HR crisis: Rampant stress, burnout and pessimism drains $9.6 trillion in productivity
Picture it: Your best managers are burning out, your teams are drowning in pessimism and corporate finances are getting pounded. That’s the stark reality facing organizations globally, with the latest research suggesting that we’re staring down a leadership crisis that makes the Great Resignation look like a hiccup.
Manager engagement has nosedived to just 27% — a devastating three-point drop in a single year that’s sending shockwaves through entire companies, according to a comprehensive study by coaching platform meQuilibrium, based on a survey of 5,477 employed adults and Gallup research.
For the second time in more than a decade, employee engagement is ticking downward, with the most dramatic decline coming not from entry-level workers but by way of the very individuals employers depend on most to inspire and drive performance, according to the report.
Brad Smith, chief science officer at meQuilibrium, whose clients include GE Aerospace, JPMorgan Chase and Paychex, noted that the sharpest declines in engagement are among managers, who are experiencing what he characterizes as “alarming levels” of stress and burnout. That, he notes, can “negatively impact employee engagement, motivation, productivity and turnover within the teams they manage.”
The financial implications are huge. If the global workforce were fully engaged, it would unlock $9.6 trillion in productivity, according to the study—the equivalent of a 9% boost in global GDP. But under current conditions, those potential gains evaporate as disengaged managers struggle to lead effectively.
The implications for HR leaders are clear. Organizations that act decisively to support their leadership layers while building organizational resilience stand to emerge stronger from the current period of workplace turbulence. That means prioritizing management’s well-being as an economic imperative, developing emotional intelligence across the organization, and fostering empathetic leadership capabilities, the research suggests.
What’s driving the meltdown? The research identifies a toxic combination of factors workplace experts say leads to an environment of “VUCA,” which stands for volatility, uncertainty, complexity and ambiguity. Among the characteristics:
Widespread pessimism. 67% of employees feel worse when considering the state of the country, while 35% feel worse about their work situations. What’s more, about half of workers expect conditions to worsen, creating a perpetual cycle of declining morale.
Uncertainty-related stress. High levels of uncertainty more than triple the rate at which employees develop pessimistic views of their work situations. Nearly one in three employees experiencing high uncertainty-related stress also show significant symptoms of burnout.
Employee disconnect. More than half of all employees exhibit at least one symptom of disconnection from their work, teams or organizations, while those who are seen as severely disconnected report a 66% impairment in productivity.
Perhaps most alarming is the perception gap creating dangerous blind spots throughout organizations. While 42% of employees acknowledge their own uncertainty-related stress, 63% believe their coworkers are suffering from it. That suggests stress levels are systematically underreported to leadership, meaning HR professionals are trying to gauge organizational health with incomplete information.
The trend isn’t affecting everyone equally, however. Gen Z employees and government workers experience the greatest levels of disillusionment, making one-size-fits-all solutions useless.
Despite the findings, the research identifies powerful buffers against workplace chaos—a sort of psychological armor in the battle against VUCA—including emotion regulation, optimism (albeit with eyes open to issues around workplace volatility) and empathetic leadership.
“In a world defined by volatility and ambiguity, building resilience is no longer optional—it’s essential,” Smith suggests. “Our research shows that skills like emotion control and empathetic leadership can shield employees from the toxic effects of uncertainty and pessimism. Even in turbulent times, we can equip people to thrive.”
Louis Carter, founder of Most Loved Workplace, an awards program recognizing the top companies to work, notes that corporate optimism won’t necessarily work to reverse the effects of corporate pessimism—”only clear, grounded leadership that rebuilds relationships and connection” is the key. “First, give people real wins they can control. Help them set small, meaningful goals tied to purpose—not just productivity. When people start to see progress, their outlook changes.”
As he puts it, “The solution isn’t about mood. It’s about meaning, feeling back in control of one’s life, and connection to the whole.”