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Thanks for subscribing to the Workplace Intelligence Insider newsletter. In today’s edition, I share news stories about why women are exiting the workforce as flexibility disappears, how rising health benefit costs are shifting more burden to employees, the growing impact of loneliness on the workplace, and new insights on Gen Z’s job-hopping habits—plus my latest article on the leadership dilemma in today’s economy.

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- Dan Schawbel, Managing Partner, Workplace Intelligence

News Spotlight

Women are exiting the workforce as flexibility vanishes. Since the beginning of 2025, over two hundred thousand women aged twenty and older have left the U.S. workforce—especially those with young children—as remote work and flexible policies are rolled back and childcare support weakens (TIME).

Health benefit costs rising, employers shifting burden. Businesses foresee health plan premiums rising by about nine percent in 2026, prompting many to shift costs to employees via higher copays or deductibles, offer alternative provider networks, and emphasize prevention to limit cost impacts (INC).

Loneliness is now central to the workplace experience. a growing sense of isolation among employees—exacerbated by remote work, shrinking teams, and blurred boundaries— is reshaping how people interact, perform, and feel in their jobs (HBR).

Stat of the Week

A new study finds that Gen Z only stays in each job for one year, and 54% are regularly browsing for their next role.

For HR leaders, the findings that Gen Z employees typically remain in a role for only about a year and that more than half are consistently browsing for new opportunities underscore the urgency of rethinking retention strategies. Rather than assuming long-term loyalty, companies should focus on creating shorter but more meaningful employee experiences—prioritizing rapid skill development, clear career pathways, and visible internal mobility options. Frequent feedback, recognition, and opportunities for project-based growth can help keep Gen Z engaged, while flexible work arrangements and well-being support address their evolving expectations. Ultimately, the key is to design an employee experience that feels dynamic and forward-moving, so Gen Z workers see growth opportunities within the organization rather than feeling compelled to look elsewhere.

Deep Dive Article
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The Leadership Dilemma in This Economy

Leadership has never been simple, but today’s economic climate has elevated the challenge to an entirely new level. Organizations are navigating slowing growth, persistent inflationary pressures, and the looming threat of recession. At the same time, leaders are managing layoffs, hiring freezes, and shrinking budgets—all while trying to maintain morale and productivity. These competing demands create a dilemma: how do you balance the financial imperatives of survival with the human imperatives of trust, engagement, and resilience?

Complicating matters further is the rapid acceleration of artificial intelligence. While AI promises to enhance efficiency, streamline processes, and even unlock new opportunities, it also creates anxiety around job security and skill relevance. Employees are increasingly asking, “Where do I fit in this future?” Leaders are under pressure not only to adopt new technologies but also to prepare their teams for constant disruption. The ability to communicate transparently, adapt quickly, and invest in upskilling is no longer optional—it’s essential.

This environment requires leaders to redefine success. The old playbook of cost-cutting and top-down decision-making may address short-term pressures, but it often erodes culture and trust in ways that harm long-term growth. Today’s leadership dilemma is about finding the right equilibrium: being financially disciplined while showing compassion, embracing technology without creating fear, and driving performance while fostering a sense of stability. The organizations that navigate this balance will emerge stronger, while those that ignore it risk losing both talent and competitiveness.

The Pressure of Leading in a Downturn

Economic downturns force leaders to make difficult decisions, often under enormous scrutiny. Layoffs, restructurings, and budget cuts dominate headlines and fuel employee uncertainty. Leaders cannot escape the financial realities, but how they manage these transitions defines their credibility. A purely transactional approach—reducing headcount to meet quarterly targets—may satisfy short-term investor expectations but often comes at the expense of long-term talent retention and brand reputation.

Employees in such climates are looking for leaders who provide clarity and fairness. Even when cuts are unavoidable, honest communication about the “why” and a thoughtful approach to supporting those impacted can maintain trust among those who remain. Leaders who acknowledge the human impact of their decisions—through empathy, severance support, or career transition resources—show that values still matter, even in hard times.

Moreover, downturns are not only about cutting; they are about repositioning. Leaders who treat economic slowdowns as opportunities to reset priorities, eliminate inefficiencies, and invest strategically in future capabilities set their organizations up for resilience when conditions improve. The dilemma is not whether to make tough calls—it’s how to make them in a way that preserves both financial stability and organizational health.

