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Every year, Gallup surveys more than 150,000 employed adults across 160 countries and territories to produce the State of the Global Workplace report, the most comprehensive ongoing study of employee engagement, wellbeing, and job market perceptions. The survey uses Gallup's Q12 employee engagement instrument, a twelve-item assessment developed from decades of workplace research, which classifies employees into three groups: engaged (psychologically committed and contributing at full capacity), not engaged (present but psychologically absent), and actively disengaged (working, in Gallup's framing, against the aims of the organisation). The 2025 edition draws on data collected throughout 2024 and marks the seventeenth consecutive year of this global tracking. The  2026 edition, released this April, extends the dataset to 2025 and introduces a new analytical focus: the intersection of engagement with enterprise AI adoption. Both reports are referenced throughout, with data attributed to the year of publication rather than the year of collection.

Global employee engagement has fallen for two consecutive years. Enterprise AI investment has reached $40 billion with negligible returns on productivity. The Gallup 2025 and 2026 State of the Global Workplace reports trace back to the same cause: organisations have consistently underinvested in supporting and developing their managers.

For retail and department store organisations, these reports carry a direct operational message. 70% of team engagement is attributable to the manager, a finding from Gallup's own longitudinal research confirmed across both reports. In a department store, that figure describes whether floor teams build customer relationships or merely complete transactions, whether a new technology reaches the team or stalls at the briefing room door, whether new colleagues develop or leave quietly within 90 days.

A two-year structural decline

The 2025 edition documented the first year of the fall: in 2024, global engagement declined from its 2022 peak of 23% to 21%. The 2026 edition extends the record to 2025, where engagement fell again to 20%, a pattern without precedent in Gallup's data, and with no region of the world moving in the opposite direction.
Low engagement cost the global economy $438 billion in lost productivity in 2024, per the 2025 report. The 2026 report estimates that figure grew to approximately $10 trillion in 2025, or 9% of global GDP, measured as the potential output gap against a fully engaged global workforce.
The 2025 report framed its findings as equal in magnitude to the COVID-19 lockdown drop. The 2026 report updates that picture with a second consecutive decline, this time in an environment where AI investment has made the quality and support of management the central variable in whether organisations see productivity returns

The manager crisis

The 2025 report identified manager engagement as the primary driver of the global decline, documenting a fall in 2024, from 30% to 27%, against individual contributor engagement that held flat at 18%. The burden was unevenly distributed: managers under 35 dropped five points; female managers dropped seven. Individual contributor engagement declined in no comparable sub-cohort. The 2026 report extends this picture to 2025, and what it shows is acceleration rather than correction. Since 2022, manager engagement has fallen from 31% to 22%; the largest single-year drop occurred between 2024 and 2025, going from 27% to 22%. Managers, at 22%, now sit within reach of individual contributors at 19%. In 2022, that gap was close to double digits. It has narrowed to the point where engaged management behaviours are present in fewer than one in four managers globally.

The motivation that historically accompanied management responsibility, the connection to authority, the development opportunity, and the sense of organisational purpose have narrowed to near parity, and their consequences extend beyond managers themselves. Gallup's longitudinal research establishes that countries with less engaged managers are measurably more likely to have less engaged individual contributors; each disengaged manager carries a team's worth of individual contributor engagement down with them, and the trajectory across both reports confirms the mechanism is active and accelerating. The 2026 report's CEO letter is direct on the cause: the data has pointed to the answer for years, and the corporate world has largely chosen to ignore it. Manager disengagement at this scale is the direct output of organisational decisions about training, development, autonomy, and investment in the people who lead frontline teams.

The European baseline

For IADS members operating across European markets, these reports place this dynamic against a structurally unfavourable baseline. The 2025 report recorded European engagement at 13% in 2024, with 73% of the region's workforce in the not-engaged category and 30% intending to leave their employer within the next 12 months. Not engaged, in a customer-facing retail context, carries a specific operational meaning: these employees are present, follow procedure, and complete transactions, but withhold the discretionary effort that distinguishes a service relationship from a service transaction. The 2026 report records a further decline to 12% in 2025, the lowest regional figure globally. For a sector whose competitive differentiation depends on the quality of human interaction, every investment the sector is currently making in AI or customer experience depends on that workforce to deliver it.

The best practice gap

The 2026 report documents best-practice organisations, those that have embedded engagement as a long-term strategic priority and applied science-based management practices, at 79% manager engagement in 2025, nearly quadruple the global average, reproduced across every region and industry in the Gallup dataset. The 57-point gap between the global average and this benchmark is a measure of the decisions that have been made or deferred. In retail, the IADS White Paper Middle Managers: remnants from the past or tomorrow's unicorns? traced exactly which decisions those were: decades of centralisation that progressively stripped in-store managers of meaningful decision-making authority, restructuring programmes that repeatedly targeted the management layer as a cost reduction lever, and development budgets systematically applied elsewhere.

The management layer and AI returns

AI and the manager bottleneck

Between the two reports, the framing of AI changes: where the 2025 report discussed it as an approaching disruption, the 2026 report treats it as a current operational reality with measurable consequences. Despite approximately $40 billion in enterprise AI investment, 95% of organisations have seen no measurable impact on profits, according to MIT Project NANDA data cited in the 2026 report. A National Bureau of Economic Research survey of nearly 6,000 executives across the US, UK, Germany, and Australia, also cited in the 2026 report, finds that 89% report no impact of AI on their company's labour productivity in the past three years. In Gallup's own 2025 workforce data, only 12% of employees in AI-implementing organisations strongly agree that AI has transformed how work gets done.

