The world of work is always changing. Trends come and go, fads reach popularity and ultimately subside, and other changes evolve over decades (e.g., a commitment to enhancing employee experience) or emerge rapidly (e.g., workplace changes resulting from the COVID-19 pandemic). How do leaders know what’s really important, what to grasp onto, and what to let go of? From our most recent research, discovery, and experience, three particular trends came to the forefront and characterized the changing state of the workplace:
Let’s briefly discuss each of these before turning to the primary focus of this paper, which is aimed toward understanding the current landscape of Employee Engagement and the critical factors leadership should be paying attention to in the coming year as they harness the efforts and commitment of their workforce.
Over the past year, organizations (including many of our clients) have begun requiring employees to return to the office in some type of capacity. This has created a contentious issue among employees for many leaders. While some companies have set firm mandates on a full return to the office, others align with a recent McKinsey report suggesting that hybrid work is here to stay and have embraced this reality. For example, Amazon, Zoom, Meta, and the U.S. federal government have all recently begun requiring employees to work in a hybrid model. Many leaders calling for employees to return to the office state that they are concerned about culture, collaboration, performance, and productivity, which they feel are maximized when employees all work in the office. As of now, most Fortune 500 companies appear to require two to three days in the office, according to the Flex Report. Clearly, work arrangements have become a hot topic as both employers and employees attempt to navigate the new normal.
At the same time, studying the impact of alternative work arrangements on Engagement and experience in detail is complicated by the unique nature in which organizations are addressing the issue. The WSAdata team is actively monitoring the ways in which these arrangements are categorized across various listening projects, and we look forward to having more to say on this issue in a paper to be released later this year.
As we also know, there has been a renewed focus on Diversity, Equity, Inclusion, and Belonging (DEIB) in society at large over the last several years (in no small part accelerated by George Floyd’s murder in 2020 and resulting social unrest). Many of our clients have been adamant about including DEIB content in their surveys, prompting WSA to develop a measure of Belonging in response. Most recently, however, we have witnessed growing social, political, and legal resistance to DEIB programs. In response to internal and external pressures (including potential legal ramifications associated with various programs and policies), some companies have pulled back from a strong DEIB focus. This reflects a trend in society at large. Indeed, the U.S. Supreme Court struck down affirmative action in higher education in the summer of 2023. The CEO of the Society of Human Resource Management (SHRM), Johnny C. Taylor, Jr., predicts that the ramifications of this decision for workplaces will be a hot-button topic in 2024. He likened this situation to the contention around the environmental, social, and governance (ESG) movement. The reasons for this pushback are not entirely clear, and we will investigate this topic as it continues to evolve. We know so far that DEIB efforts are still crucial within organizations, and most leaders seem to agree. However, organizations are taking a more critical look at the metrics and outcomes associated with these efforts to ensure they focus on the right things for the right reasons rather than simply checking a box.
Union activity is another workforce trend that has gained momentum in the last year. We intend to dive deeper into this topic after additional research to understand the differences in experience across union and non-union settings, as well as the issues most important to those seeking third-party representation. This third key trend has been understudied in recent years. Still, it deserves a fresh look, especially in light of a historical year for organized labor, whereby union activity spiked across a diverse subset of workers across the U.S. (e.g., autoworkers, actors and writers, baristas, nurses, pharmacists, and culinary workers).
In the interest of understanding the current state of the workforce, we analyzed key trends that are impacting employee experiences. Our primary focus in the paper is on Employee Engagement and the current factors that are having the greatest influence on employees’ levels of motivation, conscientiousness, and commitment. This includes a DEIB lens in analyzing differences in Engagement across key demographic segments. In addition, this paper provides up-to-date insights into Manager Effectiveness and Intent to Stay trends. Taken together, the findings from this research allow us to re-center our understanding of the state of employee experience in the midst of broader societal changes and trends.
Engagement reached an apex early in the onset of the COVID-19 pandemic in 2020. Since then, despite some modest fluctuations in Engagement over the subsequent years, we can see in Figure 1 that it has mostly stabilized post-pandemic since early 2022. Scores have essentially returned to pre-pandemic levels. Seemingly, we have returned to a state of emotional normalcy regarding the workplace.
