However, it remains to be seen how far employers can push this before they see diminishing returns. The reason for this? Employee engagement.
Far from being a buzzword, employee engagement has become a business-critical metric that directly impacts (and often reflects) a business’s productivity, retention, and performance. Gallup’s State of the Global Workplace: 2024 Report reveals this in-depth with data that demonstrates how low engagement is perpetuating a global economic crisis.
According to Gallup’s report, 62% of employees worldwide are “not engaged,” meaning they do the bare minimum, and 15% are “actively disengaged,” meaning they are unhappy and looking for another job (in 3Sixty’s benchmark report 4 out of 5 workers were looking for a new job). Together, these disengaged employees contribute to an estimated $8.9 trillion in lost productivity — equivalent to 9% of global GDP.
These findings present both a challenge and an opportunity. There is clearly a market demand for engagement-driven solutions and company cultures. The HR tech industry has the unique opportunity to bridge the engagement gap with tools that enhance employee experience, streamline people management, and provide actionable workforce analytics.
Why Employee Wellbeing Should Be an HR Tech Priority
One of the Gallup report’s most alarming insights is that employee stress is at an all-time high. 41% of employees worldwide report experiencing “a lot of stress” daily, with stress levels 60% higher among those working under ineffective management.
While many organizations attempt to combat burnout with wellbeing apps, stress management training, and mental health benefits, Gallup found little evidence that these solutions alone have a meaningful impact. Instead, the most effective interventions involve:
- Improving manager effectiveness
- Ensuring employees have the resources to succeed
- Offering better compensation and work-life balance
Solutions designed to combat stress and burnout must go beyond wellness perks. AI-powered employee experience platforms, real-time sentiment analysis, and personalized coaching tools are all areas where HR technology can deliver real value. Solutions like isolved or Fuel50.
Manager Effectiveness: The Key to Engagement
Not surprisingly, management quality is the single biggest driver of employee engagement, outweighing economic and policy factors. Managers account for 70% of the variance in team engagement, and when managers are engaged, their teams are significantly more likely to be engaged as well.
But there’s a caveat to all of this: managers themselves are struggling.
While more likely to be engaged than non-managers, managers also report higher levels of stress, anger, and loneliness. Many claim to lack the tools and training to lead effectively in today’s hybrid and remote work environment.
HR technology solutions that focus on manager enablement, leadership development, and performance management have a massive opportunity to improve engagement at scale. Solutions like Harri or Eightfold that help managers become better leaders, ensuring they can create environments where employees feel motivated, valued, and aligned with organizational goals, will go a long way. This could include:
- AI-driven coaching platforms that provide managers with personalized leadership insights
- Performance management software that incorporates real-time feedback and goal-setting
- People analytics tools that help managers proactively identify and address engagement risks
Labor Policies, Job Markets, and the Employee Experience
The report also highlights how economic conditions and labor policies impact engagement. Countries with strong job markets tend to have lower levels of disengagement, as employees have the mobility to leave bad jobs for better opportunities. What I found very interesting is how better job markets do not necessarily increase engagement; they simply reduce dissatisfaction.
Additionally, strong labor laws (ex., fair pay, maternity leave, employment rights) improve current life satisfaction but don’t necessarily increase optimism for the future. The workers that report the highest overall wellbeing tend to be in countries where employees have strong labor protections and high engagement, such as Norway, Denmark, and Sweden. The US, for example, has high engagement but with labor protections that are continually being stripped away. The key is striking the balance.
Conclusion
Gallup’s research underscores why HR leaders must prioritize engagement-focused technologies. Highly engaged teams drive better business outcomes, including:
- 23% higher profitability
- 18% greater productivity
- 10% stronger customer loyalty
- 78% lower absenteeism
HR technology vendors and workforce solutions providers have an unprecedented opportunity to solve engagement challenges at scale. Whether through real-time employee feedback tools, AI-powered performance management, or workforce analytics platforms, the future of HR tech will be built around engagement. Because if the Gallup report makes one thing clear: employee engagement isn’t just an HR issue; it’s a business imperative.
