If productivity is down in your organization, it may be a sign that at least some employees are unmotivated and unhappy—and that other employees are feeding on that dissatisfaction, further eroding productivity and creating attrition. On this episode of The McKinsey Podcast, McKinsey senior partner Aaron De Smet and partner Angelika Reich talk about McKinsey’s latest research on employee productivity and share their perspectives on a few types of workers, ranging from those who bring fellow employees down to those who raise them up.
The McKinsey Podcast is cohosted by Roberta Fusaro and Lucia Rahilly.
This transcript has been edited for clarity and length.
Data reveals significant disengagement numbers
Roberta Fusaro: So we’re in this new world of work now where we’ve got hybrid and remote models. And managers are struggling to figure out who’s being productive and who isn’t. Angelika, Aaron, you and your colleagues at McKinsey have done some research trying to provide more insight or some way of thinking differently about employee productivity. What did that research reveal?
Aaron De Smet: It revealed quite a lot. The question we had was, if we survey employees and ask, “How are you doing? How are you performing? How are you feeling?” will they be honest? And the variability in the responses we got suggests to us that they are being honest. We got some real interesting data: everywhere from people who said, “I am not performing at my job,” to quite a few others who said, “I am doing a lot at work. I’m really doing well.” So across multiple countries, a survey of over 15,000 employees illuminates a lot, and a lot of the fears are real.
Roberta Fusaro: Angelika, anything to add about those fears?
Angelika Reich: We did come across a couple of surprises, I would say, in this data. Because first of all, the number of people who are strongly or mildly disengaged but still in the organization is quite large. And that bears a high risk for productivity if organizations don’t take action.
Roberta Fusaro: Let’s talk about the quitter archetype. They compose about 10 percent of a typical organization. How would you describe them?
Angelika Reich: The quitters are the people who are the least satisfied in the organization and the least committed. That’s why they are planning to quit. We did see that there is also a group of people in this archetype who are being pulled away because they’re great performers and they’ve been offered a better place to go.
When looking at that group, it’s important to think about them in two ways: the portion of them who are being pushed away because they’re just dissatisfied and want to get out and the portion of this group who are being pulled away to something better.
And when taking action, it’s important to look at those two categories separately and to think about who are the ones we want to keep in the organization because they’re high performers and who are the ones we would actually like to actively manage out.
Roberta Fusaro: If they’re high performing, what can companies do to reengage them? How might you convince them to stay?
Angelika Reich: It starts with the basics. You have to have a good compensation package, thinking about whether there is a possibility to offer them a change of responsibilities, a great career path. But we do see that it’s even more important for managers to really be personally involved and connected with top performers so that they want to stay in the organization. We see in some of our additional research that relationships with management explain a majority of people’s interpersonal experiences on the job and their commitment to work.
Aaron De Smet: The landscape in the war for talent has changed. That or the barriers preventing a high-performing professional or manager from leaving one company and going to another have been lowered. They’re lower for a bunch of reasons.
One reason is it used to be that typically, if you were going to move companies, you would be asked to relocate. Now, a lot of companies are saying, “No. You might have to travel a bit. But you don’t have to relocate. You don’t have to move and move your family to come work here.”
There used to be a stigma attached to going from one to two to three employers over the course of a couple of years. That is, what’s wrong with that person such that they can’t keep a job? That stigma is likely gone. And so, for a number of reasons, the barriers are lower.
Because of that, the war for talent has heated up. People are saying, “Hey, if I’m not happy here, it doesn’t take much for me to start looking around and maybe try another employer. And if it doesn’t work out, I’ll quit again.” So the level of quitting for high performers is just higher. And I’m not sure it’s going to go down.
Roberta Fusaro: How do you identify the quitters in particular? Because there’s this whole phenomenon of quiet quitting, whereby people are just going along to get along. And I wonder if they’re just hard to see.
Aaron De Smet: They are a bit harder to see, because a lot of our management tools and practices were evolved in an in-person work environment. And now that most work environments are much more hybrid, it’s a lot easier for the quiet quitters to hide. One of the ways to find them is to look for them.
Ask people. Have an authentic conversation where you check in and ask, “How are you doing? Are you productive? Are you satisfied? Are you engaged?” In a few cases, people will lie and not give you the honest answer.
