the organization at hearings
Preparing, updating, and recommending human resource policies and procedures
Maintains historical human resource records
As if the job wasn’t already all-encompassing, many organizations now want to add, “Employee Engagement” to the list of duties the Human Resource department is responsible for.
One of the most common myths we see organizations entertain is the idea that increasing employee engagement is somehow solely the job of the HR department or a single individual within the organization.
It is true that in partnership with other departments, a progressive Human Resource department can affect engagement across an organization. However, the data proves that engagement won’t increase by simply having an HR department.
In fact, the larger the company, the lower the engagement level. Simply put, organizations with very large and developed HR departments are actually experiencing lower levels of engagement across their workforce. According to Gallup, “From 2012 to 2016, the engagement of small companies grew by five percentage points, while the engagement of other companies barely budged or even diminished.”
As organizations grow, there is a greater likelihood for misalignment, lack of trust, and disintegration of a strong internal culture.
It is clear that if we are going to solve the issue of engagement in the workforce, we cannot continue to think that our HR department will take care of it.
So who’s job is it?
In short, all of ours.
It is easy for us to blame the leaders and managers within an organization, but in reality, we all have a part to play. Here are a few suggestions for us all to think about.
1. Owners / Executive leaders - As the primary leader of the organization, you can help your organizations engagement by creating and communicating a compelling vision of the future. This vision needs to be rooted in data, and make sure that it has a focus on investing in growing the people of your organization. As the primary leader, you are responsible for managing change, aligning your vision for the future with strategy and data, and gaining buy-in from all members of your organization. Most importantly, you need to model the behaviors of engagement you would like to see from managers and employees.
2. Managers - As the individuals with the most communication and collaboration with each individual employee, it is your role to pay attention to the engagement needs within an organization. The single greatest shift you can make to help your organizations engagement is to re-imagine your role as a coach, not a boss. When managers increase their frequency of collaborative meaningful conversations with each person they manage, engagement skyrockets.
3. Employees - The single greatest impact you can make to the engagement of your organization is to own your engagement. It is your responsibility to accurately assess your own level of engagement, advocate for your needs, and focus on becoming more engaged, not the opposite. If every employee in an organization can focus on growing their own personal engagement, our teams and organizations will thrive.
If we are going to truly understand the challenge of engagement in the workforce, we are going to have to look much deeper than generational differences or point fingers at our HR departments. We must all take responsibility to understand and address the complexity of America’s Engagement Crisis.
Employee Engagement Myth #3
“Only Low-Wage Jobs Experience Low Engagement.”
According to the Bureau of Labor and Statistics, “The U.S. labor force has become increasingly educated over the last 24 years. From 1992 to 2016, the share of the labor force made up of people with a bachelor’s degree and an advanced degree (including master's, professional, and doctoral degrees) has grown consistently, rising by 7% and 5% respectively.”
Below is a breakdown of the composition of the workforce in 2016 according to educational attainment:
Over the past 24 years, the largest decrease has been those entering the workforce without a high school diploma. The next question worth asking is, what is the relationship between educational attainment and wage-earning potential?
While there are certainly outliers to these statistics, the general rule of thumb is the higher the educational attainment, the larger the earning potential for that individual.
Next, let’s look at the relationship between educational attainment and the type of work and position.
This data shows us that those with higher levels of educational attainment, the more opportunity for that individual to enter into management and professional services, and those with lower levels of education enter into entry-level positions within service, sales or natural resource management, construction or maintenance.
Taken as a whole, this data tells a story. A story that most of the time, the higher the educational attainment, the higher the level of position within the organization, and the higher the level of earning potential.
But does this trend also ring true when we look at engagement across these same workers? Do those with higher education, and higher paying positions experience higher engagement?
The answer is no.
Some might assume this line of thinking. “If I was an executive within a Fortune 500 company, wouldn’t I have higher levels of engagement within my job as compared to someone who is working at an entry-level position within fast-food?”
While this logic seems sound, this is a myth that we need to dispel.
