The Work Institute's 2020 Retention Report found that 79% of employees who quit their jobs cited a lack of appreciation as their reason for leaving. High morale contributes to employee satisfaction and reduces turnover rates.

According to a study by the University of Warwick, happy employees are on average 12% more productive than their counterparts with lower morale.

U.S. Employee Engagement Sinks to 10-Year Low

In 2024, employee engagement in the U.S. dropped to 31% — its lowest point in a decade. 

Each percentage point gain or drop in engagement represents approximately 1.6 million full- or part-time employees in the U.S. Declines since 2020 reflect about 8 million fewer engaged employees, including 3.2 million fewer than in 2023.

The employee engagement trend is important for organizational leaders because declines signal a potential vulnerability for business.

Research by Gallup shows that companies with engaged employees outperform their competitors by 147% in earnings per share. Engaged employees, who typically have higher morale, are more likely to deliver better customer service and drive positive business outcomes.

A study by Harvard Business Review found that employees at companies with strong cultures of innovation are 34% more likely to feel empowered to innovate and 42% more likely to feel that their ideas are valued. High morale encourages employees to think creatively and contribute to innovation efforts.

The American Psychological Association reports that employees who feel valued by their employers are more likely to report better physical and mental health. Conversely, low morale can lead to stress, anxiety, and other health issues, impacting employee well-being and productivity.

Gallup estimates that actively disengaged employees cost the U.S. economy up to $605 billion annually in lost productivity. Investing in initiatives to improve employee morale can yield significant financial returns for organizations.