The $2 Trillion Blind Spot in Modern Rewards
•February 18, 2026
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Companies Mentioned
Workhuman
McKinsey
Why It Matters
The misalignment erodes productivity and spikes attrition, costing the economy trillions, while aligning rewards with collaborative behaviors can boost performance and retain talent.
Key Takeaways
- •Individual bonuses dominate reward systems.
- •Employee engagement fell to 31% in 2024.
- •$2 trillion productivity loss linked to disengagement.
- •High-quality recognition cuts turnover 45% over two years.
- •Tillo rewards collaboration, communication, reliability in hybrid work.
Pulse Analysis
Employee disengagement has become a macro‑economic blind spot, with Gallup’s 2024 data showing U.S. engagement at a decade‑low of 31 percent. That level of disengagement is estimated to shave roughly $2 trillion from national productivity, underscoring how outdated, individual‑centric reward structures can undermine whole‑company performance. Companies that continue to reward only personal output risk widening the gap between stated cultural values and daily employee experience, fueling turnover and stalling growth.
Research from Gallup and McKinsey highlights the corrective power of high‑quality recognition. Workers who receive meaningful acknowledgment are 45 percent less likely to leave within two years, and organizations that prioritize people‑first performance management outperform peers by over fourfold, delivering 30 percent higher revenue growth. Tillo exemplifies this shift by redefining its reward criteria to celebrate communication, reliability, and shared accountability—behaviors essential for effective hybrid work. By making expectations explicit and tying incentives to team outcomes, Tillo demonstrates how clear, behavior‑based rewards can translate cultural intent into measurable results.
The broader implication for leaders is clear: reward redesign cannot remain an HR silo. Executives must embed recognition into strategic objectives, ensuring that increased demands for adaptability and pace are matched with equitable, transparent incentives. As the labor market tightens, organizations that align expectations with collaborative rewards will not only curb costly turnover but also unlock the productivity gains that have been missing from the $2 trillion gap.
The $2 trillion blind spot in modern rewards
Most companies will tell you they value collaboration. Their reward systems tell a different story.
Despite years of talk about teamwork, culture and shared accountability, the vast majority of organizations still tie recognition and reward to individual output. Hit the number, get the bonus. Miss it, and the collaboration you brought to every cross-functional meeting doesn’t count for much.
The data suggests this mismatch is deepening. According to Gallup’s recent research, only 47% of U.S. employees strongly agree they know what’s expected of them at work. Just 28% strongly agree their opinions count.
Meanwhile, many employees are feeling mentally and emotionally disconnected from their jobs. U.S. engagement hit a 10-year low of 31% in 2024, a stagnation that Gallup estimates is costing the economy roughly $2 trillion in lost productivity.
Many HR leaders turn to recognition or engagement programs in the face of this disconnection. Evidence shows that giving workers attention for their contributions may keep them from then leaving the organization.
Additional data from Gallup, in partnership with employee recognition platform Workhuman, found “employees who receive high-quality recognition are less likely to leave their jobs.” The study found that “well-recognized employees are 45% less likely to have turned over after two years.”
The clarity problem
Hanna Smith, chief people officer for the gift card and reward company Tillo, says the disconnection starts with what companies are actually asking of employees. She says employers are hitting up employees for more adaptability, more pace and more ownership. Flip the coin, she says, and employees are also clear now about what they expect in return for generating the effort.
Hanna Smith, Tillo
“We’ve worked hard to move away from vague language like ‘ownership’ unless we can define what it actually looks like day-to-day at Tillo,” Smith says. “High performance at Tillo means being clear on outcomes, moving with pace, taking responsibility for decisions and working in a way that supports the whole business, not just individual achievement.”
That specificity matters because, as Smith put it, “reward only feels fair when people understand what great looks like.”
McKinsey research backs this up. A 2024 study of more than 1,800 companies found that organizations that “focus on their people’s performance are 4.2 times more likely to outperform their peers, with 30% higher revenue growth and attrition five percentage points lower.” The same research noted a broader shift across industries from emphasizing individual performance toward recognizing the role of teams in driving organizational success.
‘Recognizing contribution beyond output’
At Tillo, that shift showed up in a specific reckoning around hybrid work. “We realized that if we were asking for more intentional collaboration, we needed to reward the behaviors that make hybrid work successful: communication, reliability and shared accountability,” Smith says. “So, we’ve focused more on recognizing contribution beyond output, the people who strengthen teams, not just hit targets.”
Meanwhile, Smith says, “reward is deeply personal,” and “different people value different things at different stages of life and career.”
It’s a seemingly simple reframe. But it challenges the default logic of most performance systems, which remain built around what McKinsey calls the “what” of performance while underweighting the “how.”
The risk, of course, is that this kind of recalibration stays in the HR silo. Smith argues it can’t, and that leadership accountability is critical.
“Reward and expectation alignment isn’t a People Team-only issue, it’s a leadership responsibility,” she says. “If we ask more of people, we have to match that with investment, recognition and a culture that sustains high performance over the long term.”
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