The Great Disconnect: Why Mental Health Is the Missing Piece in Your Engagement Strategy
The Bottom Line Up Front:
The numbers are too concerning for small talk, so we will start with straight talk. We've been treating employee engagement and mental health as separate problems when they're actually two sides of the same coin. Companies are hemorrhaging $438 billion globally in lost productivity because they're measuring engagement scores while ignoring the psychological factors that drive them (Gallup, 2025). Here's the truth—the organizations winning at both are doing three specific things that most workplaces are completely missing.
The reason your engagement initiatives keep falling flat isn't because you don't have the right tools or strategies. It's because you're trying to boost productivity while completely ignoring what's happening in your people's heads and hearts.
The Data That Should Keep Leaders Up at Night
Let's start with what the numbers are actually telling us about the connection between mental health and engagement, because this relationship isn't just correlation—it's causation.
The Mental Health-Engagement Crisis: According to NAMI's 2024 research, 33% of full-time employees noticed their productivity suffer because of their mental health, and conversely, 36% noticed their mental health suffer because of work demands (NAMI, 2024). That's not a fluffy well-being problem—it’s an engagement emergency disguised as a mental health issue.
Here's where the data gets really interesting: global employee engagement fell from 23% to 21%—a drop equal to what we saw during COVID-19 lockdowns (Gallup, 2025). But the story behind this decline is deeply psychological: manager engagement fell from 30% to 27%, with young managers (under 35) seeing engagement drop by five percentage points and female managers experiencing a seven-point decline (Gallup, 2025).
The psychological toll is measurable. Managers are experiencing decision fatigue which creates constant stress. In addition, they are facing chronic understaffing woes, and what one supervisor described as teams with "no enthusiasm" where "you can just feel it" (Gallup, 2025). We can trace the cause to an impossible list: return-to-office enforcement, navigating hiring booms and busts, restructured teams, shrinking budgets, supply chain chaos, digital transformation, AI tools, and new employee expectations without additional training and all while retaining talent and boosting productivity (Gallup, 2025).
The Well-being Collapse: It's not just engagement scores. Global employee life evaluations—how people feel about their lives overall—fell to 33% thriving in 2024 (Gallup, 2025). Managers again bore the brunt: older managers saw a five-percentage-point decline in well-being, and female managers experienced a seven-point drop in life satisfaction (Gallup, 2025).
What's driving this collapse? A perfect storm of psychological stressors: 75% of respondents reported experiencing some form of low mood, with the majority attributing it to global political turmoil and current events (PLANSPONSOR, 2025). Meanwhile, the top mental health stressor is the increasing cost of living, followed by financial instability and being overworked (Qarrot, 2024). In regions like the US and Canada, and Australia/New Zealand, wellbeing has dropped to historic lows, likely driven by housing costs and inflation that make basic living increasingly unaffordable (Gallup, 2025).
For working parents, the situation is even more dire: teen mental health challenges surged in 2023, with some ER doctors reporting kids seeking psychiatric emergency care rising from 30 per month to 40 per day (SpringHealth, 2024). When employees' children are in crisis and they're simultaneously dealing with financial pressure and work overload, life satisfaction plummets.
Attribution matters. The data tell us that half of employees who are engaged at work are thriving in life overall, compared with only a third of employees who are not engaged (Gallup, 2025).
The Quitting Conundrum:
34% of employees aged 18-29 and 28% of employees aged 30-49 reported they considered quitting because of work's impact on their mental health (NAMI, 2024).
25% of working Americans say they are considering leaving their current employer due to their need for a mental health break (TeamBuilding, 2024).
50% of American workers resigned in 2021 due to poor mental health (eLearning Industry, 2024).
Sound familiar? We keep talking about retention and engagement while people are walking out the door because work is literally making them sick.
Here's what gives me hope: 89% of employees say their leaders talk about their own mental health in 2024, compared to just 35% in 2020—creating a growing culture of transparency and safety (Headspace, 2024). But here's what should concern you: only 31% of employees say they are "very satisfied" with their workplace culture (NAMI, 2024), and only 49% believe their manager genuinely cares about their well-being (Qarrot, 2024).
We're talking about mental health more, but we're not creating the conditions where people feel genuinely supported.
