Your Organisation Is Demanding More From Its People While Investing Less in Them. The Math Does Not Work.

Let us be precise about what is happening. Seventy-seven percent of CEOs are currently pursuing cost-efficiency measures at the same time as they are articulating ambitious growth targets. Eighteen percent say they will actively decrease investment in people and culture development in 2026. And simultaneously, only forty-three percent of employees believe that their organisational culture helps them succeed at work.

These three numbers belong in the same sentence. They describe the same phenomenon from three different vantage points: the strategic posture of leadership, the investment decision that follows from it, and the experience of the workforce that absorbs both. Together they describe an organisation that is asking its people to produce more while building less of the environment that makes production possible. It is a business model. And like all business models, it has a ceiling — a point at which the withdrawal exceeds what the account holds. Most organisations are approaching that ceiling faster than their leadership has recognised.

The productivity agenda is not new. What is new is the environment in which it is being pursued. In 2026, organisations are navigating AI adoption, return-to-office recalibration, role redesign, and continuous structural change — all simultaneously, all at pace, all on workforces that are carrying the residue of four years of disruption that was never fully processed. Asking those workforces to be more productive in this environment, while reducing the investment in the conditions that make sustained productivity possible, is not a growth strategy. It is a drawdown. And drawdowns that are not replenished eventually produce the one outcome that no productivity agenda can survive: the departure of the people who were making the numbers work.

The mechanism by which this happens is worth understanding precisely, because it is not dramatic. It does not announce itself. It does not produce a crisis event that the organisation can point to and respond to. It produces a gradual, diffuse diminishment of the discretionary effort that sits above the contractual minimum — the effort that people choose to give because they believe in what they are doing and believe the organisation believes in them.

Discretionary effort is not measured. It does not appear on a performance management dashboard. It is not visible in attendance data or meeting completion rates. But it is what separates an organisation where people are working from one where people are performing. And it is the first thing to contract when the implicit contract between the organisation and its employees begins to feel one-sided.

Gartner's research on culture and performance is specific about what drives this contraction. It is not primarily pay, though pay matters. It is not primarily workload, though workload matters. The most consistent driver of culture-related disengagement is the gap between what the organisation communicates about its values — what it says it stands for, how it says it treats its people — and what employees actually experience in the texture of their working day. When leaders talk about investing in people and then reduce the L&D budget. When the culture deck celebrates psychological safety and the performance review process punishes honest assessment. When the all-hands meeting promises transparency and the restructuring announcement arrives without context or explanation. Each of these gaps does not just frustrate employees. It teaches them what the organisation actually values. And once that lesson is learned, it is very difficult to unteach.

The SugarCRM case that Gartner documents is worth examining not because it is exotic but because it is instructive about what actually moves culture. SugarCRM's CHRO faced a productivity culture crisis and responded with something that defied the instinct to programme and communicate their way out of it. They did three things. They identified, through observation rather than survey, which employee behaviours were actually driving the outcomes the organisation needed. They brought employees into the definition of those behaviours — not to tick a co-creation box, but because they understood that the people who do the work understand its mechanics better than anyone observing it from above. And they empowered employees to identify their own barriers to productivity and propose solutions, treating them as the primary experts on what was getting in the way of the work they were trying to do.

The result was not a new culture programme. It was a recalibration of the relationship between the organisation and its workforce — a shift from the organisation telling employees what to value toward a genuine negotiation of what productivity meant in practice, in this organisation, in this moment. The culture became something people had participated in defining rather than something that had been done to them. The difference in engagement was measurable and material.

What this case demonstrates — and what the broader data supports — is that the cost of culture investment is not primarily financial. The most effective culture interventions are not the most expensive ones. They are the ones that treat employees as intelligent adults who have genuine insight into what is working and what is not, and who will respond with commitment when that insight is genuinely sought and genuinely acted upon.

The organisations that are getting this right in 2026 are not those with the largest people development budgets. They are those whose leaders have made the connection between cultural health and commercial performance clearly enough that it changes how they think about investment decisions. They understand that culture is not a benefit programme that can be scaled back when margins are under pressure. It is the operating system that determines whether the growth ambitions being articulated in the boardroom have any real prospect of being delivered by the organisation below it.

For Indian organisations, the pressure points in this dynamic have particular specificity. The return-to-office debate is not resolved — it is suppressed. In many mid-market companies, RTO mandates have been implemented without the collaborative process or the transparent reasoning that would allow employees to engage with them as adults rather than receiving them as edicts. The L&D investment that was one of the first casualties of post-pandemic cost rationalisation has not been restored in most organisations, even as the demand on employees to upskill for AI, new systems, and new ways of working has accelerated. The performance management conversation — what is expected, how it will be assessed, what the consequences of delivery and non-delivery are — remains one of the most poorly executed people processes in the majority of Indian companies.

Each of these is a withdrawal from the discretionary effort account. Each of them, individually, is manageable. Together, they describe a workforce that is increasingly performing to contract rather than to capacity.

The leadership question is not whether culture matters. That argument is settled. The question is whether the connection between cultural health and financial performance is understood clearly enough to survive the pressure of a cost-efficiency cycle. Whether the CHRO has the authority and the evidence to make that case at the table where investment decisions are made. Whether the organisation has the measurement infrastructure to see the culture gap before it manifests in attrition data — which is always a lagging indicator, always expensive, and always too late to prevent the specific people who leave from having already left.

The math of the productivity agenda without the people investment does not work. Not because it is morally wrong, though it may be. But because it assumes that commitment is a fixed input that does not diminish when the conditions that generate it are systematically withdrawn. It is not. And the organisations that have already discovered this — through resignation spikes, through engagement score collapse, through the quiet departure of the people who had been carrying the most weight — have paid a tuition fee that was considerably higher than the investment that might have prevented it.

Culture is not a programme. It is not an initiative. It is the accumulated consequence of every decision the organisation makes about how it treats its people, how it keeps its promises, and whether what it says it values is visible in what it actually does. The cost of getting it wrong is not paid once. It is paid continuously, in the currency of the discretionary effort that walks out of the building every time an employee decides that the account has run too low to justify the deposit.