How to Improve Employee Engagement & Retention

Employee engagement has reached its lowest point in years, and U.S. employers are feeling the pressure. According to Gallup’s 2026 State of the Global Workplace report, global engagement fell to just 20% in 2025, costing the world economy an estimated $10 trillion in lost productivity. For HR leaders, CFOs and executives, this number translates into real turnover costs, lagging productivity, weaker recruiting outcomes and benefits spend that fails to move the needle on loyalty.

The good news? Engagement and retention are levers you can actually pull. Below, we walk through what the latest research says about how to improve employee engagement and retention, with practical strategies you can put to work this quarter.

• Why Engagement Matters
• What’s Driving the Engagement Decline
• Six Employee Engagement Strategies
• How to Boost Engagement Through Benefits
• Frequently Asked Questions About Employee Engagement

Why Engagement Matters to Your Bottom Line

Engagement is not an HR abstraction. It shows up on your P&L. Gallup’s long-running research finds that engaged employees are 87% less likely to leave their jobs, and highly engaged teams produce 23% higher profitability than disengaged ones. Turnover typically costs between 50% and 200% of an employee’s annual salary once you factor in recruiting, onboarding, lost productivity and institutional knowledge walking out the door.

For self-funded employers, the stakes climb higher. Disengaged employees tend to use health care less strategically, skip preventive care and rely more heavily on emergency services. That pattern drives claims costs up and makes it harder to stabilize plan performance year over year.

What’s Driving the Current Engagement Decline

Before exploring how to boost employee engagement, it helps to understand why so many organizations are losing ground. Gallup’s 2026 data identifies a few clear culprits.

Manager Engagement

Manager engagement is in freefall. Globally, manager engagement has dropped nine percentage points since 2022, with the steepest decline occurring between 2024 and 2025. Since managers influence roughly 70% of the variance in team engagement, disengaged managers produce cascading effects throughout their organizations. Younger managers and female managers have seen the largest drops, often because they are navigating tighter budgets, AI-driven change, conflicting expectations from executives and team restructures happening all at once.

Well-being

Well-being is also slipping. In the U.S. and Canada, only 51% of employees now say they are “thriving,” a new regional low. Recent industry research shows that 82% of workers reported work-related stress in 2025, and burnout affects an estimated 65% of employees. When people are struggling outside work hours, no perks program will fully compensate.

Benefits Disconnects

Finally, benefits disconnects are slowly eroding loyalty. A 2025 employee benefits survey found that workers satisfied with their benefits are five times more likely to say they will stay with their employer, and 73% say benefits matter as much or more than salary when deciding whether to stay or leave. Yet many workers remain unaware of what their employer actually offers, particularly remote employees.

Six Employee Engagement Strategies That Work

No single tactic will turn engagement around. The employee engagement ideas that actually move the needle share a common thread: they form a coordinated approach across management, benefits, communication and culture. Here are six employee engagement strategies backed by current research.

1. Invest in Your Managers

Since managers drive the majority of team engagement, this is where organizations see the fastest return. Gallup’s research shows that when managers receive role-specific training paired with ongoing support, their reported well-being rises from 28% to 50%. Organizations with trained managers also see a 25% improvement in engagement scores and a 30% reduction in mental health-related turnover.

Practical steps include coaching certifications, structured one-on-one frameworks, regular skip-level conversations, and manager peer groups so that frontline leaders feel supported rather than squeezed.

2. Align Benefits to What Employees Actually Value

Mental health support, flexible work arrangements and pharmacy benefits have moved from “rarely offered” to table stakes. Recent research shows that mental health screenings ranked as the third-most-valued benefit among Gen Z employees in 2025, ahead of coverage for routine doctor visits and prescription drugs. Companies with robust mental health benefits see turnover drop by as much as 60%, and retention climbs roughly 5.5% among employees who actively use those services.

The lesson for benefits leaders is to audit utilization data, identify gaps between what you offer and what employees actually use, and adjust your plan design accordingly. Apex Benefits Group’s data analytics approach helps employers match benefits spend to the outcomes that drive retention, rather than simply renewing what existed last year.

