The Productivity Paradox

10 April 2025 | 3 minute read

Productivity is more than an economic measure—it's a reflection of leadership. The organisations that improve performance won't simply work harder; they'll rethink how leaders make decisions, build capability and remove organisational friction.

This isn't a regular edition of Lead Lightly but it is a topic I believe deserved a long form post.

Australia’s productivity is circling the drain; and it’s not just a phase.

According to Australia’s Productivity Commission, Labour productivity dropped 3.7% in 2022–23, the sharpest decline in decades. That’s a flashing red light.

The reason? A record 6.9% jump in hours worked with barely any output to show for it. We’re working more, producing less, and pretending this is normal.

Here’s the data.

Over the past decade, labour productivity has been limping along:

• Modest gains from 2013–14 to 2015–16 (1.4%–1.9%)

• A sluggish drift from 2016–17 to 2019–20 (around 0.3%–0.6%)

• A temporary pandemic bump in 2020–21 (1.8%)

• And then… the cliff.

If it’s not already, this should be a serious focus for you as a leader.

At yesterday’s Property Council event to discuss Perth’s future projects pipeline, “declining productivity” echoed across the panel. The uncomfortable truth: this isn’t just happening to us. As leaders, we are complicit.

Executives: you’re part of the problem

The temptation is to blame external forces, economic conditions, regulation, workforce readiness. But stagnation isn’t just systemic; it’s behavioural.

Many execs have unintentionally become the brake pedal. Yes, there are challenges around tech and talent but outdated leadership operating models are a big part of the drag.

If your daily rhythm hasn’t evolved, your meetings are more performance than progress, and decisions still crawl through unnecessary layers; you’re not leading, you’re maintaining.

So, what can you do to reset?

Forget theory. Here’s what I believe can shift productivity in the right direction:

1. Start with you: do an executive audit

Ask your team, “When I’m in the room, does it speed things up or slow things down?”

If you’re the bottleneck, no framework will save you.

Try adopting a four-day mindset; even if the business isn’t there yet. When Perpetual Guardian in New Zealand did it, productivity jumped 20%. Why? Less fluff, more focus.

Leaders set the rhythm; if you're reactive and scattered, expect the same from your team.

2. Culture Is your most undervalued productivity system

According to the Australian Industry Group’s CEO Survey (2023), upskilling and workforce capability were top investment priorities for boosting productivity.

But if you’re honest: how often is development the first line item cut when your budgets tighten?

Culture is your organisation’s invisible operating system and it either fuels capability or chokes it.

Want performance to lift? Build a culture where learning is standard. That means celebrate experimentation over perfection, make curiosity contagious and burn the “this is how we’ve always done it” playbook.

3. Get serious about tech (and stop project-ifying it)

AI isn’t “emerging”; it’s here. Telstra is scaling its in-house generative AI to boost both speed and customer outcomes. Meanwhile, exec teams everywhere are still holding meetings about pilot programs.

Start embedding AI into how you make decisions. Automate the mundane so your people can focus on the meaningful.

And if your EA is still wrangling your diary instead of running point on critical tasks, you've missed a golden opportunity. EAs should be treated like force multipliers, not glorified PAs.

4. Kill the middle management myth

Here's a spicy one: too much middle management is killing momentum. In many orgs, managers are approval pipelines, not value creators. It's a symptom of trust erosion and risk aversion.

If the layers are thick and slow, strip them back. Redeploy, redesign, and reskill your middle managers to become capability coaches and culture carriers; otherwise, you're paying six-figure salaries to gatekeep decisions your frontline could've made in five minutes.

5. Use reverse mentoring to stay relevant

Old model: senior mentors junior. New model: early career team members keep senior leaders relevant.

Reverse mentoring drives inclusion AND it keeps leaders from drifting into irrelevance. Get someone younger, closer to the action, digitally fluent, honest, and not afraid to tell you the truth. Have them walk you through how work really gets done; you’ll uncover better, more efficient ways of doing things.