But in many other cases, if you really listen, the answer will be there. You have to look at performance by considering the following: what are people actually contributing? What is the value they’re contributing? What are the decisions they are helping to make? What are the deliverables that they’re helping with? And it just raises the bar for managers to be more plugged in with regard to how people are working.
Roberta Fusaro: How does the disruptor archetype, which we estimate to take up about 11 percent of the workforce, differ from the quitters?
Angelika Reich: Disruptors are not only not pulling their weight but they are also negatively affecting those around them, because they’re actively disrupting the organization. And that means that they are dissatisfied and they’re uncommitted just like the quitters. But they’re likely to channel that frustration toward the organization instead of just trying to stay out of sight and quietly quit.
And that is quite a dangerous dynamic to have. Because they may be pulling other people down with them—especially groups that are still engaged or mildly disengaged, but really at the edge of disengagement and underperformance. So with the disruptors, it’s really important to understand this point: what are the root causes of the disruption and of their dissatisfaction?
And is there a possibility to turn them around? Because with disruptors in any change process, if you manage to actively turn them around, you can build great allies and people who are positively influencing the organization and engaging others around them.
But if you’re not able to turn them around, they will continue to drag others down. And then the only solution you have left is to actively manage them out of the organization. So here, it’s really important to understand the following: what are the root causes? Is it possible to influence them and then take clear action in either direction?
Aaron De Smet: The disruptors, this 11 percent, are basically telling us, “I’m not doing the bare minimum.” Other people are carrying their weight, carrying their load.
So the people who are productive and are working start to see that, and they think, “My workload is increasing, because these other folks aren’t doing their jobs. And yet they’re just hiding out, not doing anything and getting paid the same thing I am.” That is inherently demoralizing.
There’s even a more toxic version of that for people who aren’t pulling their weight and are actively creating friction in the organization. They constantly complain. They’re constantly negative. They suck the energy out of a room. So they’re actually showing up and complaining and undermining and resisting every attempt to try to improve or innovate or work better or work smarter.
You have to turn them around. And many of them probably can be turned around. But if they can’t be, you’re better off having them quit. You’re better off having those folks leave than letting them hang around and demoralize everybody else.
The thriving stars
Roberta Fusaro: Another archetype that seems to have outsize influence, much the same way that the quitters and particularly disruptors do, is the thriving stars. They account, according to our research, for about 4 percent of the workforce. These are folks who have an outsize influence in the positive direction. Angelika, can you tell us a little bit more about the thriving stars?
Angelika Reich: Thriving stars are truly distinctive performers in the organization. The thriving stars are about 4 percent of the average organization, but they just create disproportionate value for the organization. So for that reason, it is critical that you keep them in the organization and engaged. And it’s equally critical not to burn them out.
The thriving stars will also be the first people everyone is running to when there is a new project or an additional initiative or something to take on. Because they’re the ones who are going to overdeliver. So to deal with thriving stars, it’s important to provide great development opportunities for them, to give them the appreciation they need, to really care about them.
Also, from a leadership perspective, make sure they have a great connection with their managers and that they’re offered the opportunities. But it’s also important to make sure that they are able to manage their own energy and to make their overperformance sustainable and to keep them happy in the organization at the same time.
Helping the thriving stars thrive
Roberta Fusaro: Angelika, do you think it’s easier to address the concerns or the needs of the thriving stars?
Angelika Reich: Yes. From my perspective, it’s easier to address the concerns of thriving stars, because on average, they come with an inherent sense of purpose, of engagement. They’re highly committed. They’re willing to work on the tasks you may give them.
But they may be equally willing to work on other priorities. And also, you will not have a challenge as an organization in finding the next role for them, giving them development opportunities, or maybe putting them in an even better context than the one they are coming from.
Aaron De Smet: There’s a different question we should be asking, though. The question I have isn’t, “How do we help those 4 percent?” They’re the ones who least need help. The question I have is, “Why is it only 4 percent? Why isn’t it 40 percent?” There’s a whole group of people who are largely committed and productive, but nowhere near as much as the thriving stars.
Angelika Reich: And a fun fact in our data is that you are definitely not going to get more thriving stars by calling everyone back to the office. Because within the group of thriving stars, there is a disproportionate number of people who work remotely or at least hybrid.
