Engagement Declines Even as Key Drivers Stay the Same

The report shows that professional development remains the leading driver of engagement, cited by 71% of respondents, ahead of remote or hybrid work at 63%. But some of the factors that increased engagement in recent years are losing their effect. Compared with 2025, the engagement lift from remote and hybrid work, artificial intelligence (AI) tools, and job market conditions has weakened. This change is especially clear in how employees respond to AI: AI tools increased engagement for 70% of respondents in 2025, but that dropped to 55% this year.

Regional differences also reinforce the point. Engagement is lowest in Asia at 59%, compared with 67% in North America, and 68% in Europe. Yet the broad pattern is consistent across regions: engagement is under pressure, and leaders can’t assume that yesterday’s engagement levers will keep working in the same way.

Burnout Continues to Affect Performance

Burnout Is Hitting Early-Career Employees Hardest

One of the clearest warning signs in the data is the gap by level. Associates and entry-level employees are the most likely to say burnout reduces their engagement, at 62% and 61%, respectively. That compares with 48% of managers, 44% of directors, 55% of vice presidents, and 38% of C-suite leaders. That gap is reinforced by how differently leaders and early-career employees view culture: executives are 2.5 times more likely than entry-level staff to say their organization’s culture is well-defined.

This matters for more than immediate productivity. Early-career professionals often represent the future leadership pipeline. When they experience burnout early and disengage quickly, organizations risk weakening long-term bench strength while making retention difficult in the near term. It also creates a perception gap between leaders and more junior employees about how sustainable the work experience is.

The organizational consequences are tangible. Among respondents, 91% say the loss of high-performing colleagues affects the organization. The top effects include increased pressure on remaining team members, knowledge gaps, and lower motivation and engagement. In other words, burnout doesn’t stay contained to the individual. It spreads through teams and compounds existing retention problems.

Address Pressure on High-Demand Consumer Frontline & Supply Chain Talent

Sarah Becker, Partner, Jobplex

Employee engagement and burnout are becoming critical issues for midsize consumer packaged goods and consumer companies that are competing with larger players for high-demand frontline and supply chain talent. Disengagement directly affects service levels, production reliability, and the consistency of the consumer experience. Burnout is particularly prevalent in operations roles, where labor shortages, volume volatility, and increasing performance expectations have become routine.

That pressure is driving a strong focus on modern workforce strategies that are designed to stabilize retention and improve talent pipelines. Flexible scheduling, targeted upskilling, and more efficient work processes are increasingly seen as operational priorities.

Organizations are introducing cross-training programs, more intuitive digital tools, and redesigned shift structures that help employees feel less overwhelmed and more capable in their roles. Many are also investing in frontline leadership development to improve communication, recognition, and workplace culture. When companies combine transparent career paths with targeted skill development, they’re better positioned to retain top talent, boost engagement, and reduce burnout.

Reduce Complexity to Reduce Burnout in Industrial Transformation

Gerlinde Berger, Managing Partner, European Industrial Practice

Across Europe, and particularly within the German, Austria, and Switzerland (DACH) industrial sector, many organizations are moving through significant transformation driven by digitalization, sustainability requirements, and ongoing restructuring. Those changes often come with organizational structures and added pressure on existing teams. As a result, engagement can fall and retention becomes more difficult, especially when employees feel uncertainty without enough support. Companies that communicate clearly, provide stability, and support leaders through change tend to maintain stronger loyalty and remain more attractive to top talent.

In industrial environments, organizations improve engagement and reduce burnout when they minimize complexity, sharpen priorities, enhance leadership capability, and create predictable workloads. Pragmatic flexibility, transparent recognition, and structured development paths also help employees feel a sense of direction and belonging. Those actions make resilience more sustainable because they address the conditions employees experience every day.

Strengthen Engagement to Compete for Tech Talent

Frank Smeekes, Managing Partner, Europe

European technology CEOs see employee engagement and burnout as critical factors that are affecting their ability to attract and retain top talent. Low engagement threatens innovation and speed, while burnout contributes to the loss of high‑performing employees who are difficult to replace. As a result, CEOs are focusing on sustainable workloads, better use of technology to reduce pressure, and high‑quality hybrid work experiences. Many now recognize that strong engagement and well‑being are competitive advantages in Europe’s tight technology talent market.

Organizations are also responding by using technology to empower employees rather than increasing control. Artificial intelligence is helping remove low‑value work so teams can focus on core priorities. Flexible hybrid work models that are supported by secure digital collaboration have become a baseline expectation and an important trust signal. Continuous skills development and internal mobility, enabled by technology‑driven learning platforms, are also essential as roles evolve quickly. At the same time, CEOs are emphasizing transparency and ethics in AI and data use, which strongly influences employee loyalty. Aligning technology with purpose, sustainability, and modern leadership behaviors remains critical to keeping top performers engaged across Europe.

Prevent Disengagement through Purpose, Safety & Pruning

Tim Wiseman, Managing Partner, Leadership Consulting

Across many parts of Asia, disengagement often appears as a quiet withdrawal rather than open dissatisfaction. Employees continue doing their jobs but stop going beyond what’s required. In China, the tǎng píng (“lying flat”) and bǎi làn (“let it rot”) mindsets reflect a growing willingness to disengage when the effort–reward equation no longer feels balanced. 

When employees lose clarity about the purpose behind their work or feel their contributions go unnoticed, engagement begins to erode regardless of workplace flexibility or digital tools. The report data show the same pattern: engagement is declining while burnout remains high. The result is a gradual loss of discretionary effort. Risk‑taking declines, idea sharing slows, and the sense of purpose that fuels strong performance begins to weaken long before turnover appears in the metrics.

The most effective responses combine purpose, safety, and pruning. Purpose: Leaders who deliberately reward meaningful progress improve engagement and retention through consistent recognition that reinforces the value of employees’ contributions. Safety: Addressing the workplace conditions, such as toxic behavior, that drive burnout is equally important. Fixing the environment – not just adding wellness perks – is non‑negotiable. Pruning: Successful cultures identify and stop low‑value work and low‑impact priorities so teams can focus on what moves outcomes. Pruning may also require difficult decisions about individuals who remain uninterested or unwilling, as keeping the wrong people undermines purpose and safety efforts. Organizations that address these issues directly create environments where employees bring energy and focus rather than quietly disengaging.

What This Means for Leaders

This year’s report makes the challenge clear. Engagement is down. Burnout remains high. And the pressure is landing hardest on the employees many organizations most need to retain and develop. Leaders cannot treat this as a short-term morale issue or assume that flexibility alone will solve it.

Leaders need to manage workloads deliberately, address excessive hours, invest in professional development, and build strong communication and recognition practices. They also need to focus on early-career employees who are especially vulnerable to burnout-related disengagement. These employees may require increased structure, support, and visibility into how they can grow. These combined initiatives will help organizations retain talent at a time when pressure is high and loyalty can’t be taken for granted.