Help, is on the way

I often post about external threats to companies, specifically political risks that in most cases firms have limited ability to control the outcome. With strategic investments in public affairs organizations can anticipate and, in some cases mitigate or minimize the damage of such threats. However, increasingly the threats are closer to home, and although well within corporate control are not acted upon or executed fully. 

Internal threats for firms are equally as critical to understand, yet what is clear is that many firms are failing employees and shareholders by failing to respond both in terms of programmatic offerings but also with adjustments to leadership style. A recent Gallup poll highlights crippling organizational failures that many firms struggle with. Integrated into this are the shifts in North America towards declining productivity, which are limiting economic recovery.  

As noted in the Financial Post, a recent Statistics Canada report highlighted that labour productivity fell by 0.3 per cent in Q1 of 2024.  CIBC went on to note that “labour productivity has now fallen in 12 of the last 15 quarters coming out of the pandemic. The level of Canada’s labour productivity is now back to where it was in 2018, which means we’ve had no growth over a span of six years,” according to Steven Tapp, Chief Economist at CIBC.

Gallup’s report reveals even deeper implications, estimating that low engagement costs the global economy US$8.9 trillion, or 9% of global GDP. This, resulting from low employee engagement, where an astonishing 62% are ‘not engaged’ and 15% are actively disengaged. Coming out of the global pandemic, inflation and affordability issues, increasing geopolitical tensions and all add to the stresses that employees feel and are consumed by.  Adding to this are critical issues around mental health, when combined, creates a high-tension environment that can be a catalyst for declining engagement, lower productivity and higher turnover.

According to Gallup, employees are feeling disengaged for a variety of reasons; including mental health, loneliness, overwhelmed by workload and general well-being all deteriorating. While it may be challenging for employers to manage and respond to the non-work issues, the pandemic shifted the boundaries on expectation and boundaries between home and work. What remains clear is that employers who recognize and respond to this quickly, are winning the productivity battle. The linkages between productivity and engagement can’t be underestimated. 

Clearly, some firms have adjusted with investments in a range of employee programs, the effectiveness remains limited.  Perhaps more troubling, is that many organizations have failed is to adjust management styles, preferring to reinforce pre-pandemic routines or outdated models of command and control that do not align with the new realities facing employees. What remains clear is that executives not focusing on the internal dynamics of their firms, the pressures their employees are facing will continue to lose the productivity battle.  

Read the report here.