Why confidence in leadership is now driving employee engagement

The top drivers of employee engagement have undergone a sharp reversal in 2025. New analysis of more than 20 million employee survey responses from the last 10 years shows that “belonging” and “feeling valued” have slipped from the top two spots.

They now sit in fourth and fifth place, replaced by “how effectively organizations handle change” and “employee confidence in senior leadership.”

According to John-Paul Ferguson, associate professor of organizational behaviour at McGill University’s Desautels Faculty of Management, the Perceptyx findings reflect a change in how secure people feel in the current environment.

In his view, the report shows a reasonable response to uncertain times: “Usually, people don't massively shift what they value from one year to the next,” he says.

But that doesn’t mean employers should stop focusing on those factors. In other words, employees still care about being valued and belonging, but it’s couched within a greater focus on organizational stability and confidence.

Why leadership confidence is rising as an engagement driver

Before 2020, the top engagement drivers were dominated by items such as “I feel valued as an employee of the company,” “My current responsibilities are positioning me for a successful career here,” and “When I do an excellent job, my accomplishments are recognized.”

From 2016 through 2019, variations on feeling valued, career opportunity and recognition sat at the top of the list, found Perceptyx.

However, that pattern changed over the past five years: “I feel like I really belong at our company” entered the top five in 2021 and held the number-one position from 2022 through 2024, before dropping to fourth in 2025 when stability and confidence in leadership took over.

To Ferguson, employee focus on leadership is, in part, a need to be led by someone who can navigate the drastic changes of the last several years; when employees question whether their employer has a plan, they will naturally focus more sharply on leadership capability.

“I think the situation in which many workers find themselves in the Canadian economy in the last year or two has been one where they have seen less stability,” he says.

“And there's a lot of concern that … [do] Canadian employers know how to respond to these changed circumstances?”

Ferguson points to Maslow’s Hierarchy of Needs to explain how disruption has made stability and leadership more salient, driving them to the top of the engagement-driver rankings: “I get the sense that a lot of workers who respond to these surveys have taken a certain degree of leadership and stability for granted, that has been called into doubt in the last 12 to 18 months.”

What employees want from leaders in uncertain times

Perceptyx characterizes the shift as a move away from purely emotional markers of engagement toward what it calls performance and strategic clarity, but it also emphasizes that engagement remains strongly linked to psychological factors such as accomplishment, growth and trust.

For Mary Crossan, professor of general management and strategy at Ivey Business School at Western University, the confidence employees are seeking is rooted as much in character as in technical skill. In uncertain circumstances, they look for leaders who can guide and “buffer” their teams, “rather than having a leader who just kind of dumps back that uncertainty on the people that work for him or her,” she says.

Crossan says organizations have traditionally focused on technical competence in leadership selection and development, while leaving character largely unexamined. In her experience, this imbalance can lead employers to promote people who deliver results in the short term but erode trust and psychological safety over time.

However, competence is not the issue, she stresses – instead, employees are now noticing whether their leaders have the strength of character to navigate through tough changes, and also to listen to employee concerns. Crossan explains, “If I'm going to spend my time working in this environment, I want to be doing something and working with somebody who I trust.”

Building character into HR practices

The report emphasizes that “leaders play a key role” in sustaining a reinforcing cycle where engagement leads to performance and success, which in turn increases the “anticipation of future success.”

It also highlights that a onep-oint increase in intent-to-stay favourability corresponds to a 0.66-point reduction in voluntary attrition across more than 400 business units.

For Crossan, the implication for HR is that leadership confidence will not improve through messaging alone; it requires a “paradigm shift” by embedding character into the systems that shape company leadership.

“The number one thing I would say is you need a better grip on understanding what character is and then embedding it in your HR practices,” she says – that could mean revisiting hiring, promotion and performance criteria so they reflect how leaders use power, respond to pressure and balance competing interests.

It also means making character “mission critical” in the day-to-day work of leaders, rather than a topic reserved for workshops.

“If you want to elevate character alongside competence, you actually have to do the due diligence of thinking about what it is,” she says.

“It's in the conversations that they have with their employees, it's into their performance management of employees, it's into strategy. It's into risk management; it's in culture development. So the mission critical side is, how do we take our leadership development out of the classroom and into the workplace?”

Engagement as a test of leadership in difficult times

In its Implications for Leaders in 2026 and Beyond report, Perceptyx summarizes the 10-trend this way: employees have shifted from asking “How can I grow here?” to “Can I trust this organization to navigate uncertainty with me?”

Underpinning this shift is the idea that engagement is “inherently forward-looking” and collapses when employees no longer anticipate success for themselves or the organization – for Ferguson, this environment is an opportunity for leaders to demonstrate the skills that matter most.

“We shouldn't be evaluating leaders based on how they do when their organizations are doing extremely well, but we have a real reflex to do that. We look at really successful organizations and we try to draw leadership lessons,” he points out.

“But it's actually in times like this, when an organization is struggling or when the environment isn't super favorable for them, that we actually get to see who really is good at leading … this is the classic case where there's also an opportunity for people to practice, and we need them to demonstrate those real skills. If you care about human resources, this is the time in which to manage people.”