Manager Effectiveness also seems to be stabilizing, though it remains at an elevated level compared to pre-pandemic. It’s worth noting that Manager Effectiveness generally remains a higher-scoring metric than Engagement. The elevated level of Manager Effectiveness over the last few years is a likely result of employees receiving enhanced support from their managers, who have a large impact on employees’ work experience. WSA referred to 2023 as the ‘Year of the Front Line Leader’ because of the close connection and high levels of support employees felt with/from their managers. This placed managers in an even more impactful position, especially considering the factors that had the greatest impact on Engagement at the time (i.e., growth and development, recognition). Managers can (and do) directly impact these factors due to their proximity and relation with employees, and data showed that employees really did perceive their managers to be working hard for them. Today, managers continue to be perceived as highly effective (77% favorable). As we discuss specific retention drivers, we will further expand on just how impactful managers can be in heightening employee commitment and retaining talent.
Examining Engagement trends more closely, the four individual items comprising the Engagement Index follow roughly the same trend as Engagement overall (see Figure 2). Pride continues to be the highest-scoring item, as it has been since we began tracking Engagement over 30 years ago. On the other end of the spectrum, Intent to Stay continues to be the lowest scoring among the four Engagement Index items. Interestingly, the Pride item has seen the greatest overall decline between the first half of 2019 (-3.0 pts) and the second half of 2023, while Intent to Stay is the only item to show an increase from early 2019 (+0.8 pts). Satisfaction and Advocacy mirror each other quite closely, with the largest divergence in the second half of 2021, as the Satisfaction item declined 5.0 points and was 2.0 points below Advocacy.
We may surmise two likely causes for the declines during this time in 2021: (1) early return-to-office policies were being instituted, and (2) mandatory vaccinations in various sectors and organizations. In addition, emotional strain continued to build for many employees, with the pandemic charging into a second year. We found that all four Engagement items improved substantially from the second half of 2021 to the first half of 2022. Advocacy, Satisfaction, and Intent to Stay improved slightly through the first half of 2023, whereas Pride decreased. In the last year, from the first half to the second half of 2023, all four Engagement Index items have declined by 1 point or greater and once again resemble their pre-pandemic levels (with Pride being lower).
In our pursuit to deepen our understanding of Employee Engagement, traditional correlation analysis has consistently shown that factors influencing Engagement are often interconnected, sharing significant relationships. Aiming to dissect these drivers with greater precision, our study embraced a novel approach that meticulously considers these interconnections alongside the distinct impact of each factor. By integrating traditional statistical methods, like multiple regression, and cutting-edge AI techniques, such as Support Vector Regression (SVR), we sought to capture the nuanced dynamics of Engagement. SVR, in particular, was instrumental in refining our analysis, ensuring the conclusions drawn about the drivers of Employee Engagement were grounded in rigorous statistical evidence and accurately reflective of the real-world workplace environment.
Figure 3 provides an up-to-date accounting of the factors that matter most:
The effectiveness of this methodological approach was quickly apparent, highlighting that an employee’s perception of the company’s future plays a crucial role in their level of Engagement. This insight is pivotal, revealing that individuals are inherently attracted to organizations they view as leaders and innovators within their field, eager to contribute to a team they believe is on the path to success. Expanding on the insights from our research, it becomes clear that the essence of an engaging work environment is multifaceted, with each driver weaving into the next to create an intricately linked framework of motivation and commitment. At the core, the acknowledgment of employee contributions by leadership stands out as a profound motivator. This recognition sends a powerful message that each individual’s work is not only noticed but valued, fostering a sense of worth and belonging. It speaks volumes about the culture of appreciation and its role in driving Engagement.
Equally important is the establishment of open and honest communication. Creating channels for transparent dialogue, where feedback and ideas can flow freely, builds trust and underscores the importance of every voice. This openness ensures that employees genuinely feel part of the company’s journey, fostering a sense of ownership and alignment with the company’s goals.
Additionally, the commitment to ethical practices resonates deeply with employees, reinforcing their trust in the company. Knowing they are part of an organization that prioritizes ethical decision-making enhances their pride in their work and loyalty to the company. This ethical stance becomes a mirror reflecting the company’s integrity and its alignment with employees’ values.
Feeling part of a team further amplifies Engagement. The collaborative spirit within a team not only enhances productivity but also enriches the work experience, making the challenges more manageable and the successes more rewarding. This sense of unity is pivotal, transforming individual efforts into collective achievements. The alignment between an employee’s work and the company’s vision magnifies this sense of purpose. When employees understand how their tasks fit into the larger picture, their day-to-day work gains deeper significance, motivating them to actively contribute to the company’s success.
