By: Jessica Wan & Kivilcim Disli
Something’s not working—and it shows. Despite major investments in employee retention and flexible work policies across industries, workforce engagement is continuing to plummet.
Morale is low, turnover is rising, productivity is stagnating, and workplace cultures are struggling to stay resilient in the face of constant change. Gallup’s 2025 State of the Global Workplace report puts hard numbers to this growing crisis—and reveals a critical factor often ignored in boardroom strategies: the physical workplace.
Global engagement rates have dropped to just 21%, matching the pandemic’s lowest levels.
Over 6 in 10 employees are simply not engaged, and 17% are actively disengaged—emotionally disconnected, dissatisfied, and inadvertently undermining team morale and performance.
This is more than a cultural issue. It’s a full-blown economic emergency.
In 2024 alone, Gallup estimates that disengagement resulted in $438 billion in lost productivity. When you factor in indirect costs—attrition, absenteeism, operational inefficiencies, poor customer experiences—the total impact climbs toward trillions of dollars, or nearly 9% of global GDP.
The takeaway? Disengaged employees don’t just underperform—they actively erode business performance.
Gallup attributes 70% of engagement variance to one factor: the manager. But here’s the twist—manager engagement is also falling, creating a domino effect across teams.
The steepest drops are among:
While poor leadership is often blamed, this narrative is incomplete. A more holistic look reveals another truth: engagement is deeply influenced by where and how people work every day.
The environments people show up to—their ability to focus, collaborate, connect, and recharge—can either support or sabotage even the best leadership.
The Overlooked Starting Point: The Physical Workplace
Conversations around engagement typically focus on values, vision, or policies. But the physical workplace is where those ideals are experienced—or forgotten.
Because at its core, the workplace is more than just a setting—it’s a daily experience. One that shapes how people connect, collaborate, and contribute. When uninspiring, isolating, or poorly aligned with employee needs, it accelerates disengagement.
But when designed with intention, it becomes a powerful lever to:
In short, your workplace can do more than house your team. It can drive performance, loyalty, and talent magnetism.
Neglecting workplace design is no longer an operational oversight—it’s a strategic misstep. A disengaged workplace leads to:
Consider this: disengagement costs an average of 18% of an employee’s annual salary. For a 1,000-person company with a 60% disengagement rate, that could mean losing millions annually, often silently.
Employee engagement isn’t a wellness perk or HR metric—it’s a core business multiplier. And workplace design is emerging as one of the most underleveraged levers in building a compelling Employee Value Proposition (EVP).
Here's how organisations can make design part of their engagement strategy:
Leadership thrives in visibility. Create zones that encourage presence and connection—touchdown areas, team huddles, and private 1:1 spaces. Leadership needs room to breathe and be seen.
Design for choice. Whether it’s quiet pods, collaborative hubs, or hybrid-ready tech zones, spaces should support how different people work best, across roles and generations.
Use space to amplify your mission and identity. From visual storytelling to purposeful layouts, the workplace can become a living expression of what your brand stands for—and why talent should choose you.
Wellbeing-focused design—natural light, biophilic elements, ergonomic setups, acoustic balance—isn’t just good for morale. It directly drives productivity, retention, and engagement.
Today’s workplace must offer what home cannot—community, culture, mentorship, and energy. It should be a place people want to come to, not one they’re mandated to return to.
When you reimagine your workplace as a strategic asset—not just overhead—it starts to return value across the full EVP spectrum:
When engagement is low, even the best benefits fall flat. But when it’s high, every investment yields exponential returns:
The disengagement crisis is real. And the economic impact is no longer theoretical—it’s playing out in real time.
The solution doesn’t lie in pulse surveys or leadership offsites. It starts with the spaces where people spend their days. With the environments that shape mood, motivation, and meaning.
The physical workplace is ground zero for culture, engagement, and performance.
Organisations that reimagine their workplaces as engagement engines, not just cost centres, will unlock new levels of performance, resilience, and growth.
Because when your people thrive, your business does too.
Ready to turn your workplace into your most powerful engagement tool?
It’s not just about where people work.
It’s about how they feel when they do.