3. Personalize Benefits Communication Year-Round

Offering strong benefits is only half the equation. Employees have to understand them, remember they exist and know how to access them. Industry survey data from 2025 found that 51% of employees say messages that feel personal to their situation are the most likely to drive action. Yet many employers still rely on generic open enrollment emails and an annual benefits fair.

Effective communication runs throughout the year, segments messaging by life stage, and uses multiple channels such as text, mobile apps, email and manager talking points to reach people where they are. Remote employees in particular need proactive outreach, since they consistently report less knowledge about available benefits than their onsite or hybrid counterparts.

4. Build Recognition Into the Daily Workflow

Recognition is one of the most cost-effective employee engagement programs available. Industry research has found that recognition increases engagement by 69%, and companies that prioritize recognition see 31% lower turnover. What drives that effect is frequent, specific recognition tied to actual contributions rather than annual awards or quarterly shoutouts.

Train managers to recognize effort in real time, build peer-to-peer recognition tools into your collaboration platforms, connect recognition to your organization’s stated values, and make sure it reinforces culture rather than becoming a popularity contest.

5. Create Flexibility Where You Can

Flexibility remains one of the strongest predictors of engagement. Forbes research indicates employees with flexible work arrangements are 67% more engaged than those with rigid in-office requirements, and hybrid workers report the highest engagement of any work style at 38%. For organizations unable to offer remote work, flexibility can still take other forms: adjustable schedules, compressed workweeks, job-sharing or expanded PTO policies that accommodate caregiving and mental health days.

6. Measure What Matters

If you cannot measure engagement, you cannot improve it. Pulse surveys, benefits utilization data, turnover by tenure band, manager feedback scores and claims data together produce a richer picture than any single metric.

Your goal is to spot at-risk populations early, such as mid-career employees not contributing to retirement accounts, caregivers showing signs of burnout, managers with declining team scores and high-potential talent who have stopped participating in development programs.

Intervene before they become turnover statistics.

How to Boost Employee Engagement Through Smarter Benefits Strategy

For employers, the biggest untapped lever is often the benefits program itself. Benefits represent one of your largest line items after payroll, and when designed well, they function as both a retention tool and a cost-management strategy. Poorly designed programs become expensive sources of employee frustration that undermine the very engagement they were meant to support.

A few questions worth asking as you plan for next year:

1. Are your benefits data and claims experience informing your plan design, or are you renewing by default?
2. Do employees know what they have, and can they access it without navigating six different vendors?
3. Are your managers equipped to talk about benefits confidently, or do they refer every question to HR?
4. Is your pharmacy strategy actively managing high-cost specialty drugs, including GLP-1s, in a way that protects both affordability and access?

Answering these questions honestly often reveals meaningful opportunities. This is where working with a dedicated employee benefits advisor pays for itself. Apex Benefits specializes in helping Indiana and Midwest employers align their benefits investments with the outcomes that matter most: healthier employees, stabilized costs, stronger retention and a workforce that actually engages with what you offer.

Frequently Asked Questions About Employee Engagement

How is employee engagement different from employee satisfaction?

Satisfaction measures whether employees are content with their jobs, while engagement measures whether they are emotionally invested in the organization’s success. You can have high satisfaction and low engagement, which often shows up as long tenure paired with low productivity and minimal discretionary effort.

What ROI can employers expect from mental health benefits?

Industry research suggests that organizations investing in comprehensive mental health programs can see up to 800% ROI when factoring in reduced absenteeism, lower claims costs for untreated conditions and retention gains. More conservative estimates still show 2x lower burnout rates and 20% higher retention.

Do engagement programs work for hourly and frontline workers?

Yes, but the design has to match the reality of the work. Frontline employees often cannot attend webinars or access benefits portals from a desk. Successful employee engagement programs for these populations rely on mobile-first communication, manager-led recognition and benefits that address concrete concerns like transportation, childcare and shift flexibility.

Apex Benefits is not a law firm and cannot dispense legal advice. Anything contained in this communication is not and should not be construed as legal advice. If you need legal advice, please contact your legal counsel.