The data is clear that those with lower levels of educational attainment are actually experiencing higher levels of engagement in their work than those with Master’s, Doctorate, or Postgraduate education. This seems counterintuitive and speaks to the need for us to realize that there are deeper forces at work.
So what is happening here? Here are a few factors that may impact these statistics:
1. Isolation - One major factor in creating a highly engaged workforce is to make sure that employees have opportunities for personal and professional growth and that someone is discussing their performance with them on a regular basis. As an employee moves into managerial and higher levels of leadership, many times these opportunities for mentorship, growth, and conversations about their performance lessen. This can cause an individual to become isolated professionally, thus causing lower levels of engagement.
2. Disconnection from the mission - Another factor in creating a highly engaged workforce is to make sure that each person’s work is connected to the mission of the organization. For many organizations, the practical work of serving clients and creating a product is connected to the mission of the organization. As an employee moves into managerial and higher levels of leadership, many times they cease to be directly involved with creating the product or delivering the service that the organization offers. This can cause an individual to become disconnected from the larger mission of the organization, thus causing lower levels of engagement.
3. Loneliness - Having a best friend at work, and colleagues who express care is a major factor in creating an engaged workforce. A common occurrence for managers and senior leaders is that they become separated from certain key relationships within the organization. This can be due to lack of time, separation of duties, or a sense of superiority. This can cause individuals to become disconnected relationally from the team at large, thus causing lower levels of engagement.
It is clear that if we are going to truly understand the challenge of engagement in the workforce, we are going to have to look much deeper than generational differences, stop pointing fingers at our HR departments, and stop simply expecting that lower-wage workers within our organizations are less engaged in their work.
Employee Engagement Myth #4
“Engagement can simply be increased by providing ping-pong tables, free food, and team bowling.”
Everybody’s heard the stories of the incredible perks and benefits of large tech startups in Silicon Valley or New York City. Things like barbershops on-site, cooking classes, free food all day, arcades, indoor treehouses, scooters, movies at work, and beer on Fridays. To be fair, many of these large companies have very generous and incredibly beneficial perks and benefits packages for employees, but what is the impetus behind all of these excessive perks?
Many organizations use perks and benefits as a way of recruiting the best talent, retaining the best talent, and keeping people engaged at work. While this strategy of excessive perks and benefits has had a positive impact on the first two goals of recruiting and retaining employees, how does this strategy affect engagement? To put it another way, do the 566,000 employees at Amazon experience much higher engagement than workplaces without these perks?
The answer is no.
So what perks and benefits package really matters to employees and their engagement? In the recent Gallup study, The State of the American Workforce, they surveyed millions of workers and asked them to rank what perks and benefits made the most impact on their engagement at work.
The top five selected were related to having the employees basic needs met.
When they asked the survey pool to describe five more perks or benefits that would increase their engagement, they expressed benefits related to increasing their quality of life.
What is missing from these lists? Obviously, there is a set of perks and benefits that impact an employee’s engagement at work, but as you can see, the excessive focus on creating new and exciting incentives and experiences at work is not having a positive impact on engagement.
In fact, some authors such as Jason Fried who wrote: “Work doesn't have to be Crazy,” "Rework” and “Remote” states that these perks and benefits actually have a negative effect on engagement and productivity.
“Once you examine these [perks], they look a little less like benefits and more like hooks,” says Fried’s co-author, David Heinemeier Hansson. “It’s not that ping-pong tables aren’t nice in an abstract way, but they can also wreak havoc on everyone else in the office’s ability to get things done.”
He goes on to discuss that when an individual works in an environment that provides for everything you need, there is actually less balance between the personal and professional aspects of work.
“There is no line you can draw between free kombucha and people’s satisfaction in their job,” he says. “If the reason you’re attracted to your employer is that they have free cupcakes, there are a bunch more cultural issues you have to unpack.”
The data is clear that you cannot simply fix issues of disengagement by providing excessive perks and benefits.
