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The State of Employee Engagement 2023/24

Exploring HR professionals’ top priorities and biggest challenges as we move into 2024

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Introduction

Since 2018, we’ve been asking HR professionals what makes them tick – and what keeps them up at night –to paint a picture of the things that are having the greatest impact on employee engagement.

The 2023 report – the fourth edition of the State of Employee Engagement series – draws insights from over 450 senior HR practitioners to understand their key priorities and challenges going into 2024.

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Key Insights

HR Priorities – ‘2024 – the year of the dragon retention’

We asked respondents to identify their top HR priorities, and the standout across the board was retention. Since our 2022 report, retention has leapt to the top of the list – having previously been the third most important priority.

Reflecting a worsening macroeconomic backdrop and amid a cost-of-living crisis, employee wellbeing has also grown significantly in importance – alongside recruitment, another well documented challenge.

Download the report to see the full priority table.

Employee-retention
1. Retention - 36%
Employee-wellbeing
2. Wellbeing - 29%
Recruitment
3. Recruitment - 28%

Employee listening is stagnating – does this explain why retention is the top priority?

In recent years, we’ve reported the gradual decline in companies relying on an annual survey to listen to their people, this appears to have remained static at 32% in 2023 (the same as 2020). The pandemic accelerated the adoption of regular pulse surveys, with HR professionals and business leaders realising that getting feedback once a year couldn’t keep up with the pace of change and leveraging employee voice to help shape hybrid working practices.

Against the background of the cost-of-living crisis and focus on ‘harder’ business outcomes like retention, performance and productivity, our 2023 study highlighted a step backwards – 17% of organisations are not formally listening to their people and of those that do, slightly fewer are relying on more regular pulse surveys.

Given the plethora of studies showing the link between employee engagement and business outcomes, engaged employees are 87% less likely to leave their job (source: Corporate Leadership Council) this is surprising.

HR professionals can do more to position employee listening as a way of driving retention and business performance.

 

Employee engagement levels aren’t improving

More than half (64%) of the HR professionals we spoke to saying employee engagement levels have either remained stagnant or worsened over the course of the past 12 months.

That’s a concern – especially when you combine it with last year’s data. In our 2022 research 18% said employee engagement was on the decline, so this year’s numbers signal a worrying continuation – suggesting many practitioners are struggling to turn this longterm trend around.

But, when we consider that so many organisations are failing to run employee listening surveys, should lower levels of engagement be a surprise?

And, more to the point, how can those who are no longer regularly listening to their employees really know the true answer?

 
 

The retention conundrum continues…

The vast majority of our respondents (89%) said the retention conundrum was either getting more difficult, or not changing.

Just 11% said retention is getting easier. That’s a huge percentage of organisations losing the knowledge and expertise that has been built up by employees who decide to leave.

Retention isn’t only a people challenge, it’s a financial one too. According to the Society for Human Resource Management, the average cost of replacing lost employees is equivalent to six to nine months of their salary.

… and it’s hampering recruitment efforts

Third in our ranking of HR professionals’ top priorities was recruitment – and, once again, it’s a challenge that’s not getting any easier.

In fact, the findings when we asked about recruitment were almost identical to those for retention – reinforcing just how closely linked these two issues are.

From our data, the vast majority (90%) said recruitment isn’t getting any easier, while just 10% said it is.

When asked about the biggest recruitment challenges, the one cited by 40% of respondents – almost twice as many as the next most popular choice – was a shortage of qualified candidates with the right skills.

 

The skills shortage crisis is impacting
productivity and performance

Between 1974 and 2008 the UK’s productivity – the amount of output you get per worker – grew at an annual rate of 2.3%. However, between 2008 and 2020, that number collapsed to around 0.5%.

And, when you consider how closely linked it is with employee engagement, it’s no wonder productivity and performance has jumped up our ranking of HR professionals’ top priorities.

According to research by Gallup, organisations with a highly engaged workforce are 21% more profitable and 17% more productive than those with disengaged staff.

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