While employee engagement budgets are shrinking, more companies believe they are doing a better job in engaging employees than they did last year. According to the 12th annual Employee Engagement and Retention Trends Report, released by TalentKeepers, less than two-thirds of U.S. employers will have some sort of budget for employee engagement plans in 2016, compared with nearly three-quarters in 2014. However, more than a quarter of respondents rated themselves “very effective” in engaging their employees, a number that was up from 14 percent in 2015. One potential explanation for this is that employers are becoming more effective in their use of leadership to engage employees during their day-to-day work, rather than relying on programs and workshops, said Christopher Mulligan, chief executive officer at TalentKeepers. “One possibly troublesome point is that budgets for engagement and retention have slipped, a surprise after years of growth in dedicated funding,” he explained. “On the flip side, more focus is being placed on the impact leaders have, likely a growing recognition that leveraging leaders adds little incremental cost and great value.”