Opportunities for personal and professional development are also crucial. A workplace that offers avenues for growth signals to employees that the company is invested in their future. This investment motivates employees to enhance their skills and cements their loyalty to the company.
Lastly, the recognition of individual productivity and achievements acts as a catalyst for sustained effort and enthusiasm. Celebrating successes, big and small, reinforces the value of hard work and encourages a culture of excellence. Together, these elements create a vibrant environment where employees are not just working but thriving. Leadership’s role in fostering this environment, the culture of openness and ethical conduct, the sense of belonging and purpose, opportunities for growth, and the acknowledgment of efforts all interlock to drive Employee Engagement. It’s a dynamic interplay of factors that collectively fuel a workforce’s motivation to excel, care, and stay committed to their roles and the company’s overarching vision.
Retention remains a crucial focus for many business and HR leaders today, particularly for critical job families. In the case of employees’ Intent to Stay, it was noted earlier that it is the only one of the four Engagement Index items to emerge stronger than it was pre-pandemic (+.8 pts). However, Intent to Stay is substantially lower today compared to during the height of the pandemic when jobs were scarce and uncertainty lurked around every corner. It’s probable that more employees are looking for new jobs currently than at the beginning of 2021, which might be due to the tight labor market over the last couple of years. In 2023, the average unemployment rate of 3.6% held relatively low.
To learn what has been impacting employees’ commitment and retention over the last year, WSA analyzed the drivers of the Intent to Stay item by conducting multiple regression analyses.
We found that the #1 reason employees are staying or leaving in the last year is whether they believe they are paid fairly. For one, few people are ever completely satisfied with their pay and always appreciate having more money to live a comfortable life. It’s also not too surprising that this topic is emerging given the continued elevated rates of inflation and cost of living experienced globally over this time period.
The second strongest retention driver was the extent to which employees feel like they are included and belong. We’ve generally found a strong correlation between belonging and Engagement as well, but it is having a growing impact on employee commitment. We all want to feel like we are part of something and that we, as individuals, belong. When we don’t feel like we belong, we are likely to look elsewhere in hopes of a greater feeling of inclusion.
The third driver of Intent to Stay is also one of the top key drivers of Engagement–the belief that your company has a bright future. Employees desire to be a part of a winning team, and a company that has a positive outlook not only amounts to a sense of security but also a sense that there are opportunities to grow within it. Together, these three items were found to account for 73% of the unique variance in the model for predicting intent to stay, highlighting their importance.
Other top drivers of Intent to Stay in the model relate to trusting senior leaders, feeling heard, and feeling valued for hard work and contributions. Employees generally want to feel confident that leaders are making the right decisions for the organization and that they are being transparent and honest, as well as willing to hear employees’ ideas, suggestions, and concerns.
Recognition is, of course, an important component as well, particularly for high performers. Managers are key in recognition efforts, as well as helping facilitate an environment where each person feels like they belong (while there are also overarching organizational factors that contribute to that sense as well). Lastly, when managers are perceived as being “outstanding,” they garner greater levels of commitment from employees. With this item as part of the list, it reinforces how impactful managers are to the employee experience. While there appear to be other (relatively stronger) reasons for why employees stay or leave an organization, undoubtedly managers have an impact. When helping our clients design their survey content, particularly the Manager Effectiveness Index, we often hear that “outstanding” is too extreme. They ask themselves whether or not they expect their managers to be “outstanding.” Indeed, this is a high bar, but this analysis proves the value of setting a high bar, as it can have an impact on the bottom line, given its connection to retention.
An important facet of analyzing Engagement trends is understanding the nuances within specific demographics. A primary trend WSA has continuously monitored is Engagement by race/ethnicity. Not only has WSAdata continued to grow in terms of project and respondent count, but it has also grown in terms of demographic availability. As can be shown within the figure below, the percentage of unique projects within WSAdata that captured race/ethnicity data in 2023 is 29% points greater than in 2019. Given the previously noted emphasis on DEIB over the last several years, this is not particularly surprising as organizations rose to the occasion and aimed to better understand differences in the employee experience when it came to race/ethnicity. As an additional benefit, the large increase in available data increases the reliability of analyses when looking at such trends.
As can be seen in Figure 6, Asian employees saw the largest improvement in Engagement (+0.9 points) from 2022 to 2023. Engagement for Black/African American employees has slowly but steadily improved since 2021 (+0.5 points). Overall, White employees’ Engagement has declined the most from 2021 (-0.6 points). Although this change did not represent a statistically significant difference, this is a trend that we plan to continue to monitor. Anecdotally, we have witnessed many situations in which there appeared to be a pushback or backlash reaction from the majority populations when encountering a stronger DEIB focus within their organizations.
