The engagement mirage: why leaders think they’re valuing staff (and why they’re wrong)

How valued do your people really feel?

Most leaders would probably say ‘quite a lot’. They may invest in wellbeing schemes, recognition programmes and benefits platforms. They might issue thank-you messages, celebrate milestones and talk openly about culture. On paper, it sounds like a modern, people-centred workplace. Yet the numbers tell a different story.

According to The Perkonomics Report 2025, while 81% of employers believe they’re doing enough to make employees feel valued, workers themselves rate that experience at just 6.75 out of 10. Nearly half say they feel undervalued right now, and over a third are likely to look for a new job in the next year because of it. It’s what we call the engagement mirage, where leaders see something that simply isn’t there.

The perception gap that hides in plain sight

At first glance, the gap between 6.75 and 7.4 (the score employers thought staff would give) might not look alarming. But when you translate those numbers into declining motivation, higher attrition and lower morale, it becomes clear this is a leadership execution problem.

In truth, most organisations already understand what matters. They know recognition drives engagement. They know that wellbeing and flexibility count for more in how people feel about their jobs, and benefits can make or break retention. The issue is that awareness isn’t translating into consistent action.

There is a popular statement in business management by Peter Drucker, “You can’t manage what you can’t measure.” The same applies to value. Many companies run engagement surveys once a year and tick the box, not realising that value fluctuates with workload, pay, recognition and even the tone of leadership communication. Without ongoing visibility, leaders risk overestimating how people really feel.

When good intentions miss the mark

The report also reveals that recognition is the single biggest driver of feeling valued, cited by 53% of employees, ahead of wellbeing (33%) and purpose (36%). Yet 42% still say they feel undervalued. That’s not because leaders don’t care. It’s because systems and habits often get in the way.

In large organisations, recognition tends to get diluted. In very small ones, it’s often informal but inconsistent. The “value apex” - the point at which employee value peaks in relation to a specific metric - sits somewhere around the 500–999 employee mark. It’s the point where leadership is still close enough to know people personally, but big enough to fund structured recognition. Beyond 1,000 employees, the sense of value falls sharply.

We shouldn’t underestimate the cost of undervaluation either, as it has a direct effect on how people show up, how they work with others and how long they choose to stay. Over half of employees say it has damaged their motivation, and around the same proportion report a drop in morale. Six in ten link it to stress, lower self-esteem or broader mental health concerns. 

No benefits brochure or tick-box wellbeing initiative can counteract that. Recognition, trust and fairness are the foundations people rely on to feel secure at work. When those foundations weaken, performance metrics become almost irrelevant, because the conditions that support good work are no longer there.

When technology complicates the picture

There is a lot of debate going on about how AI impacts value at work. Most teams are comfortable using AI; that isn’t the issue. Almost seven in ten employers believe these tools are improving the employee experience, but employees see it differently. The challenge is that when a tool completes tasks that once helped people demonstrate their skill, confidence or judgment, the work can feel less satisfying. Only 38% feel more valued when using AI, and the same proportion says it reduces their sense of personal accomplishment.

Leaders should ask themselves: Does technology free up time for higher-value work, or does it strip away the moments that make people feel proud of what they do? The difference often comes down to how deliberately organisations connect automation to human contribution.

Turning awareness into action

As the report shows, there is a gap between how leaders think people feel and what employees actually experience. However, that gap doesn’t come from a lack of care. It usually develops when organisations grow or move quickly, and leaders lose sight of the day-to-day reality. Managers need to be more aware of what’s happening in their teams, how people are coping, what’s motivating them and what’s possibly weighing on them. That means they are less reliant on assumptions or optimism and can better respond to the climate people are working in.

Value at work is shaped by the ordinary interactions that happen every day. A quick thank-you, a thoughtful comment during a meeting, a manager noticing something done well - these moments carry more weight than any formal programme.

As many employees are balancing rising pressures at home and at work, organisations should think about benefits that genuinely help with those pressures. That kind of support feels considered and shows that the organisation understands what people are dealing with beyond their day-to-day work.

People want to know their contribution matters. They want to feel that their work has substance and their circumstances are understood. When organisations notice those things and respond to them in steady, genuine ways, the working environment becomes stronger, more resilient and far better at retaining the people who keep it running.

The engagement mirage exists because leaders mistake motion for progress. While new tools and benefits can look good on paper, it’s meaningless without a consistent human connection behind them. The good news is that employees want to belong, contribute to their teams and stay. The opportunity is right there. Organisations just need to turn value into something people can actually feel - and that is more than just an illusion.