Where the technology has delivered, Gallup's Q1 2026 data consistently identifies the manager as the determining factor: employees who strongly agree their manager actively supports their team's AI use are 98.7 times as likely to agree that AI has transformed how work gets done, and 97.4 times as likely to say AI gives them more opportunities to do their best work. Yet fewer than one-third of US employees in AI-implementing organisations strongly agree their manager actively supports the technology (21% in Germany, per Gallup’s 2026 dataset).

The IADS White Paper documents the mechanism. Our research noted that 49% of managerial work, including drafting job postings, integrating performance feedback, and routine reporting, can be automated by generative AI, freeing managers for the relationship-intensive leadership work that determines whether their teams adopt and use new tools effectively. The White Paper also details five specific roles middle managers play in this process: applying human judgment and empathy, managing risk, reimagining roles and work processes, leveraging real-time team performance insights, and freeing leadership capacity through task automation. At 22% global manager engagement, those functions are active in fewer than one in four managers globally. Organisations investing in AI without simultaneously investing in manager capability are funding a multiplier they have not yet built the conditions to use.

The $10 trillion productivity gap documented in the 2026 Gallup report and the AI investment failure are the same problem viewed from different vantage points. Both trace to a management layer that, at 22% engaged globally, is operating below the level at which either productivity or technology returns are reliably produced.

Training and the 79% benchmark

Both reports point to the same course of action, and the 2026 CEO letter frames the employer's choice plainly: equip managers with the resources to excel, offer development opportunities, and reconnect teams to a shared mission. The 2025 report establishes what committing to that produces: engagement gains of up to 22% among participants, up to 18% in their teams, and manager performance improvements of 20 to 28% within nine to eighteen months, with effects confirmed as durable. Training alone increases manager thriving from 28% to 34%; adding active organisational development encouragement raises it to 50%, according to that report. That the findings hold across pharmaceutical manufacturing, luxury hotels, and technology firms as consistently as they do in department stores matters specifically for retail leaders: the gap between 22% and 79% closes regardless of sector, and its determinant is investment decisions.

In retail, the IADS White Paper established why the deficit runs deeper than the global average suggests. The sector has operated for decades on an inversion that most organisations have never named: middle management is 80% leadership and only 20% management, while line management runs the opposite ratio. Yet promotion decisions across retail have historically rewarded management performance, producing a management layer selected for the 20% and left to discover the 80% on the job, without training, without frameworks, and frequently without support. A McKinsey survey of 700 middle managers across industries found that 42% were unsure, or actively disagreed, that their organisation had set them up to succeed as people managers. Those same managers reported spending more time on individual contributor work than on any other activity, a pattern the White Paper describes as particularly acute in retail, given the sector's promotion culture. The pandemic made the cost of this visible directly: when organisations needed managers to lead through unique conditions, many could not, because no one had developed that capacity in them.

The productivity stakes

McKinsey's 2024 research on frontline workforce retention in retail found that having an inspiring leader was cited as the seventh reason employees left their jobs in 2022; by 2023, it had risen to third. That two-year movement tracks the time during which manager engagement fell fastest across these Gallup reports. Most of the managers who struggle to inspire their teams were promoted into roles whose leadership demands were never part of the job description they were evaluated against, and were given no tools to develop them once there.

Bloom, Sadun, and Van Reenen’s Management as a Technology? research book, established that differences in management practices account for approximately 30% of the variation in total factor productivity, the standard measure of technology's impact on output. In the AI era, that relationship has grown more consequential: the same management practices that determine whether teams perform also determine whether technology investments deliver returns. Organisations operating with undertrained managers are forfeiting a quantifiable share of the productivity gains their technology investments are designed to produce.

Middle-out in practice

Carrefour France's restructuring under CEO Rami Baitieh, documented in the IADS White Paper as the defining retail case study of the 'middle-out' approach, inverted the traditional management hierarchy, placing customers at the top and the CEO at the bottom, and flattening the structure from five layers to three. Middle managers were placed at the centre of a real-time customer feedback loop: cashiers recorded comments daily, sorted by middle management teams via WhatsApp and reported directly to the CEO and HQ. Within six months, Carrefour France reached its highest Net Promoter Score on record. What produced those results was managers given purpose, equipped with the right tools, and trusted with meaningful commercial responsibility, with no new technology platform and no restructuring programme beyond the decision to place management at the centre of the operation.

Engagement as a human investment

Half of employees who are engaged at work are thriving in life overall, compared with only a third of those who are not, per Gallup's 2025 data. The engagement-wellbeing relationship runs in both directions, with managers at the hinge. The 2026 report adds a further dimension: when managers are engaged, they report all negative daily emotions at lower rates than individual contributors and are 14 points more likely to be thriving overall than the average leader. Improving manager engagement is simultaneously a business intervention and a human one; across both reports, these two goals converge rather than compete.

For retail, the argument does not stop at the data. These reports provide a documented path forward: the training and development investments that reverse manager disengagement are established and reproducible across every sector and region in the Gallup dataset. Manager development has long been treated as a cost incurred after the real investments are made; these reports establish that the investment determines whether the others deliver at all.

Two consecutive years of declining engagement across every region of the world is a structural pattern Gallup has not previously recorded. Structural patterns call for structural responses, not wait-and-see quarters or survey cycles filed as HR metrics. That response means investing in the leadership capacity the sector has historically failed to develop and restoring the autonomy and purpose that made the role meaningful. The organisations that realise AI's returns are those whose managers are equipped, supported, and genuinely committed to the teams they lead.

Credits: Maya Sankoh