Gallup reports that its global employee engagement measures have fallen during the last two years, after rising for all of the previous 12 years, except in 2020, during COVID-19. In 2024, it fell by two percentage points. Gallup estimates that the world economy suffered an estimated $438 billion in lost productivity.
Gallup reports that managers are experiencing the sharpest decline. Manager engagement fell from 30 percent to 27 percent, while individual contributor engagement remained flat at 18 percent. Engagement among managers under the age of 35 fell by five percentage points; female manager engagement dropped by seven points.
In recent years, according to Gallup, managers have been squeezed between new executive priorities and employee expectations. Many organizations experienced workforce changes after the pandemic, characterized by high turnover, rapid expansions, and layoffs in some sectors. Disrupted supply chains and the end of stimulus programs have shrunk budgets.
At the same time, employees have new demands for flexibility and remote work based on their pandemic experiences, but some companies have rolled this flexibility back. All of this eventually takes a toll on the world’s managers, who are struggling to make it all work.
In the US, employee engagement scores have fallen in three of the last four years, from 36 percent in 2020 to 31 percent in 2024.
Gallup has consistently found that its best practice organizations have employee engagement scores at 60 and 70 percent. Outstanding results. Please see the Gallup chart below.
Gallup’s meta-analysis finds that when organizations build their growth strategy around great management, the result is better customer service and higher productivity, sales and profits. These outcomes are reproducible across industries and cultures.
The best organizations that Gallup has studied put culture development and manager training and development at the center of their strategy. Even rudimentary training shows benefits to engagement, according to Gallup. However, managers who receive best-practice training see their own engagement and their team’s engagement improve substantially. Management performance metrics improved by 20 percent to 28 percent, according to Gallup.
We, at InnovationOne, LLC, agree with Gallup that when companies invest in culture and manager training and development, employee productivity rises.
At InnovationOne, LLC, however, we measure organizational culture, which is a much broader measurement of an organization than employee engagement.
Our InnovationOne Culture Index©, which is based on more than 30 peer-reviewed articles published by InnovatonOne founder, Dr. Brooke Dobni, measures four organizational dimensions, each having three drivers. Typical employee engagement measures are in what we call Employee Connectivity, Employee Skills and Creativity and Employee Empowerment. Culture that are highly innovative and productive, have much more at play than what is measured by employee engagement.
Please note in the InnovationOne Culture Index below, that there are nine other organizational drivers in addition to the three that have common employee engagement questions. These nine include innovation culture drivers, such as Innovation Vision and Goals, Strategic Model, Organizational Learning, Technical and Financial Support, Knowledge Generation/Transfer/ Decision Making, Idea Management and Alignment. It is not just a limited focus on employee engagement.
It takes all 12 drivers to create a culture of innovation and to enjoy the better outcomes, productivity, innovation, and financial success that come with it. These organizational dimensions convert to traits exhibited by leaders to drive these successful cultures and empower employees.
These leadership traits include the following:
- Leaders who broadly share the business and innovation goals of the organization, communicate customer experiences, and invite employees to help achieve goals and overcome obstacles.
- Leaders who drive action-oriented strategic planning, avoid bureaucracy and consistently share customer needs and a clear vision for the future.
- Team leaders who manage performance, coach, encourage debate, build trust, and actively sponsor innovation.
- Organizations that widely share lessons from new technology, business models, and past successes and failures.
- Employees who are empowered to propose innovations, collaborate to develop them, and rapidly experiment.
- Management quickly decides which innovations to pursue and creates a learning culture of “failing fast, furiously, and frequently, consistently asking, “What did you learn today? What will you experiment with tomorrow?”
- Teams are empowered to innovate without being micromanaged provided they stay focused on the organization’s innovation goals.
- Other departments, such as supply chain, operations, sales, and marketing are aligned and rewarded to commercialize new innovations.
- Performance management systems reward collaboration, idea generation, experimentation, and successful innovation.
Our research revealed that companies scoring in the top quartile of our InnovationOne Culture Index© reported higher financial performance than bottom quartile performers by as much as 22 percent. We also learned that the 2012 top innovators earned a 6.3 percent total shareholder return premium (stock price appreciation and dividends) over three years.
Our recently completed joint study with the US Department of Energy shows that higher innovation culture scores improve R&D lab performance. In fact, improving a culture score by just one point (on a 100-point scale) can increase performance in innovation, commercial deployments, partnerships with industry, and academic publications by up to 30 percent.
Culture and innovation, not just the limited focus of employee engagement, can be measured and managed. You can measure and ignite your culture of innovation intelligently.
Click here to learn more about the InnovationOne Culture Index© and how it can help you assess, benchmark, and improve your organization’s culture of innovation.
About Victor
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and Managing Partner of InnovationOne, LLC. He works with organizations to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: The Best of Empirical Research, Method and Process, and Digitization. He is quoted in business journals such as The Wall Street Journal, Workforce Management, and CEO Magazine. Victor has partnered with The Conference Board the Us Department of Energy on innovation research. Subscribe to his weekly blogs at http://www.VictorHRConsultant.com