Gallup: Why Managers Cost The Global Economy $438 Billion

Forbes

24-04-2025

Gallup reveals why managers are increasingly disengaged at work.
The global workforce stands at a critical crossroads. In 2024, employee engagement fell to 21%, matching the drop during the pandemic. But this time, the cause isn't a global health crisis. According to Gallup's State of the Global Workplace: 2025 Report, the primary factor driving this disengagement is the group meant to inspire and guide teams—managers.
As manager engagement declines, team performance, employee well-being, and global productivity inevitably deteriorate. Yet, executives have an opportunity to address these issues. The data not only highlights a concerning downward trend but also reveals clear actions that can revitalize workplaces and boost profitability.
Let's examine the current workforce crisis and strategies to improve engagement and organizational performance.
Gallup's latest research reveals that declining employee engagement cost the world economy a staggering $438 billion in lost productivity in 2024 alone. This marks only the second time in 12 years that global engagement has fallen, dropping from 23% to 21%. What makes this decline particularly alarming is its source. While engagement among individual contributors remained flat at 18%, manager engagement fell significantly from 30% to 27%. This isn't just a statistical blip. It's a warning sign of deeper organizational dysfunction that threatens business performance and economic growth. "Manager engagement affects team engagement, which affects productivity. Business performance—and ultimately GDP growth—is at risk if executive leaders do not address manager breakdown," warns Jim Harter, Gallup's chief workplace scientist.
Gallup's research consistently shows that managers account for at least 70% of the variance in team engagement. When managers disengage, their teams inevitably follow suit. Yet, the decline hasn't affected all managers equally. Young managers under 35 saw their engagement drop by five percentage points, while female managers experienced an even steeper seven-point decline. These demographics, often representing the future leadership pipeline of organizations, are showing the most severe signs of burnout and disillusionment.
The post-pandemic workplace has placed unprecedented demands on managers. They're expected to:
Despite these escalating responsibilities, only 44% of managers globally report receiving any formal training for their role. Many are what are being called "accidental managers"—employees who slip into more senior roles for which they are unprepared, untrained, and, sometimes, even uninterested.
Disengaged managers trigger a troubling cascade effect—disengaged teams, reduced productivity, higher turnover, and lower profitability. This extends beyond work to overall well-being, with global life satisfaction ("thriving") falling to 33%—its lowest point since 2021. The U.S. and Canada region has hit a record low, with only 52% of employees thriving. Emotionally, stress remains elevated, sadness is trending upward, and one in five employees report loneliness. Most concerning for retention--50% of global employees are seeking or looking for new opportunities, representing a potential talent exodus that could further destabilize organizations.
Gallup's research points to three specific actions that can dramatically improve manager engagement and organizational performance:
This fundamental step alone can cut extreme manager disengagement in half. Despite its proven effectiveness, manager development has declined globally in recent years. Providing even basic training on core management functions can significantly improve manager performance and team outcomes.
Managers who receive training in coaching techniques see up to 22% higher engagement than non-participants. More importantly, teams led by these managers experience up to 18% higher engagement. This multiplier effect makes coaching skills one of the highest ROI investments for improving organizational performance. Studies show that management training can raise productivity by 17% in the first year alone through improved quality and efficiency.
When employers provide training, manager well-being increases from 28% to 34%. But the real magic happens when you combine training with active development support—having someone who encourages their growth. This combination boosts manager well-being to 50%, creating a virtuous cycle where thriving managers lead thriving teams. Organizations that implement these strategies consistently achieve 70% or higher engagement levels—more than three times the global average. The economic impact is equally impressive, with these companies outperforming their peers by 23% in profitability.
While Gallup's research confirms the value of manager training, not all development programs deliver equal results. The most effective approaches share several key characteristics:
Organizations achieving the highest ROI on manager development typically implement structured programs lasting 6-12 months with regular touchpoints and clear performance expectations. Simply providing one-off training sessions without ongoing support rarely produces lasting engagement improvements.
The $438 billion in lost productivity represents just the tip of the iceberg. When you factor in the costs of turnover, absenteeism, safety incidents, and quality defects associated with disengagement, the true economic impact is likely in the trillions. The good news is that this crisis is solvable. "It's time to rethink the role of the manager," Gallup concludes in its report. This means redefining expectations, providing adequate resources, and creating support systems that enable managers to succeed. In a world where only one in five employees is engaged, creating an environment where managers can thrive isn't just good leadership—it's good business.