Gallup: The $228M Cost of Disengaged Employees

Global employee engagement fell 20% in 2025, according to Gallup’s 2026 State of the Global Workplace report – marking the lowest levels since 2020 and signalling material risk to productivity, margin and ROI on transformation spend.

Jon Clifton, Gallup’s CEO, said the report establishes “a global baseline for management effectiveness in the AI era.”

“Businesses are investing heavily in AI, but the results are not showing up in the bottom line. Gallup's data points to an answer the corporate world has largely ignored: the manager,” he adds.

What should finance leaders do to correct this? Finance Chief Magazine takes a deep dive into the report to identify the three most important takeaways for CFOs and their HR partners.

Businesses are missing $10 trillion in opportunity

Last year’s low engagement reportedly cost the global economy US$10tn in lost productivity, or 9% of GDP. Each percentage point of engagement represents approximately 21 million employees.

The report measured employees' psychological attachment to their work, their team and their employer, with Gallup’s meta-analyses consistently showing that “a strong relationship between employee engagement and business-unit productivity, including profitability and sales.”

The report states: “While engagement occurs at the team level, employees who are not engaged or actively disengaged lead to less profitable organisations, which, in turn, translates into lower economic growth.”

This data highlights that engagement from people operations should be seen as an initiative to a business strategy imperative – rather than just a “nice to have”.

As a result, when HR leaders present engagement programmes to finance and operations teams, they're identifying a strategic operation that can unlock trillions in global productivity.

For a median-size S&P 500 company, this translates to US$228m to US$355m in annual lost productivity from disengagement and attrition. The math is compelling: small improvements in engagement yield enormous business returns.

Managers are no longer the solution

Employee engagement fell by two percentage points from its 2023 peak to 2025, according to Gallup.

Managers are also less engaged, with levels dropping five points in 12 months – from 27% to 22% – marking the largest year-over-year shift. The “engagement premium” managers historically enjoyed over individual contributors has effectively disappeared, suggesting traditional management structures no longer insulate teams from disengagement and its knock-on effects on productivity, quality and transformation ROI.

The report also stated: “In 2025, Gallup found that within best-practice organisations, 79% of managers were engaged at work – nearly quadruple the global average.

“These world-class workplaces span all regions and industries, prioritising employee engagement as part of their long-term business strategy.”

For finance leaders, this represents a fundamental shift in value creation. Engagement can no longer depend solely on manager effectiveness. Instead, organisations must address why managers themselves are disengaging – and whether current spans and layers, workloads, incentives and career paths are sustainable. CFOs should partner with HR to quantify the cost of manager disengagement, streamline operating models to reduce friction work, invest in enablement and analytics that return time to leadership, and track manager engagement as a leading indicator tied to performance and retention.

AI investment needs manager buy-in

As CEO Jon Clifton highlighted, there is a clear gap between technology spend and business results. For CFOs, the bridge is adoption – and managers determine whether AI translates into productivity and margin.

Managers are pivotal to employees’ perceptions of AI value. In US organisations investing in AI, employees whose managers actively support their team’s use of AI are 98.7 times more likely to report that the technology has transformed how work gets done. They are also 97.4 times more likely to agree that AI creates opportunities to focus on their core responsibilities. The disparity underscores how manager engagement drives whether AI delivers measurable operational change.

Conversely, employees under managers who do not actively support AI report significantly lower perceived value. Without deliberate manager leadership on AI integration, organisations risk stranding AI investments, diluting ROI and missing opportunities to lift employee satisfaction and productivity.

For finance leaders, funding manager enablement, change management and outcome tracking should be non-negotiable components of every AI business case.