Does employee engagement even matter? How changing one thing in your business could lead to a 23% increase in profitability

The work landscape is in turmoil. Recent Gallup data suggests that in 2024, employee engagement plummeted to an 11-year low, with just 23% of employees engaged globally. Employee satisfaction also returned to a record low, and people are now seeking new jobs at the highest level since 2015.

This is bad news for productivity and profitability, as employee engagement is crucial for business success. Research from Gallup again shows that companies in the top quartile of employee engagement achieve 23% higher profitability than those in the bottom quartile. This is because they're better at retaining top talent, serving customers, achieving higher-quality output and accomplishing numerous other outcomes that lead to profit. 

Simply put, investing in tackling employee disengagement is imperative if you want your business to survive and thrive in 2025. So, what's the one thing you can change in your business to help with this? The answer lies in front-line management capabilities.

Why current management styles don't work
Managers are key to a business, but many people in management roles have been promoted due to their high performance elsewhere. Worse still, a study from the Chartered Management Institute shows that 82% of these accidental managers received no formal training for their role. In the absence of a mental model for how they're supposed to perform their new role, they default to doing what they know best—fixing problems. What this means in practice is that they inadvertently favour more of a command-and-control approach towards their team, directing and telling them what to do.

However, making themselves accountable for the decision-making and problem-solving can be disastrous for employee engagement. When a manager constantly directs, employees are robbed of the opportunity to think for themselves, engage appropriately with tasks and develop independence within a role, ultimately leading to demotivation and disengagement.

This management style is bad for both employees and managers. Being relied upon by the team for everything can also quickly lead to managers becoming overwhelmed and burned out. Continually stepping in to solve other people's problems means that managers have less time to focus on the higher-value aspects of their role, which affects their growth and advancement prospects and has a knock-on effect on organisational performance.

The answer is a question
So, what can managers do to better engage employees? The answer is to learn to adopt an Operational Coaching style of management, an enquiry-led solution with a measurable impact on productivity. By incorporating the coaching-related behaviours of situational awareness, active listening, and purposeful enquiry into their everyday management style, managers and leaders quickly become alert to the potential of situations where asking team members questions that invite them to think for themselves drives better outcomes.

Asking powerful questions is a management and leadership superpower – and one that's under-utilised mainly because managers have never been taught how to use purposeful enquiry as a skill. It requires managers to let go of the idea that they must hold all of the answers, provide constant direction and advice, and instead ask questions that stimulate the other person's thinking to find solutions. This opens employees up to a wealth of skills development, helps them prioritise their tasks more efficiently, and builds their confidence in decision-making, fostering a more profound sense of purpose in their work.

Why using an enquiry-led approach improves engagement
The sustained use of this enquiry-led approach effectively taps into the team's talents, improves collaboration, and boosts productivity and engagement. By asking questions that invite others to think and signal that their contribution to a situation is valued, managers pull team members towards them rather than pushing them away by micro-managing. Ultimately, the whole organisation benefits, as employees are enabled, greater trust is built, and managers win back valuable time from not taking on their team's work.

More importantly, this style of management has been shown to really work. The London School of Economics recently conducted a large-scale randomised control trial to measure the impact of this Operational Coaching approach in 62 organisations across 14 sectors. The statistically significant results proved that managers 1) improved their capabilities across all nine competencies measured, 2) spent, on average, 70% more time coaching team members in the flow of work, and 3) generated a sixfold improvement in employee retention compared to control group organisations. Almost half (48%) of the reported successes were related to increased engagement and productivity, generating an average 74x return on investment per manager.

With Gen Z expected to make up a quarter of the workforce by 2025, urgent investment in improving management quality is needed if organisations want to reap the rewards of increased employee engagement and the financial and operational improvements it generates. Companies that ignore the benefits of investing in their managers' development might just find that it truly is the difference between success and failure.