Employee Engagement Is Toast. Now What?
The “employee engagement” era is finally coming to an end.
It had a good run – from Marcus Buckingham and Curt Coffman’s 1999 manifesto First, Break All The Rules through late 2025.
But when big, successful, and profitable companies like Amazon, Nestle, and Novo Nordisk started laying off large numbers of white collar staff while claiming “these layoffs have nothing to do with performance,” they didn’t just shake the trust of their own employees.
They’ve sent a message to loyal, productive and committed employees everywhere that they’re likely to be next.
That’s the thing about performance-agnostic layoffs.
They don’t just break the deal at the companies doing them.
They inject contagious systemic risk into the very nature of employee trust across companies, sectors and geographies.
Workers at other organizations can see what’s happening. And they’re drawing the rational conclusion: if even the most successful companies can’t promise security based on performance and loyalty, why would mine be different?
This isn’t speculation.
It’s playing out in real time, whether it’s in shaky markets in the West, or in markets where talent has more options, like in India.
But first, let’s understand what’s been incinerated – and why it required conditions that no longer exist.
What Engagement Required (And Why It’s Gone)
Here’s what Gallup and the rest of the “engagement-industrial complex” never wanted to admit: their entire framework was built on asking people how they feel about things that have almost nothing to do with whether their organizations actually function.
“On a scale of one to ten, how well do you feel you understand the company’s strategy?”
That’s my number one candidate for the worst survey question of all time.
Here’s a radical idea: let’s find out what employees actually know about strategy, not how they feel about it.
The Gallup Q12 – the so-called “gold standard” – asks whether your manager seems to care about you and whether you have a best friend at work.
These questions might correlate with longevity (people who like their colleagues stay longer) and satisfaction (people who feel cared for report higher satisfaction), but they tell you almost nothing about whether your organization coordinates effectively, makes decisions at appropriate velocity, or enables people to do meaningful work sustainably.
But the “employee engagement” idea wasn’t concerned with such essentials. Instead, it offered corporate executives the appearance of a “one-way bet”: if you could increase your employee engagement scores, your productivity would improve and your profits would soar, without much additional effort or investment on your part.
There was little talk, if any of the employee side of what was actually a “two-way bet”: the extent that employees were willing to tolerate unclear priorities, coordination dysfunction, occasional misalignment, and limited autonomy because long-term security and prosperity make it worthwhile – to the point that those employees didn’t feel inclined to blow it by giving an employee survey question a “3” when displeasure could be expressed more mildly and less visibly with a “7”.
But that only works when there’s some belief that security and prosperity would actually follow.
The MacLeod Report: Codifying the Illusion
The report even convinced some leaders across sectors that engagement was a goal in and of itself rather than a contributor to larger success, and was measured in parallel with the corporate bottom line.
Read the MacLeod report carefully and you’ll see the trap being set on every page.
“Employee engagement strategies enable people to be the best they can at work.”
“Engaged employees freely and willingly give discretionary effort.”
The language was seductive. And MacLeod’s four enablers – strategic narrative, engaging managers, employee voice, and integrity – seemed to be enough within the remit of internal communication and HR professionals to meaningfully influence that they embraced it.
The problem?
None of this told you whether your employees could actually do their jobs.
I’ve seen organizations with stellar engagement scores and catastrophic execution problems.
I’ve watched IC teams celebrate improved sentiment while the business missed every strategic target.
Why?
Because they’d confused feeling good about work with being effective at work.
But MacLeod’s framework assumed something more fundamental: that organizations could credibly promise security and progression in exchange for engagement and effort.
That assumption was just burnt to a crisp by the likes of Amazon, Novo Nordisk, and Nestle.
When High-Profile Failures Destroy System-Wide Credibility
Here’s what makes performance-agnostic layoffs uniquely devastating to the engagement paradigm: visibility and virality.
When Amazon announces layoffs affecting thousands of white-collar workers “unrelated to performance,” that news doesn’t stay contained within Amazon.
LinkedIn lights up.
Industry Slack channels buzz.
