The Big-Stay Era: Develop or lose - Talent Insights 360

The Big-Stay Era: Develop or lose

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April 18, 2025

From the Great Resignation to the Big-Stay Era: The Critical Role of Learning and Development.

The tale of a conversation between a CFO and a CEO about investing in employee development has circulated in business circles for years. The CFO questions, “What happens if we invest in developing our people and they leave?” The CEO counters, “What happens if we don’t, and they stay?”

This dialogue, once a mere anecdote, has become a stark reality for many organizations today. In the wake of the Great Resignation, we’ve entered the Big-Stay era—an era where elevating learning and development is no longer optional but essential. Companies must act decisively to enhance their L&D strategies or risk facing severe stagnation in innovation and productivity. This shift demands that organizations not only retain their workforce but also continuously develop their skills to thrive in an ever-evolving business landscape.

Navigating the Double-Edged Sword of Low Turnover in Organizations

The initial decline in resignation rates, once viewed favourably by companies grappling with high turnover and escalating salaries, has introduced new complexities.

With companies now exceeding their budget allocations for salaries and benefits, leaders face tough decisions: delay key projects or reduce staff numbers, both of which could negatively impact employee morale.

Moreover, low turnover can lead to organizational stagnation, particularly as opportunities for internal mobility diminish. This situation heightens the importance of keeping top talent engaged and aligned with the company’s culture. It also emphasizes the necessity of actively discussing and planning career paths.

Conversely, a certain level of turnover can be beneficial. It opens up opportunities for high-performing employees to advance and allows companies to infuse new talent into their workforce, bringing fresh ideas and essential skills.

The "Build" talent strategy is becoming increasingly vital.

Learning and Development (L&D) is now a central topic in strategic discussions like never before.

With external hiring constraints, the “Build” approach to talent development is proving more essential than the alternatives of “Buy” or “Borrow.”

To address challenges in productivity and innovation and to support long-term objectives, organizations need to focus on investing in the development, upskilling, and career advancement opportunities for their employees.

Productivity as a Pillar of ESG: Driving Economic and Social Prosperity

Enhancing productivity within companies not only strengthens business performance but also contributes significantly to societal well-being. From an ESG (Environmental, Social, and Governance) perspective, improving productivity is crucial for economic stability and enhancing quality of life. For Canada, where productivity is essential to maintaining our standard of living, the stakes are exceptionally high.

Increased productivity leads to wealth and prosperity, fostering more substantial economic growth. This underscores the broader implications of corporate productivity gains, which benefit not just individual businesses but the entire community and economy at large.

In 2023, Canada experienced a national productivity decline of 2.2%, falling to $59.10 per hour worked—the most significant drop in 25 years, with the exception of the post-COVID-19 downturn in 2021. Measured as GDP per hour worked, this decline highlights the urgent need for productivity improvements.

Given the challenges of an aging population, energy transitions, supply chain reconfigurations, and inflated global balance sheets, enhancing productivity is now more critical than ever. It remains the most viable means to elevate living standards across the country.

Elevating Productivity Through Intangible Assets and Skills Development

Reason for Optimism and a Call to Action

There’s a growing sense of optimism about the potential of investing in intangible assets to spur innovation. Despite challenges such as higher inflation and interest rates, these conditions could lead to more robust demand and promote more efficient capital allocation, helping to avoid the pitfalls of excessive debt and inflated asset prices that have marred the last two decades.

Technological advancements, notably in AI and quantum computing, promise to transform the workplace rapidly. These technologies are poised to revolutionize productivity across various sectors by solving complex problems more efficiently.

Impact on Advanced Economies

Strategic investments in digitization, automation, and artificial intelligence could ignite new waves of productivity growth. By striving to return to pre-Great Financial Crisis productivity levels, advanced economies could see an increase of $1,500 to $8,000 in GDP per capita by 2030, according to the McKinsey Global Institute.

Overcoming Obstacles to Harness Productivity Gains

While capital investment in intangible assets and innovation is a critical first step, several challenges remain. These include scaling skills, issues with collateralization, and the recovery value of investments, which can impede the realization of productivity benefits.

Addressing and overcoming these skill barriers is essential for boosting productivity and harnessing the full benefits of our investments.

Financial Risks of Inefficiency in Organizations

The story remains relevant at organizational levels. Unfortunately, current accounting methods don’t directly reveal the impacts of skill gaps, low productivity, and disengagement—a topic for another day.

According to a McKinsey analysis, a mid-sized S&P 500 company could lose approximately $254 million annually due to diminished employee productivity. This substantial financial burden breaks down into specific areas of concern:

Lack of Skills: Accounts for a $116 million risk. It leads to a 22% reduction in productivity because employees need more job skills.
Lack of Engagement: Results in a $91 million risk. There’s a 6% decrease in productivity due to “presenteeism,” where employees are at work but not fully productive due to a lack of motivation and engagement.
Inefficiency: Accounts for $47 million in lost productivity. Each hour of unproductive labour costs companies $15,000 annually.

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