From tariffs to tight labour markets, the economic outlook is complex. But there’s one lever every organisation can pull today: stronger leadership.
At the Institute of Managers and Leaders, we see first-hand the impact leadership has on productivity. The recent Productivity Summit in Canberra highlighted the structural challenges facing our economy. But as leaders, we don’t need to wait for policy change to make an impact.
I had the privilege of joining our Corporate Members recently for an economic update from Saul Eslake FIML, one of Australia’s most respected economists. His presentation was a timely reminder that productivity isn’t just an abstract policy challenge, it’s a lived reality for every organisation, every leader, and every team.
The headlines are sobering. Global headwinds, from escalating US tariffs to a slowing Chinese economy, are reshaping the environment in which our businesses operate. While these forces are beyond any single leader’s control, they set the context in which leadership becomes even more critical.
At home, inflation has shown signs of moderating, while interest rates have eased. Yet uncertainty remains, and we continue to grapple with a persistent productivity slump. Productivity is often discussed in terms of capital flows, industry shifts, or government policy. But at its heart, it’s about people: how they’re led, how they collaborate, and whether they’re equipped and motivated to perform at their best.
Saul’s analysis highlighted that while economic policy is important, the immediate levers for productivity are found within organisations. Leadership shapes whether teams simply cope with change or find ways to thrive.
Saul reminded us of three levers to lift productivity, within firms, across industries, and at the economy-wide level. While economists and policymakers focus on the latter two, the first and most immediate lever lies firmly in the hands of leaders:
Within firms: Upskilling managers and leaders is the most direct way to unlock productivity. Leaders who communicate clearly, provide clarity, motivation, and trust create the conditions for engagement, innovation, and sustained performance.
Across industries: Productivity improves when labour and capital move from underperforming to stronger-performing firms. Leaders can drive this by sharing best practices, mentoring talent, and fostering operational excellence.
Economy-wide: Shifting resources toward higher-productivity industries can boost national performance. While this depends on policy and investment, organisational leaders who embrace innovation and strategic thinking play a crucial role in realising these gains on the ground.
A call to action for leaders
Leadership capability matters, not just in theory, but in practice, every day. It’s what turns economic insight into operational reality. It determines whether tighter budgets stifle teams or spark creativity, whether challenges are survived or turned into opportunities for growth.
As leaders, we may not influence global tariffs or government policy. But we can influence how our people experience work. By investing in leadership, providing clarity, and fostering a culture of trust and accountability, we can unlock the discretionary effort that drives performance.
Australia’s productivity challenge is real. But it’s not only an economic equation, it’s a leadership one. Every leader, in every sector, has a role to play in turning the tide. Equip yourself with the skills to make a real difference with our leadership courses and on-demand webinar resources.