WhatsApp groups at competing companies share the stories.
Workers everywhere see their colleagues – people who did everything “right” according to the engagement playbook – getting terminated anyway.
When Nestle or Novo Nordisk does the same, the pattern becomes undeniable.
These aren’t struggling companies making desperate cuts.
These are profitable, successful organizations that could afford to keep people but chose not to.
The stated reasons vary: “strategic realignment,” “operational efficiency,” “organizational transformation,” or, even more insidiously, “AI”.
The unstated truth is simpler: employment security – even for high performers – no longer matters enough to preserve.
And here are some killers: some of the terminated employees had been promoted months earlier.
Some had exceeded every target.
Some had relocated themselves and their families for the company.
Some had stellar engagement survey scores and teams with stellar scores.
None of it mattered.
This doesn’t just break trust at Amazon, Nestle, or Novo Nordisk. It breaks trust everywhere.
Because workers at other companies are watching and thinking: “If it happened there, it can happen here. And if performance doesn’t protect you there, why would it protect me here?”
The engagement paradigm required workers to believe their effort and loyalty would be reciprocated.
Performance-agnostic layoffs – especially at high-profile, successful companies – prove that belief was always conditional.
And once that proof goes viral, you can’t put the genie back in the bottle.
What Gen Z (Correctly) Understands
If you can’t offer security and long-term prosperity – and I can see from the burgeoning numbers of “green banners” on LinkedIn that even “good” companies don’t – I at least want purpose, autonomy, and consistency. I will leave if I don’t get those and if I have other options.
Or, if I don’t I will silently and sullenly “disengage.”
This isn’t entitlement or immaturity.
It’s a rational response to publicly visible information.
Why tolerate organizational dysfunction at my company if I can see that even high performers at prestigious companies get laid off anyway?
Why invest emotional energy in “engagement” when the engagement itself provides no protection – as demonstrated repeatedly at organizations across my industry?
Why India Showed Us the Future
Between November and December, my research partner Ambuj Dixit and I conducted an extensive study tour across five Indian cities, interviewing internal communication practitioners, Global Capability Center leaders, and other business executives about organizational transformation – resulting in the NextICShift report released last month
We went looking for insights about how Indian organizations navigate change.
What we found instead was something more fundamental: a preview of how the relationship between organizations and workers gets rewritten when workers have options and information.
India is an excellent laboratory for observing this shift.
It’s the only major region currently hiring Gen Z talent at scale, and this talent has genuine employment options – multiple employers competing for the same talent pool.
But critically, this talent also has access to information about how organizations globally are treating employees.
They see the Amazon layoffs.
They see Nestle.
They see the pattern.
And they’re making decisions accordingly.
This combination creates unique conditions to observe what happens when traditional organizational assumptions meet workers who lack the historical context that made those assumptions tolerable – and who have real-time information about whether those assumptions hold true elsewhere.
What emerged from our conversations:
Talent retention depends on organizational effectiveness, not engagement initiatives. Workers choose organizations that don’t waste their time with unclear priorities, excessive escalation, or coordination dysfunction. Recognition programs and holiday celebrations don’t compensate for dysfunctional operations – especially when workers can see that dysfunctional operations at other companies lead to performance-agnostic layoffs anyway.
Autonomy expectations are non-negotiable for workers with options. They want clarity about what success looks like, then freedom to execute. They resist organizational models requiring escalation for routine decisions. Why? Because they can see that organizations with coordination dysfunction are the ones doing layoffs – and engagement scores don’t prevent it.
Purpose requires consistency, not just compelling mission statements. Workers need to see connections between what organizations claim to value and how they actually operate. Say-do gaps create cynicism faster than engagement programs can counter it. And in an information-rich environment, workers can compare their organization’s say-do gaps with others’ and make informed choices about where to work.
Organizations that function better win talent. In competitive talent markets with high information flow, operational effectiveness becomes a competitive advantage. Workers can sense within weeks whether organizations coordinate well, make decisions at appropriate velocity, and enable people to do meaningful work. They vote with their feet. And they share their experiences publicly – on LinkedIn, Glassdoor, industry forums – creating a feedback loop that rewards functional organizations and punishes dysfunctional ones.
