A Crisis of (Employee) Confidence

Confidence comes in waves, and after cresting in 2022, employees’ faith in their employers’ business prospects—after a series of setbacks and disappointments this year—has come crashing down.

The euphoria of 2022, when corporate profits and stock prices were soaring and hiring was robust, is a distant memory to employees now. According to a new study, only 47% of them have a positive view of their company’s current business outlook. The study, which analyzed millions of reviews of business performance, found that employee confidence across industries has fallen by 6% year-over-year.

To be sure, employee confidence, like consumer confidence, can change quickly. Several outside factors, such as return-to-office mandates and layoffs, can affect workers in a temporary way. But their current sentiment about business contrasts strikingly with the positivity of many other stakeholders. Alma Derricks, a senior client partner in the Culture, Change, and Communications practice at Korn Ferry, says workers’ declining confidence matters to leaders. “It’s like having a ticking time bomb inside the company, from a talent perspective,” she says.

Each industry has its own issues. In the financial-services industry, where confidence fell 5%, employees are concerned with the ability of leaders to adapt to the change in various business sectors, says Deepali Vyas, global head of the FinTech, Payments, and Crypto practice at Korn Ferry. This year, she says, employees have watched companies cope with slowing growth by laying off staff and issuing return-to-office mandates. With fears of a tough economy still looming, “there’s a cloud hanging over the industry,” says Vyas.

In the tech sector, too, layoffs have been an issue: After topping the survey’s list last February with a 65.5% positive business outlook, tech-employee confidence now stands at 48.6%, a decline of nearly 17%. Professional and business services, meanwhile, suffered the second-largest decline for any industry, which experts attribute to a talent shortage rather than layoffs. The one bright spot? Construction, which ranked as the only industry where employee confidence increased.

In the retail industry, a 4% drop in worker confidence concerns John Long, North America retail sector leader for Korn Ferry. “The confidence workers have will translate into how customers experience the retail environment,” he says. With retail sales so dependent on front-line employees, “having an energized and excited workforce is critical to creating customer experiences that drive sales.”

For her part, Derricks advises leaders to double down on retention efforts by “re-recruiting people inside the company”—expanding training, development, and other opportunities for advancement. Similarly, “the way to build loyalty and bring employees along during tough times is with culture,” says Vyas.

Another way to rebuild employee confidence is by reaffirming the company’s mission and purpose, says Bradford Frank, senior client partner in the Technology practice at Korn Ferry. “Remind people of your values, and create a positive mindset around what you are providing,” he says.

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