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More than half of employees are disengaged. What’s a leader to do?

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ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

Brought to you by Liz Hilton Segel, chief client officer and managing partner, global industry practices, & Homayoun Hatami, managing partner, global client capabilities

Ever since employee burnout and attrition came to the forefront during the COVID-19 pandemic, many employers have responded with measures to improve worker well-being and engagement. But employees’ unhappiness with the workplace still hasn’t changed—if anything, it has become worse. Recent research shows that the number of actively disengaged employees in the US is the highest in a decade. Reasons for workers’ dissatisfaction include limited career advancement opportunities, poor leadership, excessive workloads, and lack of connection to the company’s purpose. While organizations may not be able to address all these challenges at once, some unconventional tactics may help get the process started.

AN IDEA

An image linking to the web page “Some employees are destroying value. Others are building it. Do you know the difference?” on McKinsey.com.

Measure which employees are effective

Attrition and employee disengagement could cost large organizations up to $355 million a year in lost productivity, according to research led by McKinsey senior partner Aaron De Smet and colleagues. Over five years, that’s an estimated $1 billion or more per company. To make a dent in those numbers, organizations may need to deploy thoughtful interventions across various groups of employees to increase their motivation and commitment. Our research identifies six different segments of workers that range from highly dissatisfied to superengaged; the challenge for leaders is to move as many workers as possible into the most-engaged part of the spectrum. By paying attention to six important factors—which account for nearly two-thirds of the total cost to companies from disengagement—companies could save an estimated $56 million a year in disengagement costs.

A BIG NUMBER

That’s the number of attributes that frontline employees consider most important for career advancement, according to research conducted by McKinsey and Cara Collective. Job growth tops the list, with compensation coming in a close second, and is “significantly more important to frontline employees than their employers think,” note the researchers. Gaps between what workers want and what employers think they want can derail leaders’ efforts to boost employee engagement. For example, in the case of frontline workers, employers place more importance on job titles and overvalue vacation and sick leave, and discrepancies appear between what middle managers—who play a critical role in employees’ satisfaction—perceive as important and what their organization values.

A QUOTE

“If managed correctly, gen AI can help employees be happier, more content, and focus on what they love doing.”

That’s McKinsey senior partner Ben Ellencweig in a discussion with Philipp Skogstad, CEO of Mercedes-Benz R&D North America, on the automaker’s recent beta test of a generative AI tool in its vehicles. “Gen AI is a great addition to any activity that requires creativity and needs human interaction or leadership,” says Ellencweig. Instead of viewing technology as a threat that puts them out of work, humans can use it as an asset that removes much of the tedium from routine tasks and enables people to thrive by doing what they do best. “Think about the technician that services your car when you bring it to the dealer,” observes Ellencweig. “Gen AI has the ability to guide the technician, to identify the problem and quickly pinpoint how to solve that problem.”

A SPOTLIGHT INTERVIEW

An image linking to the web page “Leading from the front: How DBS embraces change and empowers employees” on McKinsey.com.

When Singapore-based financial institution DBS wanted to advance its strategic people agenda, it turned to its own employees for guidance. “People support what they help create,” says Yan Hong Lee, DBS’s managing director and head of group human resources, in a discussion with McKinsey. “We went to our employees and asked them what they needed to take the organization forward.” The result was the creation of five values and behaviors—such as innovation and decisiveness—that have become part of the company’s people programs and processes. DBS supports a culture of transparency and accessibility: for example, employees have several opportunities to interact with senior leaders directly. “This level of transparency has led to some fantastic results,” says Yan Hong. “Nearly 97 percent of our employees complete the engagement surveys we field annually, which tells us people trust that we take their opinions seriously.”

DISCONNECTED

An image linking to the web page “Workplace rituals: Recapturing the power of what we’ve lost” on McKinsey.com.

As a leader, you may believe that it’s your job to “fix” disengaged employees, but that may not always be practical, says the author of a Harvard Business Review article. Rather, you may be better off learning how to collaborate with them. That may mean enlisting disengaged workers in concrete, task-oriented activities while respecting their personal space. As the “Great Disengagement” pervades workplaces, organizations that prioritize fair pay and rewards, equip their leaders to manage through change, and connect and communicate with employees are likely to come out ahead. And to build a sense of community, it’s important to reestablish workplace rituals that may have been lost.

Lead by engaging.

— Edited by Rama Ramaswami, senior editor, New York

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by "McKinsey Leading Off" <publishing@email.mckinsey.com> - 02:11 - 25 Sep 2023

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