But interestingly, in other groups, that’s not the case. Especially when people are disengaged or mildly disengaged, it’s best to have them work hybrid. You have to give your thriving stars and your high performers as much autonomy and choice as possible with regard to a working model. But at the same time, others in the organization may need more connectivity to stay engaged, to benefit from a great leadership style by having at least a hybrid working model where they can physically keep in touch with their coworkers.
The management challenge
Aaron De Smet: It creates quite a conundrum for leaders and for companies. Because if you ask, “Look, can we just let everybody be flexible and work whenever they want, wherever they want, and just have full flexibility?” broadly speaking, the answer is no. For most companies, that’s a terrible idea.
But then, if you ask, “Okay, should we have a policy that says you must come in three days a week? These are the days you have to come in,” the answer is also no. It looks like, for the most part, that’s also a terrible idea. So then you ask, “Now, what do I do?”
You have to find ways to maintain flexibility and autonomy and get people working in person, collaborating in person, and in the right way—which actually varies by team and by role and, in some cases, by individual. And how do you do that? Because if you let it be a free-for-all, it doesn’t work. We don’t know the answer to that. There isn’t a simple, easy answer to the problem.
Roberta Fusaro: The key message here is that your workforce is not monolithic. You have to recognize that you have different kinds of workers, different worker segments. Aaron, you implied earlier that we can learn from top performers. Should the goal always be to move individuals up to the next level of the satisfaction spectrum? And I ask that because I feel like the top performers, the thriving stars, may be workaholics.
Aaron De Smet: You could go well above 4 percent. It’s not unrealistic to think that it might be possible to get more like 4 to 20 percent of your workforce to be thriving stars.
Angelika Reich: We also looked at the reasons of disengagement, asking, “Why are people disengaged? Why are they planning to leave the organization?” And those reasons can be addressed at scale, because the response includes, as we’ve mentioned as an example, development opportunities that an organization can offer to people.
It includes, in addition, creating a sense of meaning or a sense of purpose that people feel about their task. It includes the leadership style that they’re being confronted with. They can be influenced very effectively. Just taking the example of the leadership style, managers went through quite a disruptive, if not traumatizing, period with the pandemic and the sudden change of the working model and a lot of remote work. Many of them have not built a lot of capabilities around adjusting their leadership style, for example. And that could have contributed to employees feeling less supported.
The cost of attrition
Roberta Fusaro: What are the economic and opportunity costs of disengagement and attrition?
Aaron De Smet: If you have an employee doing a job and they quit and you have to replace them, there’s a cost associated with that. There’s also a cost to get them onboarded. There are also costs associated with low engagement. So there’s been a lot of research out there on when an employee is less engaged, what the productivity effect of that is, and what the knock-on effect in terms of what it costs an employer is. It’s either an opportunity cost or an actual cost, because you have to hire more workers and because you’re not getting the most productivity out of the ones you have.
No matter what assumptions you pick, the cost is big. It’s very big. And it’s exacerbated by what some have started to point to as the hangover effect of the pandemic, in terms of mental health issues and people feeling lonely and isolated—which is also part of hybrid and remote work.
People are just not as socially connected in some ways as they used to be. And we haven’t fully brought that back. At least, most companies have not fully cracked this issue yet. When you have a lack of meaningful work, a lack of flexibility, a lack of career development and advancement, unreliable or unsupportive people at work, those drive people the other way. Whatever math you want to do and almost whatever assumptions you use, the cost is enormous.
Roberta Fusaro: We estimate that the double-dipper archetype composes about 5 percent of the workforce. These are people who hold two or more jobs. How are they managing dual roles and getting away with it?
Aaron De Smet: We have defined a double-dipper to be an individual who holds two jobs, both of which are ostensibly full-time jobs. And in many cases, the employer does not know the person has a second full-time job. At first, this sounds preposterous.
These people must be quiet quitting and not doing the bare minimum at both jobs. And there are some of those, by the way. But it turns out that the double-dippers are spread throughout all our other archetypes. What we have to realize is that basic routine work, wherein all you need to do is show up for eight hours a day and stand at the assembly line making widgets, is increasingly being automated.