The Strategic Imperative: Effectiveness Is the Only Credible Value Proposition
The shift we observed in India isn’t an Indian phenomenon.
It’s a preview of the global future.
In Bangalore and Hyderabad, we listened to leaders discuss how talent flows to organizations that coordinate better, decide faster, and waste less time, regardless of brand prestige or engagement programming.
Why?
Because in an environment where performance-agnostic layoffs happen at the most prestigious brands, brand prestige provides no protection.
But operational effectiveness does.
Workers with options choose organizations where they can:
Identify priorities clearly
Make decisions efficiently
Execute without heroic coordination efforts
See direct connections between their work and outcomes
These capabilities don’t just make work more satisfying.
They make workers more valuable – and therefore more resilient when the next wave of layoffs hits somewhere in their industry.
As talent markets tighten and younger workers increasingly dominate the workforce, the old engagement playbook becomes not just ineffective but actively dangerous.
Organizations investing resources in sentiment management while tolerating operational dysfunction are masking business risk as people strategy.
The competitive advantage goes to organizations that make clear operational choices: clarifying priorities ruthlessly, pushing decision rights down to execution level, eliminating coordination bottlenecks, and building systems that let people do meaningful work without heroic effort.
It won’t go to organizations that double down on trying to sustain employee forbearance through better sentiment management – asking people to tolerate dysfunction today in exchange for security you can no longer credibly promise tomorrow.
Especially when workers can see across companies and sectors that nobody can credibly promise that security anymore.
This isn’t about being nicer to employees or creating better employee experiences.
It’s about building organizations that actually function.
Because in an environment where information flows freely and performance-agnostic layoffs are visible everywhere, functional organizations are the only ones that can attract and retain talent.
What Comes Next: Measuring Effectiveness and Empowerment
Does this mean organizations should stop monitoring employee sentiment entirely?
No.
As the AI acceleration, generational workforce transformation, and hierarchy pressure of what I call “The Big Shift” unfold over the next 6-18 months, organizations will need ways to understand how workers are experiencing rapid change.
But it can’t be based on tools like the Gallup Q12 that are structurally biased toward employee longevity (questions about “best friends at work” correlate with tenure, not performance) and common measures of satisfaction (feeling cared about doesn’t mean you can execute).
These tools were designed for an era when the social contract held across industries.
That era is over.
What’s needed instead are focused diagnostics that measure whether employees can:
Identify organizational priorities clearly and consistently
Connect their work to those priorities
Access the information and decision rights they need to execute
Navigate coordination and escalation processes efficiently
Feel they can do so with a minimum of interference or “corporate bullshit”
These aren’t “engagement” questions.
They’re effectiveness and empowerment questions.
And here’s why that distinction matters: effectiveness and empowerment are things organizations can actually deliver – and that workers can verify independently.
You can measure whether people know the top three organizational priorities (knowledge, not feeling).
You can measure whether decisions happen at appropriate levels without unnecessary escalation (process, not sentiment).
You can measure whether coordination mechanisms work or create bottlenecks (outcomes, not engagement scores).
Most importantly, workers can assess these things themselves – within weeks of joining an organization.
And they share that assessment publicly.
The feedback loop is immediate, transparent, and impossible to game.
In an environment where performance-agnostic layoffs are visible everywhere, workers with options make rational choices.
They choose organizations where they can be effective and empowered.
Not because it makes them feel good, though it might.
But because effectiveness and empowerment make them more valuable – which provides the only real security available in a post-engagement world.
The engagement era measured how workers felt about work.
The effectiveness era measures whether workers can actually do that work.
Organizations that make this transition in the next 6-18 months will have a significant competitive advantage, both operationally and in talent markets.
Those that don’t will keep running “engagement programs” right after layoffs: either chasing their remaining employees out of the building, or leaving them to hold on for dear life rather than recalibrate and recover.
Editor’s Note: Reprinted with permission from Strategic Magazine.