AI Disruption and the Workforce Transition

AI is simultaneously a source of promise and fear, and leaders sit squarely at the intersection of both. On one hand, automation and machine learning are enabling companies to streamline operations, reduce costs, and innovate faster than ever before. On the other hand, employees worry that these same technologies will render their roles obsolete or devalue their skills. This tension places leaders in the difficult position of championing AI adoption while also addressing employee anxieties.

The key lies in reframing AI as augmentation rather than replacement. Leaders who emphasize that AI is a tool to remove repetitive work and free employees for higher-value contributions help shift the narrative. Pairing technology rollouts with meaningful investments in reskilling and upskilling signals to employees that they are part of the future, not casualties of it. Training programs, cross-functional projects, and learning incentives can demonstrate a commitment to growth while easing fears.

Transparency is equally important. Overpromising that “no jobs will change” undermines credibility, but so does a lack of communication. Leaders must set realistic expectations about how roles will evolve and share concrete steps the organization is taking to prepare its people. By proactively managing the human side of technological change, leaders can transform disruption into empowerment.

The Fragile State of Employee Engagement

In today’s economy, engagement is more fragile than ever. Economic stress, job insecurity, and constant change have eroded loyalty and heightened burnout. Employees who fear layoffs often disengage, either by quietly reducing their effort or by seeking opportunities elsewhere. For leaders, this presents a double bind: they need higher performance to weather the storm, yet the very conditions they must manage make sustained engagement harder to achieve.

The solution requires intentional investment in culture and connection. Recognition, flexibility, and meaningful communication are critical levers. Leaders who show appreciation for contributions, even in constrained times, reinforce that employees matter beyond the bottom line. Providing autonomy and flexibility, where possible, helps employees balance personal and professional demands, which in turn fosters resilience. Regular check-ins, open forums, and transparent updates signal respect and reduce the uncertainty that fuels disengagement.

Leaders should also recognize that engagement is not just about motivation—it is about psychological safety. When employees feel safe to voice concerns, experiment with new ideas, and learn from mistakes, they are more likely to remain committed despite external turbulence. In a fragile economy, psychological safety can be one of the most valuable assets a leader cultivates.

Balancing Short-Term Realities with Long-Term Vision

The temptation during economic hardship is to narrow focus to immediate results. However, the leaders who succeed are those who balance short-term execution with long-term vision. This dual lens ensures that cost-cutting does not erode innovation, and that technological adoption aligns with strategic goals rather than quick fixes.

For example, some organizations are using this period to reassess their workforce strategies: which roles can be automated, which skills are essential for the future, and how to reconfigure teams for agility. Leaders who communicate this vision show employees that today’s hardships are part of a larger plan, not just reactive measures. Aligning daily decisions with a bigger narrative instills purpose and gives employees a reason to endure challenges.

At the same time, vision must remain grounded in financial discipline. Leaders cannot ignore shareholder demands or operational realities. The art lies in making trade-offs that protect long-term growth without sacrificing immediate viability. Those who strike this balance demonstrate not just managerial skill but true leadership.

Leading With Empathy and Authenticity

Perhaps the most defining leadership quality in this economy is empathy. Layoffs, restructuring, and constant change create an emotional toll that cannot be ignored. Leaders who show compassion—through listening, presence, and genuine care—build trust even in the toughest circumstances. Authenticity also plays a central role; employees can sense when leaders are being disingenuous or hiding behind corporate jargon. Honest acknowledgment of challenges, combined with a willingness to share personal reflections, humanizes leadership and strengthens connection.

Importantly, empathy does not mean avoiding hard decisions. It means approaching them with respect, clarity, and humanity. Leaders who combine decisiveness with empathy are better positioned to maintain credibility and loyalty, even when outcomes are difficult. In this sense, the leadership dilemma is not whether to prioritize results or relationships—it is how to integrate both in a way that sustains the organization.

What Leaders Must Do Now

The leadership dilemma in today’s economy is a test of balance, adaptability, and humanity. Leaders are being asked to navigate economic downturns, technological disruption, and fragile employee engagement—all at once. The easy answers no longer apply. Instead, leaders must embrace the paradox: being financially prudent while investing in people, adopting AI while protecting trust, and making tough calls with empathy and authenticity. Those who rise to the challenge will not only guide their organizations through turbulence but also shape cultures and strategies that thrive in the future.

Thanks for reading — be sure to join the conversation on LinkedIn and let me know your thoughts on this topic!

Quote of the Week

“It does not matter how slowly you go, as long as you do not stop."
​Confucius