The Employee Engagement Crisis in Indian Mid-Market Companies

Authored By Dr. Yogish Arora, Director & CEO, HR Anexi

Most founders I speak with can tell you their revenue to the last lakh. Very few can tell you how engaged their workforce actually is, and fewer still have ever measured it. That gap, between what businesses track obsessively and what they ignore entirely, is where India’s mid-market engagement crisis is quietly taking root.

The numbers, where they exist, are not subtle. ADP Research’s People at Work 2025 study found workforce engagement in India fell to 19 percent in 2025, down from 24 percent the year before, the steepest decline of any market in the survey. Gallup’s 2026 State of the Global Workplace report adds a sharper detail: manager engagement in South Asia, driven largely by India, dropped eight points in a single year, the largest regional decline anywhere.

Part of why these numbers are so easy to misread is that engagement is not one measurement, it is the balance between what an employee receives from the organisation and what they give back through ownership and initiative. Most owners only track the receiving half, because it is the one that is visible day to day. A cheerful office and low attrition can look like health. It can also look identical to a business quietly running on goodwill instead of output, a distinction Indian family businesses feel more acutely than most, since informal communication that once held everything together becomes harder to sustain as they grow, and India has more of these multi-generational businesses than almost anywhere else.

In the mid-market and family businesses we work with, we regularly find two very different versions of this sitting inside the same team. Think about your own team for a moment. There is likely someone who has been with you for many years, well liked, dependable, the kind of tenure owners are often proudest of. But loyalty reflects how long someone stays; engagement reflects how much they are actually choosing to contribute while they’re there. Ask when you last heard this person push back on a decision, or bring you an idea you didn’t ask for. If you cannot remember, that comfort has likely become coasting, and the cost shows up quietly, in decisions this person could have improved but didn’t, while a leaner competitor moves faster simply because their people are still leaning in.

A few desks away is likely someone else entirely, still the first name anyone mentions when something urgent needs fixing. Ask when you last checked in on them without it being about a deadline. If you cannot recall that conversation, you may have someone one bad quarter away from resigning, and you would not see it coming, because their delivery has been masking how disengaged they’ve become. In a decade of doing this work, I’ve learned to trust this pattern more than any survey: it is rarely the visibly unhappy employee who does the most damage, it’s the quietly disengaged high performer, and their exit is rarely a single departure. It’s usually the first of two or three, because the people watching them carry the load, staying only because they were staying, no longer have a reason to.

Both blind spots come from the same place, believing that knowing someone personally is the same as understanding what they actually want. As businesses grow, assumptions quietly replace conversations.

Asking well means asking about specific things, not engagement in the abstract, usually some combination of clarity, communication, connection, career development, and care. The comfortable employee above is typically missing the first two. The quietly burning-out one is typically missing the last two. Same underlying problem, different missing piece, which is why one engagement score across a whole team hides both.

Most founders reading this can already sense who those two people are. But here is the harder part: even if you ask them directly, you may not get an honest answer, not because they are dishonest, but because answering truthfully means telling the person who owns the business, and often shares their surname with it, that something is wrong. That is a very different conversation from the one they would have with someone who isn’t their employer. Closeness does not just make this gap hard to see. It makes your own attempt to check it unreliable, precisely when it matters most.