So what are the best practices for creating a package of perks and benefits that maximizes engagement?
1. Prioritize the benefits that matter most - Pay attention to the Gallup data and other sources that rank the most important benefits to focus on. Prioritize providing benefits that fall into two major buckets: providing for employees’ basic needs and benefits that help to create a higher quality of life.
2. Listen to your people - Get yourself and your team into a regular cycle of measuring and discussing the level of engagement across your organization. You may discover that there are much bigger issues to be solved than creating new benefit programs.
3. Be thoughtful - As we will discuss in later posts, all of us desire to make our highest and best contribution at work. Many of the excessive perks and benefits that companies employ actually create more involuntary distractions that take people away from having time to do meaningful work. Remember, that simply having “fun” at work is not what makes a highly engaged workforce. Be thoughtful about how potential new perks and benefits may affect your whole team.
It is clear that if we are going to truly understand the challenge of engagement in the workforce, we are going to have to look much deeper than generational differences, stop point fingers at our HR departments, recognize that all positions across an organization are at risk of disengagement, and that we cannot simply fix the problem by proving an excessive amount of perks and benefits.
Employee Engagement Myth #5
“Engagement is just about making employees happy. It doesn’t produce any real business outcomes.”
In our line of work, we have lots of conversations with business owners, CEOs, leadership teams, and managers about different aspects of their organizations. One of the primary concerns is often around answering the question, “How do I grow my organization?”
While many leaders expect us to answer this question with discussions of increased sales, more effective marketing, and decreasing expenses, we will often discuss that the greatest way to scale a business is by growing its people.
This is not an answer they expect, and not always one they readily receive.
This hypothetical conversation reveals a common myth that states investing in the culture of the organization may make those employees happy, but that it will not do much to grow the business as a whole.
To dispel this myth, let me first begin by discussing the negative impacts low engagement has on an organization. To do this, I am going to talk about the cost of disengagement in two cost “buckets”; turnover costs and disengagement costs.
This article titled, “How Much Does Employee Turnover Really Cost?” published in 2017 in the Huffington Post gives us a calculation of how you can quantify the impact of your employee churn. They even give you a tool to find out this cost of turnover specifically for your organization.
Furthermore, the Center for American Progress study found the following turnover costs to be consistent across the business landscape.
The cost to replace a $10/hour retail employee would be $3,328
The cost to replace a $40k employee would be $8,000
The cost to replace a $100k employee is $213,000
As you can see, the higher the wage, the more exponential the cost to replace that individual will be. This means that for highly skilled positions the economic cost of turnover for that employee is, “213% of the cost of one year’s compensation for that role.”
Josh Bersin, a global analyst for Deloitte reveals that the greatest hidden cost for high-turnover organizations is the loss of potential economic value to the organization over time. In the following image, Josh illustrates that there is a significant amount of time invested into each employee before you begin to see returns on that investment, and the longer an individual stays and is engaged with an organization, the higher the economic return.
The second cost bucket to address is the high cost of disengagement when an individual doesn’t leave, but stays within an organization and is actively disengaged in their work. Active disengagement is defined as someone who is “unhappy and unproductive at work and liable to spread negativity to coworkers.” If you remember from our earlier section in this article, it is estimated that 16% of the current workforce falls into this category. Gallup estimates that an actively disengaged employee costs their organization $3,400 for every $10,000 of salary, or 34 percent. That means an actively disengaged employee who makes $60,000 a year costs their company $20,400 a year!
In addition, they state that the 16% of actively disengaged employees cost the U.S. $483 billion to $605 billion each year in lost productivity. These are staggering numbers for any organization to swallow. The good news is that Gallup's State of the American workforce study proves that when you focus on growing your people, everything else grows too.
So, let me ask again, is engagement just about making employees happy?
Clearly, the answer is no.
It is important that all organizations focus on not just working to make employees happy but to help create environments where engagement is key.
This data makes a compelling case that maximizing the human potential in our organizations must be the primary goal if we care about the growth of our organization.
