Global Engagement Fell to 21% in 2024 — and Perks Won't Fix It

Global employee engagement dropped from 23% to 21% in 2024, a decline comparable to the fall recorded at the height of the COVID-19 pandemic, according to Gallup's 2025 workplace report. For HR leaders, the number signals a problem that flexible schedules, office aesthetics, free snacks and game rooms cannot solve — especially for Gen Z talent.

The younger generation of workers is not choosing employers on perks. What Gen Z employees want, the analysis finds, is consistent high-quality management, continuous meaningful feedback, and clear paths for growth. At the same time, many companies are flattening structures and asking managers to do more without giving them the training or tools to succeed. That gap between expectation and delivery is hitting retention and employer brand.

What changed for managers?

Gallap's data points to one decisive factor: 70% of team engagement is directly attributable to the manager. Yet manager engagement itself fell from 30% to 27% in 2024, creating a ripple effect across teams. When managers are disengaged or overwhelmed, their capacity to support, coach and motivate employees shrinks.

Flattened org charts compound the pressure. With fewer layers of management, leaders now support more employees while still delivering results as individual contributors. Many are stretched too thin to provide the coaching their teams expect — and most were promoted without formal training in delivering feedback or developing talent.

The capability gap arrives at the exact moment expectations are rising. Gen Z employees want frequent communication, real-time feedback and transparency around their growth. Without effective managers, even thoughtfully designed benefits programs fail to deliver meaningful impact.

What role can AI play in performance management?

Technology is taking on part of the load. According to Klaar's State of AI Report, 45% of managers believe AI in performance management should surface insights they might otherwise miss, and 56% expect AI use in this area to increase within the next year — more than one in two managers anticipating growth in adoption.

AI-powered performance tools can prompt timely check-ins, surface engagement trends and flag potential retention risks before they escalate. They can also personalize development insights, letting managers support employees at scale. But the analysis is explicit on one limit: technology augments human connection, it does not substitute for it.

What does effective management look like in practice?

Organizations investing in manager development are already seeing measurable results, the report finds. Strong managers align individual goals with broader business objectives, so employees understand how their work contributes to organizational success. They build environments where people feel supported, recognized and motivated to grow — which translates into higher engagement, stronger performance and improved retention.

In day-to-day terms, that means:

• Consistent one-on-one conversations
• Clear goal-setting tied to business objectives
• Continuous feedback loops that eliminate surprises and build trust

The report also calls for redefining the manager's role from task overseer to coach and talent developer. That shift requires investment in practical skills managers can apply immediately: delivering continuous, actionable feedback; building trust and psychological safety; and supporting individualized career development.

How can L&D leaders close the gap?

For learning and development leaders, the starting point is a capability assessment: where are managers struggling, and which skills are missing? From there, leadership development should be prioritized as a core business strategy rather than a nice-to-have, backed by practical tools, frameworks and training managers use in their daily roles.

Performance management systems must evolve too. Annual reviews and quarterly check-ins alone are no longer sufficient; development should be embedded into daily workflows, with feedback and growth conversations that are ongoing, timely and tied to real work.

Measurement matters as much as training. The report recommends tracking engagement, internal mobility and retention rather than productivity and checked boxes alone — metrics that reflect a healthier, more sustainable workforce.

The bottom line for HR teams competing for younger talent: the future of engagement is built on people, not perks. As Gen Z redefines what a positive workplace looks like, companies that equip managers to coach, communicate and develop talent will be best positioned to attract and retain the next generation of workers — and effective management will function less as an option than as a competitive requirement for long-term success.