How employee engagement drives retention and business growth

It’s no surprise that 66% of employees experienced burnout this past year. HR leaders are coping with shifting budgets or pressure to do more with less. There are higher expectations to upskill and onboard to meet the demands of the latest technology. 

We’re all inundated with headlines of economic instability and increased job turnover. We hear of AI advancements threatening roles or restructuring teams. This constant change can leave anyone feeling anxious or uncertain. 

It’s up to leaders to understand how these challenges are impacting their workforce. HR professionals need to offer resources to re-engage teams, not only to create a stabilizing environment but also to support employee retention. 

Engaged employees are more likely to stay with a team, contribute creatively and help an organization grow. Employees are a business’s biggest differentiator, so it makes sense to invest in their success.

The cost of decreasing employee engagement 

According to Gallup, a decline in employee engagement this past year cost the global economy $438 billion in lost productivity. Engaged teams perform more efficiently. They have a stronger sense of well-being, resulting in less turnover or absenteeism. The global economy would gain $9.6T from employee engagement. 

So, employee engagement isn’t just a “feel-good” tactic. It creates a stabilizing workplace. Employees feel cared for and seen through recognition. They feel nurtured and trusted through learning and development.

Manager disengagement leads to turnover

Gallup attributes the productivity loss to increasingly disengaged managers. Over the past year, manager engagement decreased to 27%, with 51% of managers actively looking for new opportunities elsewhere. At a global level, 42% of managers said they’re increasingly stressed each day.

Tasked with higher demands and employee expectations, it’s understandable that managers are burning out. And it’s leading to voluntary turnover on their teams.

Most voluntary turnover stems from poor management. About 70% of U.S. workers claimed they'd leave a company because of a bad manager. Leadership development is a proactive step organizations can take to bolster stronger teams.

Related: 3 ways leadership development can support employee engagement

The downward spiral when employees leave

When employees feel happy and supported by their organization, they’re more likely to stay. With only 18% of employees engaged at work today, it's unsurprising that 49% are actively looking for new companies as a result. 

When employees volunteer to leave, it creates a cascading effect. Remaining team members handle a disproportionate amount of work, leading to stress, increased errors or potential burnout. Employee morale decreases even more. As a result, more people leave, and the turnover cycle continues. 

High attrition hurts the organization’s image as a reputable place to work, especially as work-life balance trends among young generations with 77% of Gen Z seeing it as an essential in the workforce.

Employee engagement proactively strengthens a workforce. It benefits retention and attracts strong candidates.

What drives employee engagement

55% of employees say they’re less likely to consider a new job when they enjoy their work. But what drives employee happiness? 

​There’s no one-size-fits-all solution. Flexible offerings like remote work, recognition or personalized development paths can help employees feel seen by their managers and organization.

​“It's all about listening, taking it in and activating on it in a way that is meaningful, measurable and sustainable,” said Jerrold Hill, Vice President and Head of HR at Fiserv during a recent episode of ITA Group’s "Love your people" podcast.

For example, offer courses to help team members see the value of AI as it relates to their role. They feel confident thanks to new skills. They see how their organization values their experience paired with new tech. Meaningful development opportunities tell employees their organization is invested in them as individuals.

Related: Top employee engagement trends in 2026

Proven employee engagement and retention strategies 

Employee engagement builds company culture at scale. Start with understanding your people's needs and acting on employee feedback. This informs your goals, which in turn, guide how your HR team maintains a work environment where employees grow and thrive. 

Examples of employee engagement 

• Create learning and development opportunities to invest in career development. 
• Offer employee resource groups to align the company's purpose with your people (e.g., veterans, young professionals, women leaders).
• Leverage a recognition and rewards platform to build community and establish a core of appreciation that’s tied to your core values.

Recognition is a powerful tool that influences employee behavior. A shout-out from a manager can help an employee feel seen. A peer’s note of thanks can create visibility within the live feed. A good recognition highlights how we accomplished it.

The right tech can help managers stay on top of engagement. ITA Group’s Cooleaf platform helps teams prioritize recognition while tracking engagement. Having a main feed for recognitions gives the team an opportunity to celebrate individuals. Additional tools, like pulse surveys, calculate eNPS scores so managers can track sentiment and pivot strategies when needed.

How leading organizations build engagement that lasts 

Employee engagement stabilizes teams. It keeps managers and employees aligned to the organization’s mission and values as they navigate change. 

“Our values are more than just something on a wall. We live it every day,” Crystal Hanlon, SVP of Culture and Values at The Home Depot, shared on the “Love your people” podcast. Their company's core values guide leaders through tough decisions when challenges arise. 

​Recognition, for example, highlights and encourages the behaviors a company wants to see. However, a recognition program for front-line workers might look very different from one for an in-office corporate team. Understanding your teams helps HR and leadership offer solutions that meet your people where they are. 

It’s time for organizations to embrace employee engagement 

An organization’s strongest assets are the unique personalities and experts within its teams. Engaging employees not only drives business results, but it also creates a stable environment in a world of constant change. 

A successful employee engagement strategy understands what its people need. Recognition, learning and development encourage employees to push themselves and grow in their roles. Manager engagement sets an example for teams. And core values outline a business’s mission and how it will achieve success.

When people feel supported and valued, organizations create a dynamic environment for employee retention and long-term success.

Build a resilient workforce, starting by engaging managers and leaders. Download our step-by-step guide on investing in leadership development.