What Actually Works: The Three Mental Health-Engagement Integration Strategies
After analyzing research from Mental Health America's analysis of nearly 75,000 work health surveys and Gallup's comprehensive global data, here are the three approaches that address mental health and engagement through concrete organizational changes:
1. Redesign Manager Roles to Include Well-Being Accountability
Here's what most organizations miss: data shows that 70% of team engagement is attributable to the manager, yet manager engagement fell from 30% to 27% (Gallup, 2025). You can't fix team mental health with managers who are clearly drowning—and the data proves they are.
Why This Works: Less than half of the world's managers (44%) have received management training, yet half as many trained managers are actively disengaged (Gallup, 2025). But instead of more training, make well-being outcomes part of their actual job.
What This Actually Looks Like:
Well-being metrics in performance reviews: Track team well-being indicators (stress levels, time off usage, retention) alongside productivity metrics.
Workload caps with real consequences: Managers can't assign more than (X) hours of work per person per week, with systems that automatically flag over-allocation.
Mandatory well-being check-ins: Monthly one-on-ones that must include a well-being discussion, with documentation requirements.
Walking the walk: Leaders are penalized for not taking adequate vacation time (rather than being rewarded), and not knowing company sponsored benefits and well-being resources.
2. Implement Structural Work Design Changes
Here’s the second place most organizations miss. The World Health Organization (WHO) explicitly states that preventing mental health challenges at work means managing psychosocial risks by directly targeting working conditions (WHO, 2024). This isn't about culture—it's about systems.
The Evidence Base: Workplaces prioritizing mental health see 13% higher productivity, with employees 2.3 times less likely to report feeling stressed and 2.6 times higher likelihood of reduced absenteeism (PLANSPONSOR, 2025). These results come from changing how work actually works.
What This Requires:
Maximum meeting limits: No more than 4 hours of meetings per person per day, with meeting-free blocks for deep work.
Email/message response time standards: 24-48 hour response expectations (not 2 hours), with after-hours communication policies that actually have teeth.
Project buffer requirements: All deadlines must include 20% buffer time, and rushing deadlines requires C-level approval.
Mental health days as infrastructure: Minimum 2 mental health days per quarter, separate from PTO, with no questions asked (and leader modeled).
3. Create Financial Consequences for Well-being Outcomes
What we reward gets repeated and what we punish gets avoided. Organizations only change when there are real consequences.
The Evidence Base: Mental health issues cost the global economy $1 trillion annually (SpringHealth, 2024), while lost productivity from disengaged employees costs $438 billion globally (Gallup, 2024). Organizations with strong mental health support see 74% of employees rating their mental health as good or excellent, compared to just 46% in less supportive workplaces (TeamBuilding, 2024).
What This Actually Looks Like:
Leadership compensation tied to well-being metrics: Executive bonuses include team mental health indicators (stress surveys, retention rates, mental health day usage).
Mental health impact assessments: All major organizational changes (restructures, layoffs, system changes) require mental health impact studies with mitigation plans.
Burnout prevention insurance: Organizations purchase coverage that pays out when employees experience documented work-related mental health issues.
Toxic behavior penalties: Clear financial consequences (bonus reductions, promotion freezes) for leaders whose teams show poor mental health outcomes.
Where to Start This Week
If you're ready to stop treating mental health and engagement as separate initiatives, here's where the data says to begin:
For leadership: Start measuring mental health and engagement together. Ask people how work is affecting their psychological well-being, not just how engaged they feel.
For managers: Learn to recognize that disengagement often signals mental health struggles. Have conversations that address both the work and well-being.
For HR: Audit your programs to identify which ones actually address the root causes of both mental health decline and disengagement—things like autonomy, workload, and social connection.
For everyone: Stop pretending these are separate issues. Mental health IS engagement. Engagement IS mental health. They rise and fall together.
The truth? The companies that figure out this connection first will have a massive competitive advantage. They'll retain better talent, achieve higher performance, and build more sustainable organizations that can handle whatever comes next.
The research proves it. The business case is compelling. The human case is undeniable.
Ready to transform how your organization approaches mental health and engagement? If you or your leadership team are facing these challenges, I'm here to help.
Book a consultation with Kacy Fleming Consulting to build workplace systems that support both human well-being and business performance.