The U.S. labor market closed 2025 in stagnation. November added just 64,000 jobs. Unemployment hit its highest point since September 2021. For HR leaders, this creates a deceptive and at times eerie calm: retention looks stable, engagement surveys show employees intend to stay, and the metrics suggest everything is fine.
The metrics are lying.
Our research team, drawing on longitudinal data and frontline observations from Fortune 500 organizations, has identified the trends that will define employee experience in 2026. The patterns challenge conventional wisdom about what engagement scores actually mean, why retention numbers can mislead, and how AI adoption is reshaping the relationship between employees and their organizations.
Most organizations treat engagement as a simple binary. Leaders pull aggregate scores from annual surveys and declare victory or concern based on whether the needle moved. This approach misses complexity that matters.
Engagement indices typically combine four distinct indicators: pride in company, willingness to recommend, intent to stay, and intrinsic motivation. When leaders look only at the average, they lose the diagnostic value each component provides.
Consider what happens when intent to stay rises while intrinsic motivation falls. During economic uncertainty, employees report stronger intentions to remain. We observed this pattern during the 2020 pandemic. But retention alone doesn't guarantee productivity. If employees stay because leaving feels risky rather than because work is meaningful, organizations face a workforce that shows up physically but checks out mentally.
Intrinsic motivation remains the strongest predictor of high performance. A dip signals productivity risks that aggregate scores obscure.
The push toward shorter surveys compounds this problem. One-question surveys sacrifice the predictive power that comes from measuring engagement's component parts. Leaders need granularity to distinguish between employees who stay because they're thriving and those who stay because they're stuck.
As 2025 closed, companies including Instagram, Fox, and TikTok announced five-day return-to-office mandates. These mandates arrived alongside continued restructuring, with tech companies alone laying off more than 66,000 workers between May and November.
Our data shows that perceptions of how change is handled have declined for two consecutive years, even as change management has become the single strongest predictor of employee engagement.
Change fatigue doesn't discriminate between positive and negative change. Even changes employees support can deplete their capacity to absorb the next initiative. Organizations that directly measure change perceptions have a clear line of sight into how employees experience transformation. But fatigue often surfaces through indirect indicators: confidence in senior leadership, belief in strategy, and career connection all decline when employees feel overwhelmed.
The organizations that navigate change effectively establish clear priorities and communicate what they will not pursue. They align leaders around shared goals before expecting alignment from the broader workforce. They acknowledge difficulty rather than dismissing concerns as resistance.
AI adoption crossed a threshold in 2025. McKinsey reports that 91% of organizations now use at least one AI technology, with 75% of knowledge workers integrating AI tools daily. ChatGPT alone exceeds 300 million weekly users.
Yet our research reveals a significant gap between executive enthusiasm and frontline skepticism. Executives and managers use AI more frequently and express greater confidence than individual contributors. The problem emerges as enthusiasm cascades downward. Managers must simultaneously use AI themselves, translate strategy to teams, and support skeptical direct reports.
AI can gather input, summarize patterns, and surface insights. What AI cannot do is set priorities, make trade-offs, or build trust. When survey results reveal declining engagement, AI can shed additional light on the problem, but determining root cause and deciding appropriate actions requires human interpretation.
Organizations that successfully integrate AI treat adoption as a trust contract: clear consent mechanisms, firm boundaries on data use, and visible follow-through demonstrating that input leads to improvement. Employees who understand how AI will be used and retain agency over participation are far more likely to accept it.
The term "job hugging" entered workplace vocabulary in 2025 to describe employees clinging to positions not because they're thriving but because they fear what awaits elsewhere. With workers watching for opportunities even as quit rates remain below Great Resignation peaks, organizations face a challenge: retention numbers look stable while the workforce grows disengaged.
The revealing metric is intrinsic motivation. When intent to stay rises while motivation falls, organizations face a stable but underperforming workforce. Employees who wouldn't recommend their employer are sending a clear signal: present but not engaged, and likely to leave when markets improve.
Poor management drives turnover risk by four times. Career development concerns follow, varying by stage: early-career employees want skill building, mid-career employees want trajectory visibility, and late-career employees want to stay relevant. Lack of belonging rounds out the top drivers.
The shift from reactive to strategic retention requires understanding the full picture: who is leaving, what drives departure, when in tenure they leave, and where they're going. The goal is building a workforce that performs, adapts, and drives success.