6. Pay for curiosity, not tenure

Productivity doesn’t come from seniority; it comes from curiosity. Promote the builders, the questioners, the ones asking “why?” ten times a day; not only the long-timers with safe hands.

The real threat isn’t underperformance; it’s disengaged veterans on autopilot.

7. Burn the busy badge

Burnout isn’t a badge of honour, and being constantly “on” isn’t commitment; it’s negligence. People aren’t machines. Expect 24/7 access and you’ll get burnout, not brilliance. .

As a leader, your habits set the bar. Model boundaries, sustainability, and focused performance. High-performing teams aren’t frantically maxed out, they’re sharp, intentional, and built to last.

8. Design performance systems that kill presenteeism, not protect it.

Your performance frameworks should dismantle presenteeism, not protect it. If your team is hitting targets, does it really matter where they’re working from?

Empower your people to deliver in ways that work. Trust-first systems force clarity, fuel autonomy, and spark self-directed momentum.

Final thought: we don’t have a productivity problem. We have a courage problem.

The numbers are clear. The behaviours haven’t shifted. And the real obstacle isn’t only technology, or talent, or policy; it’s courage.

Are you willing to be uncomfortable. To challenge your own rhythms. To disrupt your own playbook. To lead differently.

Less polished. More present.

Less controlling. More galvanising.

Productivity is a mirror.

And right now, it’s asking every executive in Australia: are you really leading?

Key Takeaways

• Australia's productivity challenge is as much a leadership issue as an economic one.

• Executive behaviours, decision-making and organisational systems can either accelerate or constrain performance.

• Strong organisational culture improves capability, adaptability and long-term productivity.

• Technology and AI create value only when they are embedded into everyday leadership and decision-making.

• Leaders should redesign management layers to build capability rather than create unnecessary approvals.

• High-performing organisations reward curiosity, continuous learning and thoughtful experimentation over tenure and presenteeism.

• Sustainable productivity comes from courageous leadership that removes organisational friction, builds trust and enables people to do their best work.

Frequently Asked Questions

Why is Australia's productivity declining?

Recent productivity declines reflect a combination of economic conditions, increasing complexity and organisational behaviours. Many organisations are working longer hours without improving decision-making, capability or execution, reducing overall productivity.

What role do executive leaders play in productivity?

Executive leaders shape productivity through the way decisions are made, priorities are set, resources are allocated and organisational culture is reinforced. Leadership behaviours directly influence how efficiently organisations operate.

How does organisational culture affect productivity?

A healthy culture encourages learning, collaboration, innovation and accountability. When people feel trusted and supported, they make better decisions, solve problems faster and contribute more effectively to organisational performance.

How can AI improve organisational productivity?

AI delivers the greatest value when it removes repetitive administrative work, improves access to information and supports better decision-making. It should create more capacity for strategic thinking rather than simply automate existing inefficiencies.

Why do traditional management structures reduce productivity?

Excessive approval layers slow decision-making, reduce accountability and create unnecessary organisational friction. Modern leadership focuses on empowering people closest to the work while managers build capability rather than control activity.

How can leaders improve productivity in their organisation?

Improve productivity by simplifying decision-making, strengthening organisational culture, investing in capability, embedding technology into everyday work, reducing unnecessary bureaucracy and creating systems that reward initiative, learning and meaningful outcomes rather than busyness.

About Louise

Louise Zawada is an executive coach, change strategist and leadership mentor based in Perth, Western Australia.

She works with senior leaders and executive teams navigating complex organisational change, helping them close the gap between strategy and execution by strengthening executive judgement, reducing leadership friction and improving the quality of conversations that drive performance.

Her work spans mining and resources, government, infrastructure and corporate organisations, where she coaches leaders to make better decisions under pressure, build trust through uncertainty and lead change with greater confidence and clarity.

Louise is the creator of the Leadership Friction framework and writes regularly on executive judgement, organisational legibility and the behavioural evidence that determines whether strategy becomes action.

If you're leading significant change and need a trusted thinking partner, connect with Louise or book a conversation.