Employee engagement is on the decline, and it’s little wonder why, as companies try to return to how they were working before things like the Covid-19 pandemic, remote work and AI upended norms. But the ingredients of effective corporate culture have largely remained the same, say Dave Duschene, Shannon Stucky Pritchett and Tim Peters of FTI Consulting — and it all starts at the top.
A recent conversation with the chief communications officer at a global building and construction products manufacturer led to a startling admission. The person struggled with efforts to build her company’s reputation because a former CEO didn’t fully understand the important role he had to play as the organization’s chief storyteller.
His communications philosophy was that “No one needed to know we were there,” she told us.
Ultimately, the understated CEO retired and a new leader, one with a very different approach, took the reins. He worked closely with his corporate communications team to more routinely engage with employees, reach out directly to customers, brief shareholders, interact with reporters and increase his own visibility.
Perhaps it’s no coincidence, then, that over the new CEO’s first three years in charge, the company’s share price grew by 88%, net sales grew 43% and adjusted operating profit grew nearly 86%.
Certainly, multiple factors led to these business results. And we can’t as easily quantify the full impact that improved communications had on reputation (and, thus, buying behavior), recruitment, retention, productivity and other business drivers. But the CEO’s commitment to open communications shouldn’t be discounted as one key driver of overall success.
The new CEO took time to invest in trust, making clear what the company stood for and ensuring the organization delivered on its promises. Through his words and actions, he demonstrated a clear path forward for his company. You can bet others in the organization followed.
Leaders must incorporate communications into their core responsibilities. Failing to do so not only affects organizational culture, but it can also lead key stakeholders to speculate and draw their own assumptions, ultimately opening the organization to risk of mis-stepping around matters of operational efficiency and compliance.
Communicating contributes to company success
Communication alone does not drive company success. But leaders who make communicating a central part of their jobs seize an important opportunity to favorably shape perceptions and influence behavior.
This is particularly true of leaders who embrace a culture of communicating within their organizations and living their companies’ values in every interaction.
Microsoft CEO Satya Nadella could be considered the archetype. As Nadella ascended to CEO in 2014, he embarked on a listening tour, meeting with managers throughout the company and replacing what he called a “know-it-all” culture with a “learn-it-all” approach, through which he modeled a level of curiosity and humility.
He chronicles this approach in his 2017 book, “Hit Refresh,” in which he writes, “The CEO is the curator of an organizational culture. Everything is possible for a company when its culture is about listening, learning and harnessing individual passions and talents to the company mission.”
In Nadella’s decade-plus as CEO, Microsoft’s stock value has increased more than 10-fold, from just over $40 in February 2014 to more than $500 in July 2025. And according to nearly 50,000 reviews on Glassdoor, 86% of Microsoft employees would recommend the company to a friend and 87% approve of Nadella as CEO.
Nadella’s philosophy permeates Microsoft and serves as a critical foundation as the company navigates one of its most difficult challenges to date: how to build, deploy and help customers use AI responsibly. It’s telling that Microsoft’s 2025 report on AI transparency emphasizes how it prioritizes listening, learning and collaboration in its approach. Teams are following the example and expectations of their leader, and it’s paying off. Microsoft is consistently named among the most responsible companies in AI as illustrated in a recent post from the University of Pennsylvania’s College of Liberal and Professional Studies. Microsoft also gets an uptick financially, including recently being named by U.S. News & World Report as one of the top AI stocks to buy.
Data suggests engagement is on the decline
While Nadella and Microsoft have built a culture of communication and engagement with material benefit, recent data indicates that employee engagement is on the decline globally — and that comes with significant risks to broader accountability and compliance.
In its 2025 report on the global workforce, Gallup found that employee engagement dropped in 2024 for the first time since the Covid-19 pandemic in 2020 and only the second time since 2009. The 2024 decline cost the world economy an estimated $438 billion in lost productivity, Gallup estimates.
The losses don’t stop there. Consider how leaders’ inability to engage employees as part of a broader vision influences their willingness and ability to make thoughtful decisions reflective of the companies’ values, elevate risk and hold both themselves and others accountable for delivering optimal performance. Once ethical culture starts to erode, companies risk not only financial losses but also reputational damage, legal penalties, higher employee turnover and diminished morale, according to the University of Pennsylvania.
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Of course, data suggesting engagement is on the decline shouldn’t be terribly surprising. The world of work has experienced seismic change over the past six years:
- First, the Covid-19 pandemic changed the pact between employers and their people. Many employees became accustomed to remote work and are reluctant to return to the office. A recent Pew Research Center poll found that 46% of workers who work from home at least some of the time are unlikely to stay with their current company if they can’t work remotely.
- Employees, investors and policymakers alike expect CEOs to be more dynamic, demonstrating confidence during uncertain economic times while also building trust with employees, according to FTI Consulting’s research. FTI’s study found that 88% of employees expect CEOs to be excellent communicators, 84% believe CEOs are responsible for modeling the right behaviors and 72% believe a company’s reputation is primarily driven by its CEO. The numbers in all categories are higher than the other stakeholder groups.
- Meanwhile, as generative AI tools emerge and are deployed into the workplace, the way we work is changing. A Brookings Institute study projects that 30% of all workers could see generative AI platforms alter at least half of their work tasks in the years ahead. And 44% of corporate board members say they’re considering how to incorporate AI/generative AI into one or more areas of their businesses, according to the “What Directors Think 2025” study by Corporate Board Member, Diligent Institute and FTI Consulting.
In light of this, it stands to reason engagement has suffered, creating a multitude of risks to organizations in the midst of uncertain times. Leaders should take note, doubling down not only on communications but also on the ways they purposefully engage to set the tone for cultural norms.
Key considerations for leaders in this new era
While the landscape has shifted significantly, the playbook for leaders striving to create winning cultures has evolved more subtly. Best practices include:
- Listen first. Take a page from Nadella’s book, seeking true understanding with humility and a willingness to learn. Companies today have far more data than ever before. Build best practices that encourage data-driven decision-making and be sure to include authentic, candid conversations with stakeholders as part of the research mix.
- Don’t go it alone. While stakeholders continue to expect a lot of CEOs, the push for companies to engage more deeply on a broader array of complex issues is prompting more organizations to train and empower a larger group of leaders to not only carry the message but also help stakeholders to understand and believe it. Tone from the top should be initiated — but not solely driven — by any one leader.
- Incentivize and recognize the right behaviors. Ensure performance metrics, incentive plans, recognition programs and leaders’ go-to examples encourage the behaviors you most want to see. Walk the talk of what it means to succeed.
- Maintain focus. Culture is not defined by a single interaction or pronouncement. Engaging employees around a shared vision of success requires ongoing learning, communication and refinement. Celebrate successes and make it fun to work and be together.
Remember that CEO who told his chief communications officer, “No one needed to know we were there?” Don’t take that advice. When CEOs and leaders set the tone for their organizations, results follow.
David Duschene
Shannon Stucky Pritchett
Tim Peters
