EMPLOYEE ENGAGEMENT ON THE RISE IN THE U.S.

• 34% of U.S. workers are engaged, tying highest in Gallup's history • "Actively disengaged" percentage is down to 13%, a new low • Engagement is highly related to positive business outcomes

The percentage of "engaged" workers in the U.S. -- those who are involved in, enthusiastic about and committed to their work and workplace -- is now 34%, tying its highest level since Gallup began reporting the national figure in 2000.

The percentage who are "actively disengaged" -- workers who have miserable work experiences -- is now at its lowest level (13%), making the current ratio of engaged to actively disengaged employees 2.6-to-1 -- the highest ever in Gallup tracking. These findings are based on a random sample of 30,628 full- and part-time U.S. employees working for an employer from January to June 2018.

The remaining 53% of workers are in the "not engaged" category. They may be generally satisfied but are not cognitively and emotionally connected to their work and workplace; they will usually show up to work and do the minimum required but will quickly leave their company for a slightly better offer.

While the percentage of engaged U.S. workers is still quite low, the 6-percentage-point improvement in the trend over the past decade represents approximately 8 million more workers who are engaged.

Why a High-Engagement Culture Matters Organizations and teams with higher employee engagement and lower active disengagement perform at higher levels. For example, organizations that are the best in engaging their employees achieve earnings-per-share growth that is more than four times that of their competitors.

Compared with business units in the bottom quartile, those in the top quartile of engagement realize substantially better customer engagement, higher productivity, better retention, fewer accidents, and 21% higher profitability. Engaged workers also report better health outcomes.

What Has Led to the Improvement in Engagement? There are several possible explanations for the improvement in engagement over the past decade:

1. Unemployment and underemployment have been declining in recent years, allowing previously disengaged workers to change jobs. The improved economy in recent years has given workers more confidence and therefore more choice in where they work -- so they don't have to tolerate poor working conditions.

2. Slightly higher turnover rates in recent years could theoretically influence overall engagement percentages, because people new to an organization experience the highest engagement levels, on average -- a "honeymoon effect" of sorts. An increase in job changes may mean more honeymooners. However, labor turnover rates were at a similar level a decade earlier, when fewer employees were engaged, so this factor is unlikely to provide a significant explanation for the improvement in engagement.

3. Gallup's annual workplace trending shows slight increases in workers' satisfaction with tangible workplace benefits such as the amount of vacation time they receive, their company's retirement plan and their pay. Some benefits are associated with engagement, such as flex time, along with performance and pay plans that improve autonomy. But benefits and perks alone won't improve engagement in the long term.

4. Gallup's annual workplace trending also shows increases in recent years in satisfaction with recognition received for work accomplishments; relationships with coworkers; and supervisors. These likely provide the best explanation for improvements in the percentage of engaged employees. Gallup organizational research indicates that at least 70% of the variance in team engagement is explained by the quality of the manager or team leader.

Team leaders influence whether workers are able to use their strengths to do what they do best, give team members recognition for good work, and hold ongoing conversations to coach their employees.

The 21st century workforce expects to have a manager who coaches them based on their strengths -- this growing awareness and action of many workplaces likely explain the gradual shift upward in the percentage of engaged workers.

Bottom Line Gallup has worked with many organizations that have reached exceptional levels of employee engagement, including those with ratios as high as 14 engaged employees for every actively disengaged employee. Some started with less than 20% engaged employees, which ultimately improved to more than 70%.

The changes didn't happen by accident. These successful organizations built a culture of high development experiences that led to high achievement. The culture shift was CEO- and board-supported and included continuous company-wide communication. Importantly, these companies educated team leaders on a new way of managing -- relying on high development and strengths-based competencies. And they held managers accountable for these competencies.