Employee Happiness Hits 4-Year Low

Employee satisfaction plummeted for the third straight quarter in the last months of 2023, reaching a four-year low, according to new data.

A report from BambooHR found that the overall average employee satisfaction score, which in part accounts for how likely employees are to recommend the organization as a place to work, in December 2023 dropped to the lowest overall average score since 2019. The report is based on data collected from more than 1,600 companies nationwide, representing more than 57,000 employees.

The finding is significant for employers, who have been trying to manage employee mental health and overall unhappiness. It’s also somewhat surprising that employee satisfaction is lower now than it was at the height of the pandemic, said Anita Grantham, head of HR at BambooHR. The average score in Q4 2023 was 10 percent lower than in December 2020, nine months after the COVID-19 pandemic emerged.

“The report’s time frame includes the peak of the pandemic, when employees were seeing some of the largest upheavals of their careers, so a four-year low is definitely significant,” she said.

The satisfaction drop is driven by factors including inflation and financial woes, inconsistent return-to-office policies, evolving employee expectations, and layoffs, Grantham said. The lattermost factor is a likely contributor to the fact that tech workers are among the least satisfied employees. The bulk of recent layoffs have been in the tech industry, with firms including LinkedIn, Google and eBay announcing layoffs in the first quarter of 2024. Meanwhile, a growing focus on artificial intelligence is also sparking competition and uncertainty, employees told BambooHR.

[SHRM members-only toolkit: Developing and Sustaining Employee Engagement]

Nonprofit workers are another cohort who are especially unhappy, the report found. These employees’ satisfaction scores dropped 10 percent from September 2023, reaching the industry’s lowest score since July 2021. 

Some workers, though, are happier than others. In fact, BambooHR found that happiness is‌ improving in industries like travel, construction and education. Construction workers are consistently the happiest in their jobs, the report found.  

Burnout, and concerns that their company doesn’t care about them, are undoubtedly additional factors contributing to the overall dip in employee happiness, said Aflac CHRO Jeri Hawthorne.

Well over half of employees (57 percent) are experiencing at least moderate levels of burnout, according to a recent report from Aflac. Meanwhile, employees’ confidence in how much their employers care about them has declined significantly: In 2023, 48 percent said they are confident that their employer cares about them—down from 56 percent in 2022 and 59 percent in 2021.

These dire statistics indicate employers would be wise to step up efforts in employee communication, compensation, benefits and support, and overall company culture, Grantham said.

“Managers and leaders must have regular check-ins with their teams to understand what the problems are, communicate what they’ve learned, ask for employee support and then act on the feedback,” she said.

Employees surveyed by BambooHR agreed, saying more regular feedback and time with managers would make them feel more supported. Increased compensation in the form of competitive pay; clear and transparent structures for raises, promotions and bonuses; and improved incentive programs, like stock options, was also suggested in employee feedback.

Organizations should also look at employee expectations, and make sure a company’s values and culture are well defined and communicated, Grantham said.

“Pay, benefits and perks only hold value long-term if employee values align with the culture they work in and they have great leaders and people around them,” she said. “If the last four years have taught us anything, it’s that the employee-employer landscape is constantly changing, and we need to understand the shifts in that dynamic as they happen. If we wait until we’re at a four-year low, we’re fighting an uphill battle.”

Hawthorne agreed, saying that unhappy and burnt-out employees take a hit on employers’ bottom lines, as well.

“People who are stressed are less productive, and not only are they less productive, but you have things like higher levels of absenteeism and irritability in the workplace, which sometimes create a toxic culture and can create employee relations issues,” she said. “Burnt-out employees are less likely to go above and beyond for customers or clients, so you have a downstream impact on your company’s performance.”

On top of that, Hawthorne said, there’s a big retention motivator to act, as well. “People who are burned out will think about leaving their job, especially if they think their employers don’t care about them.”