Australia has historically punched above its weight. Productive, hardworking, commercially creative. But something has shifted, and it has been shifting for longer than most people want to acknowledge.
Three decades without a significant recession did something to us. So did rising property values and insulated industries. Stability became comfortable. And, over time, comfortable became complacent.
Since 2016, Australia has had effectively zero productivity growth, and since 2022, it has turned negative. While Australia has stood still, the average American is 17 per cent more productive than they were in 2016 and 18 per cent wealthier in real terms. Labour productivity in the Australian economy fell by 0.6 per cent in the 2024–25 financial year. Productivity fell in eleven of our nineteen industries. Australia's economy has now had zero overall productivity growth for the last six years. If we had delivered our average pre-pandemic performance, Australia's productivity would be approximately 7 per cent higher than it is today.
That is not a short-term blip. That is a structural problem.
The conversation about productivity in Australia tends to focus on policy, investment, and technology adoption, all of which matter. But there is a dimension that gets far less attention: how organisations think about performance accountability and, critically, whom they choose to hire.
The comfortable choice
I have spent more than three decades placing senior executives. What I observe with increasing frequency is a pattern of defensive or down-hiring within Australian institutions.
When industries contract or feel threatened, people want to hold onto what they have. That is understandable. But it creates a predictable consequence: hiring decisions start to favour the known quantity over the right quantity. The person who will not challenge the status quo over the person who will improve it. The safe internal appointment over the external candidate who brings a different lens. Hiring for the role now, rather than what else this person can do over time
My view has always been straightforward. Executive search is not a cheap option. Retained search fees reflect the expectation of an outcome that justifies the investment. That means one thing: outstanding talent, every time. Not a shortlist of safe bets. Not a candidate who will keep the seat warm. The best person for the role, assessed with rigour, often needs to be nurtured or convinced to explore the opportunity. If that is not what a client is getting, they are not getting value. And frankly, neither is their business.
This matters because the down-hiring pattern is not just a cultural observation. It is a performance risk. And in financial services, it has contributed directly to the accountability gaps that regulators and shareholders are now confronting.
What happens to the people who do not fit that pattern
The best people do not stay in environments that undervalue them. They leave. They move to less bureaucratic, less political settings where they have genuine accountability, room to back themselves, and leaders hire them to make a difference.
High performers are not just leaving bad bosses. They are leaving organisations that cannot meet their own expectations. They want accountability that runs in every direction, up, across, and into the teams they lead. They want to contribute something that matters, not just fill a seat. When the environment cannot offer that, when leadership is not working in the same direction, when progress is opaque, or when the people around them are not being held to the same standard, they leave. Quietly.
This is not primarily a retention problem. It is a leadership and culture problem that manifests as a retention problem. When an organisation consistently hires below itself, whether due to risk aversion, a preference for loyalty over capability, or a reluctance to be challenged, the effect compounds. Mediocrity becomes the gravitational centre. Exceptional people exit. The organisation gradually becomes less capable of recognising what constitutes great.
Changing behaviour requires changing incentives.
Something I learned early in my career: if you want to change behaviour, you need to change what people are rewarded for. Not the values statement on the wall. Not the leadership workshop. The thing that actually lands in someone's bank account.
ANZ's recent decision to tie manager bonuses directly to cultural performance is worth noting for exactly this reason. The bank is overhauling how thousands of managers are paid, linking bonuses directly to behaviour and cultural change through a new five-point performance rating system that explicitly connects individual performance, conduct, and rewards to the broader bank's performance.
Whether or not ANZ executes this well is a separate question. The structural intent is sound. They are attempting to close the gap between stated expectations and measured consequences. The clarity being pushed for, people knowing what to do and what not to do, is precisely what most Australian organisations are missing when it comes to how they think about talent.
The metric that is rarely measured
This is personal for me. The reason I have always held the line on delivering only outstanding talent is precisely that I understand what the cost of a wrong hire, or a deliberately safe hire, does to an organisation over time.
Performance frameworks in Australian financial services reward revenue, risk management, and increasingly, conduct. Those are the right things to measure. But there is one dimension that now needs to be front of mind : how leaders think about hiring, developing, and retaining exceptional talent.
An executive who consistently hires strong people, develops them, and creates environments where they do their best work is delivering significant long-term value. When executives down-hire or defensively hire, surround themselves with people who will not challenge them, and lose high performers to competitors, they're destroying long-term value. Most incentive structures cannot distinguish between these approaches.
Until organisations start measuring the quality of talent decisions alongside financial outcomes, the incentive to build talent capability and pipelines within remains weak. The bonus system will continue to reward what it has always rewarded. The pattern will continue.
What this asks
For boards, C-Suite, and leaders, the question is whether they are willing to hold leadership accountable not just for what was delivered this year, but for the organisation's capability to deliver results in three to five years.
That means asking harder questions of CEOs and their direct reports. Whom are you hiring and why? What is the quality and trajectory of the people coming in? Where are your best people going when they leave, and why are they leaving? What does your leadership pipeline look like?. And in an environment where Australia's productivity problem is now documented, structural, and getting worse, these questions may be well overdue.
The organisations that start taking talent quality seriously as a performance metric, not just a cultural aspiration, will compound an advantage. The ones that continue to rely on comfortable hiring and hope that incentives remain misaligned enough that no one notices will find the gap closes on them faster than they expect.
The world is not waiting for Australia to get comfortable again.
Sourcing notes: Productivity data sourced from the Australian Industry Group (February 2026), McKinsey Global Institute (July 2025), and the Centre for Independent Studies (August 2025). ANZ information sourced from public reporting on CEO Nuno Matos's stated strategy. Talent retention observations sourced from NW People (February 2026). Analysis, professional observations, and the talent metric argument are the author's own.