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A few months ago, Gallup released what is arguably the most consequential workplace report of the past few years. Most firm owners glanced at the headlines and quickly moved on.
They shouldn't have. The 2026 State of the Global Workplace report doesn't just update global employee engagement data, it documents a structural failure of the modern manager role, and puts a price tag on the consequences. That bill comes in at roughly $10 trillion (about 9% of global GDP) in lost productivity.
If that doesn't immediately send a jolt through your nervous system and grab your attention, let me lay out the case for why it should.
- Global employee engagement has fallen to 20% (its lowest level since 2020). That means just one out of every five employees worldwide is actively engaged at work, while the other four are either effortlessly coasting or actively disengaged.
- Manager engagement has dropped nine points since 2022 (with the largest single-year drop of five points occurring last year). Managers used to enjoy an 'engagement premium' where they were more engaged than the people they led, because their work mattered more, paid more, and felt more meaningful. That premium has effectively evaporated.
- The steepest manager engagement declines are among managers under 35 and female managers. These are precisely the populations most firms are making concerted efforts to develop, promote, and retain. The middle of the leadership pipeline is the part that's under the greatest stress.
- Managers still account for 70% of the variance in team-level engagement. Even though managers themselves are currently struggling, the strong relationship between manager quality and team engagement hasn't changed. The manager is still the lever. The lever is just under considerably more strain these days.
- The economic cost of disengagement is roughly $10 trillion, or 9% of global GDP. This is Gallup's estimate of annual lost productivity as a result of workers who are not actively engaged.
It all points to a simple and unavoidable truth: every team in your firm is operating somewhere on the disengagement spectrum, and the gap between what they could produce and what they're actually producing is being absorbed by your P&L each and every quarter.
Why Manager Overload Is Creating an Engagement Crisis
While the headline numbers are shocking, the most interesting part of the report can be found in the diagnosis.
Gallup's analysis identifies a specific structural problem: the manager role itself has been overloaded to the point of breaking.
Managers are being asked to do everything a senior individual contributor does, plus manage people, culturally carry their entire team, and champion whatever transformation initiatives roll through the firm (such as AI adoption). And they're doing it without the time, training, or authority to accomplish any of it well.
The pattern in advisory firms is the same as everywhere else, with one unique twist. In successful firms, the newly promoted manager is almost always a top advisor who is being asked to manage while still producing, running their book, serving their clients, hitting their numbers, AND leading a team. The math simply doesn't work. Something has to give. Unfortunately, it's usually the team.
Of all the statistics in the report, however, the one every firm owner should internalize is this: managers account for 70% of the variance in team-level engagement.
Read that again very carefully. It doesn't say managers are a factor. It says they're the primary factor -- bigger than compensation, bigger than benefits, bigger than the mission, bigger than the office, and bigger than the work itself. The reason your best team is on fire and your worst team is on life support has far more to do with the person at the helm than with anything else you could change.
This has two implications, both of which you should be taking very seriously:
- You cannot fix engagement without fixing managers. Every survey result, every retention plan, every culture initiative ultimately runs through the manager. If a manager can't deliver the experience employees need, no amount of HR programming is going to compensate.
- Management quality is your highest-leverage variable. Better managers don't just produce better outcomes for their teams. They produce better outcomes for the firm in the form of lower turnover, faster ramp, stronger growth, better hiring, and higher client retention through team stability. The ROI on developing managers isn't subtle. It's enormous.
How Top Firms Escape the Engagement Crisis
The Gallup report contains one piece of unambiguously good news for firm owners: within best-practice organizations, 79% of managers were engaged at work (nearly 4x the global average).
Those firms aren't lucky, and they're not paying higher compensation than their peers. Instead, they're doing four specific things -- differentiators which show up consistently in nearly every firm that escapes the engagement collapse:
- They treat management as a profession. Not a promotion. A profession. With its own training, its own development path, and its own performance criteria. They don't promote and hope for the best. They prepare.
- They continuously invest in manager development. Not a one-time program upon promotion. Rather, they establish ongoing coaching, peer cohorts, refresher work, 360 feedback, and other structures to keep managers learning past their first year.
- They protect their managers' time and energy. They don't ask their managers to be senior individual contributors in addition to people leaders and transformation champions. They make the necessary trade-offs and let managers actually manage.
- They build peer communities. Managers in these firms have a peer group of other managers (both inside and outside the firm) who they can lean on. The loneliness that's driving so much manager disengagement gets mitigated by structured connection.
With these differentiators in mind, let's consider what actions firm owners can take over the next three months to start the ball moving in the right direction. Two specific moves, both inexpensive.
- Audit your manager population. How many people manage other employees at your firm? When was the last time each of them got real, structured development? If the answer is 'never', or 'during onboarding X years ago,' you've identified the gap where that 70% engagement variance is sitting.
- Pick one cohort to invest in this year. You don't have to fix everything at once. Pick a handful of managers (the ones in the middle of the engagement curve, where the leverage is highest) and put them through a real development program. Coaching, frameworks, peer cohort, six to twelve months. Then measure the difference. The before-and-after on team engagement will sell you on making the next investment.
The current engagement crisis isn't a localized problem you can simply outsource. It's a $10 trillion global problem with a specific lever attached to it: your managers. And that lever is currently under more pressure than it's ever been, in a labor market that's giving employees more options than they've had in a decade.
The firms that pull the lever, that develop their managers seriously, continuously, and as a strategic priority, will steadily and inexorably pull away from the firms that don't. Quietly at first, then visibly, then unmistakably.
Make sure you're one of the firms that pulls the lever.
Coaching Questions From This Article
- Think about your firm's current operating model, are you treating management more like a full-time job or as a part-time 'side hustle' for your top producers? What specific client-facing or operational tasks could you remove from their plates so they actually have the capacity to lead?
- Given that the sharpest drops in engagement are occurring among female managers and leaders under age 35, how targeted and continuous is your development strategy for these specific cohorts? Are there steps you can take to strengthen it?
- When you compare your highest-performing team with your most disengaged team, how much of that performance gap is tied directly to the quality of the manager at the helm? And what's the quarterly cost to your P&L if that leadership gap remains unaddressed?
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