The work we need people to do now is increasingly creative, innovative, judgment based. It has emotional labor. And so it’s not always about the amount of time you put in.
Roberta, if you were going to buy a painting and you looked at two, would you pick the painting based on which artist spent more hours painting theirs?
Roberta Fusaro: Not at all.
Aaron De Smet: How would you decide which painting you wanted to buy?
Roberta Fusaro: It would be whatever appealed to me aesthetically.
Aaron De Smet: What if the one you like had been painted in only 30 minutes? And you’re like, “Oh my gosh, the amount per hour this person is getting would be insane.” And look, this is an extreme example, but I’m not sure we should care how many hours people put in to deliver a product.
If they delivered a great product and they could do so efficiently, why should we care? Some people are finding that with hybrid and remote work, the amount of time they need to be in person, collaborating with colleagues, is only a day a week. They’re finding that if they have two jobs, and have one day a week in person for each job, they manage to get all their other work done.
Some of these people are getting the bare minimum done. But some of them are actually quite high performing at two jobs, because they’re that productive and they’re that efficient.
Roberta Fusaro: Angelika, how do you manage the double-dippers effectively, especially those on the inefficient end of the spectrum?
Angelika Reich: In many cases, the double-dipper starts to become less engaged, doesn’t meet deadlines, or isn’t as productive anymore. And the reason may be that they’re overworked. In that case, double-dipping may be a symptom of a need they’re trying to fulfill.
Because, for example, they’re not making enough money. They need to hold a second job in order to provide for their family or for other reasons. But those are structural reasons that an employer has to take seriously and think, “Are we creating the right conditions for our employees to be productive and successful and engaged?”
Aaron De Smet: If you have a double-dipper who is truly high performing, you might ask, “Is there another opportunity we can give them where we pay them more?” You give them a bigger role, and you might say to them, “It’s probably going to require more of your time and attention and focus and energy. Maybe this will be enough for you to quit that other job and spend all your time here.” But if not, if you want them to just keep doing a good job in the role they’re in and they are already doing a good job, you might just let it go. So the first question you need to answer is, “Who are the double-dippers?” The next question should be, “Is it actually a problem?” My guess is the answer will vary.
Which interventions work best?
Roberta Fusaro: Are there interventions that are common across all of these archetypes? Is it always all about compensation or flexibility? Are there certain principles that cut across all these archetypes that our listeners could pay attention to?
Angelika Reich: The most critical principle to start with is fairness. So compensation should be fair. Working conditions should be fair. Other elements of the job should be fair, because unfairness is very easily discovered. And it’s also very demoralizing for people.
Beyond that, there’s definitely a set of motivational factors that contribute to a good employer value proposition and consequently better engagement. First and foremost, this is about providing good development opportunities for people, giving them a perspective for their career, for advancement.
It’s also about effectively recognizing and rewarding high performance, which is, by the way, connected to a sense of fairness as well. It’s important as well to invest as an organization in a good and inclusive leadership style, to provide training to managers—especially to lead effectively in a hybrid work environment—and to provide people the sense of connectivity, the sense of belonging, the sense of achievement.
Last but not least, it’s important to create this sense of purpose for people. And that is something that has actually gained in importance, especially over the past years. We do see that it’s especially important to the younger employees—Gen Z, for example.
It’s one of the trickier things to do, because it’s not that easy. You have to figure out the following: how do I create a sense of purpose for an individual? What is it they care for? How does their work contribute to that? And how do I get them to understand that connection?
So this is a case wherein you really need to listen and to think about how to help people discover that intrinsic sense of meaning and sense of purpose at their job. But if you manage to crack it, that’s definitely got to be a strong motivator for people.
Aaron De Smet: When you look at the factors that induce engagement versus disengagement, at the top of the list are meaningful work and compensation. But there are three other factors that are very related.
One of the three is, “Do we have a supportive network of people at work? Are the people I work with reliable?” The second is, “Is it a safe work environment, both physically and psychologically?” And the third is, “Is it an inclusive work environment and a welcoming community?” The combination of those factors is actually higher and more important than compensation or meaningful work. If you don’t have them, people are going to find it difficult to get to that level of engagement that really helps increase productivity and performance.