Analyzing the trajectory from 2019 to 2023 shown in Figure 7, Engagement has inched upward for Hispanic, Asian, and Black employees, which is a positive observation given many companies’ increased focus on DEIB and on monitoring the experience of various groups. Those who identify as two or more races, as well as White employees, have seen slight declines. When looking broadly across survey data captured by race/ethnicity from 2019 versus 2023, Asian and Black employees reveal a more optimistic sentiment than those who are White. This could be due, in part, to the positive benefits of effective DEIB efforts aimed toward traditionally marginalized groups.
In order to better understand the differences in Engagement of race/ethnicity groups, we explored further by introducing the intersection of gender (Figures 8 & 9). We found that females across race/ethnicity groups maintained or improved on Engagement from 2021 to 2023, with the exception of White females, which declined by 2.1 points. Compared to pre-pandemic, Black female Engagement is up by 1.4 points, and Hispanic female Engagement is up by 0.8 points. Engagement for females who identify as two or more races is actually 1.3 points below pre-pandemic levels. For males, we find similar trends in which White males are 2.2 points lower on Engagement than in 2021 and 1.5 points lower compared to pre-pandemic. While males of two or more races are 0.8 points lower compared to pre-pandemic, they are 0.4 points higher than in 2021. For Black males, while they have only improved by 0.5 points from 2021, they are currently 1.2 points higher compared to pre-pandemic. We see a very similar trend for Hispanic males, who are 1.5 points higher compared to pre-pandemic and 0.7 points higher in Engagement from 2021. Lastly, Asian men have had the most stark changes, improving by 2.1 points from pre-pandemic and also 3.2 points higher compared to 2021. This provides some encouragement that the DEIB focus instituted by many organizations over the last few years and broader societal trends are having an impact on those groups who have generally felt less included, as indicated by their elevated levels of overall experience and Engagement.
Lastly, we saw a promising trend within the dataset, one that we have paid particular attention to in the recent past, which is regarding the Engagement of senior leaders (Figure 10). The gap between male and female senior leader Engagement has decreased two years in a row. From 2021 to 2023, the gap has closed by 6.5 points, as female senior leaders are experiencing higher levels of Engagement than in 2021. Engagement for male senior leaders has remained stable over the last three years. Where female leaders perhaps once felt isolated, this is hopeful data indicating they are now likely having a more similar experience as their male colleagues.
In the journey through our client data, a consistent theme emerges: Engagement and Manager Effectiveness remain remarkably stable— a testament to the resilience and adaptability of organizations worldwide. This stability is in line with what we’ve seen historically, which is steady scores in the absence of any major global and/or economic crises.
Organizational pride remains a cornerstone of Engagement, though it is trending slightly downward. This will be important to monitor. At the heart of enhancing Engagement lies the shared responsibility between senior leadership and frontline managers. It’s about creating a culture of enthusiasm for what lies ahead and demonstrating a deep-seated commitment to each employee’s well-being and success. Employees are not just looking for a paycheck; they are seeking a sense of belonging, a connection to the company’s future, and evidence that they are a valued part of something greater. From a psychological perspective, the relationship between an employee and their employer is profoundly similar to personal relationships; it thrives on mutual respect, anticipation for future achievements, and a caring environment. Leaders who excel in fostering this connection, who not only talk about values but live them out daily, are the ones who cultivate a deeply engaged and committed workforce.
As leaders consider strategies for retention, it’s clear that the focus must extend beyond mere Engagement. Our analysis underscores the importance of addressing several key areas to deepen employee commitment. Fair compensation, a sense of belonging, and excitement about the company’s direction are non-negotiable for employees to feel fully invested. When these elements are actively nurtured, the lure of external opportunities diminishes, binding employees more closely to their current roles and the organizational vision. However, when organizations lose sight of these critical factors, they risk their talent proactively seeking other environments that align more closely with their personal and professional aspirations and needs.
Authors and Content Contributors:
Sheena Lyons, M.S., Executive Consultant, WSA
Karen Moriarty, Ph.D., Executive Consultant, WSA
James Longabaugh, Ph. D., Director of Consulting, WSA
Robert Weldon, Ph. D., Director of WSAdata, WSA
Cameron Klein, Ph.D., Executive Consultant, WSA
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