Frontline workers represent the face of organizations to customers and patients, yet their voices remain systematically underheard. Our research surveying 21,000 frontline employees found that 53% who deal directly with the public have encountered verbally abusive or threatening customers. Retail workers face the highest exposure at 61%.
Among retail workers, 81% report burnout, and 40% say their manager rarely checks on their stress. Employees who've dealt with unruly customers are 1.3 times more likely to be seeking new jobs, 1.9 times more likely to disagree they work in a safe environment, and 2.2 times more likely to report work stress affecting physical health.
Traditional annual surveys capture a single snapshot that may be months old by the time leaders act. What matters to frontline populations differs markedly from corporate employees: belonging, feeling valued, having voice in local decisions, and growth opportunities. Feeling heard ranks as a top driver for retail frontline, above compensation.
Healthcare faces three simultaneous challenges: staffing shortages, layoffs from consolidation, and voluntary departures seeking better conditions. Nurses with three to ten years of experience now report highest intent to leave. Frontline healthcare workers have grown frustrated with responses addressing symptoms rather than causes. Resilience training doesn't address staffing ratios, psychological safety concerns, or the emotional weight of care work.
The voluntary quit rate has hovered around 2% for most of 2025, one of the lowest levels in nearly a decade. The Great Resignation has become the "Great Stay," with employee turnover falling from 177% in 2023 to roughly 50% in 2025.
Our Benchmark Megatrends research found four of the top five drivers of intent to stay now relate directly to career growth. Employees planning to remain are three times more likely to believe they can achieve career goals at their current organization. Yet career growth fell out of top engagement drivers entirely in 2023 and 2024. Employees want development, but fear has overtaken ambition.
Work forms a core component of identity, and AI threatens not just jobs but the sense of self that comes with professional competence. When defining skills face automation, the question becomes existential. This identity instability drives people to choose safety over growth. Employees are refusing stretch assignments, declining internal mobility, and downplaying ideas.
The traditional career model assumed linear progression. AI disrupts this fundamentally. Skills capable of propelling advancement may be automated by next quarter. Development needs vary by career stage: early-career employees want rapid skill building, mid-career employees want clarity about advancement, and late-career employees want targeted development honoring experience while keeping them relevant.
Frontline leaders oversee most of the typical organization's workforce, yet they remain the last group to receive systematic development support. Our research shows 24% of employees report working for their worst manager ever, unchanged since 2023. Among employees with ineffective managers, 85% are actively job seeking and only 1 in 5 are fully engaged.
Poor management costs U.S. businesses $408 billion annually in turnover and up to $211 billion more in lost productivity. The largest leadership population, responsible for the majority of employees, receives the least investment.
The traditional defense centered on scale. Organizations could justify intensive development for 200 senior leaders but struggled to deliver equivalent programming to 2,000 frontline managers. But AI-powered development tools, personalized nudging, and continuous feedback mechanisms have eliminated such excuses. The scaling challenge that made frontline development difficult is gone. Continuous, personalized enablement through intelligent nudges and AI coaching can reach every leader at every level.
The question in 2026 is no longer whether frontline leader development can scale, but whether organizations have the will to make it happen.
The top drivers of employee engagement have undergone what our research calls the biggest shift we've ever recorded. A ten-year longitudinal analysis of over 20 million survey responses reveals that belonging and feeling valued, consistent top two drivers from 2016 through 2024, fell to bottom positions in 2025. Change management effectiveness and confidence in senior leadership now claim top spots.
Employees have shifted from asking "How can I grow here?" to "Do I believe this company will succeed, and will I succeed with it?"
This reversal reflects years of accumulated pressure. Organizations have asked employees to do more with less since the pandemic, and engagement trends have followed a corresponding decline. Work has been treated like a series of sprints rather than a marathon, without building in the recovery periods sustainable performance requires.
After years of overcomplicating employee experience with new programs and technologies, the path forward may lie in simplification. Organizations that have squeezed employees continuously might consider the obvious: stop squeezing.
The patterns identified by our Workforce Transformation Consultants and Behavioral Scientists point to a workforce recalibrating its relationship with work itself. Employees are no longer asking primarily whether they feel valued or whether they belong. They are asking whether their organization can navigate uncertainty, whether leadership decisions reflect stated values, and whether change will be handled in ways that preserve rather than deplete human capacity.
Download our complete Employee Experience Predictions report for the full analysis, including detailed research findings, expert perspectives, and actionable guidance for building an employee experience strategy that addresses these challenges head-on.