Declining Employee Engagement and Its Impact on Customers

A Culture Crisis Is Brewing. Are You Ready?

There’s a silent crisis creeping into workplaces across the globe—and it’s not just about quiet quitting or remote work frustrations. It’s something far more dangerous: declining employee engagement and the seismic shift in employee mindset that threatens the very foundation of organizational success—your customer relationships.

More than ever, employees are embracing a gig worker mentality. Their focus has turned inward, prioritizing personal well-being and home life over organizational loyalty. This isn’t laziness or disengagement for its own sake—it’s a response to a world that has taught people they can work differently and live better. But for employers, the implications are staggering.

The Culture Chasm: Why It’s “Nearly Impossible” to Build Committed Teams

The glue that once held teams together—shared purpose, camaraderie, a sense of belonging—is losing its stick. As individuals reorient their lives around flexibility and autonomy, the idea of a tight-knit, engaged workplace culture is becoming elusive. The result? It’s nearly impossible to create committed teams or powerful workplace relationships in this new landscape—unless you deliberately and strategically rebuild your workplace model.

The Customer Consequence: Engagement Erosion Hits Where It Hurts Most

Here’s where it gets serious: the fallout isn’t just internal. It’s already showing up in your customer relationships.

Customer satisfaction is deteriorating. The American Customer Satisfaction Index has shown worrying declines—and the root cause may be closer than you think. It’s not just product quality or market competition—it’s your disengaged workforce.

Why? Because customers and employees are intertwined. They interact, they build trust, they rely on one another. In many cases, they’re even friends. And when your employees check out emotionally, your customers feel it first. The real retention crisis isn’t just about talent—it’s about losing loyal customers because the people they trust no longer feel connected to your business.

The Economic Wake-Up Call: $8.9 Trillion in Lost Potential

According to Gallup’s State of the Global Workplace report, global employee engagement flatlined at just 23% in 2023. That’s right—only about one in four employees worldwide are truly engaged in their work.

The cost of this disengagement? A staggering US$8.9 trillion, or 9% of global GDP.

This is not an HR problem. It’s a strategic, financial, and existential business problem. Declining employee engagement means the productivity losses alone are enough to undermine growth, innovation, and market leadership.

The Road Ahead: A Massive Transformation or a Massive Decline

Gallup’s data shows that U.S. employee engagement is at a seven-year low. The reason? People have discovered a new way to work—one that fits their lives better. And unless organizations are willing to undergo a massive transformation to meet these new expectations, they’ll be left behind.

This transformation isn’t just about flexible hours or hybrid policies. It’s about redefining your workplace strategy from the ground up:

Rebuilding trust and purpose in the employee experience
Redesigning roles and teams to foster real connection
Aligning leadership, culture, and operational models
Creating environments where engagement is built into the business model—not bolted on

A Call to Action: It’s Time to Get Strategic About Work

Engagement isn’t a perk. It’s a competitive advantage. If your workforce is drifting toward disconnection, your customers won’t be far behind. The companies that will win in this new world aren’t just offering more flexibility—they’re designing comprehensive workplace strategies that integrate culture, customer experience, and performance into one cohesive system.

This is your moment to act. Before the culture crisis becomes a customer crisis.

SCG is here to help organizations: