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March 2, 2026
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Across our work with leadership teams over the past two years, a tension keeps surfacing in planning conversations. Executives acknowledge that their people are stretched. They see engagement data flattening or declining. They recognise that recent restructures or technology deployments haven't landed the way they expected. And yet, when budget decisions are made, the investment continues to flow toward systems, platforms, and structural change — with people capability treated as something that will follow.
What's changed in 2026 is that the evidence base for why it doesn't follow has become remarkably consistent.
Over the past twelve months, Deloitte, Gallup, DDI, Gartner, and McKinsey each published significant research on what drives team and organisational performance. They used different methodologies, surveyed different populations, and asked different questions. They arrived at the same place.
Deloitte's January 2026 study on high-performing teams surveyed nearly 1,400 professionals across industries. The differentiator between teams that consistently meet or exceed expectations and those that don't was not technology adoption, team structure, or process maturity. It was six human capabilities — curiosity, emotional intelligence, divergent thinking, informed agility, resilience, and connected teaming. The gaps were significant. Trust on high-performing teams sat at 65%, compared to 28% on others. Mutual respect: 72% versus 31%. Decision-making that considers diverse viewpoints: 55% versus 18%.
Gallup's State of the Global Workplace 2025 — covering around 250,000 employees across 160 countries — found global engagement had dropped to 21%, matching the low point during COVID. The primary driver was a decline in manager engagement. Gallup's central finding remains one of the most important in the field: 70% of the variance in team engagement is attributable to the direct manager.
DDI's Global Leadership Forecast, drawing on 11,000 leaders, reported that 71% are experiencing increased stress and 40% have considered stepping away from leadership to protect their wellbeing. Trust in immediate managers fell from 46% to 29% between 2022 and 2024.
Each of these findings, on its own, would warrant attention. Together, they describe a pattern that's difficult to set aside.
The challenge is not that organisations are unaware of the importance of their people. Most leadership teams would agree, in principle, that capability matters. The disconnect is between that principle and where resources are actually directed.
Deloitte's Tech Trends 2026 report found that 93% of organisational AI investment is allocated to technology infrastructure. Seven percent goes to people-related work — development, change support, capability building.
Gartner predicts that by the end of 2026, 20% of organisations will have used AI to flatten their structures, removing more than half of their middle management positions. The employee-to-manager ratio has already tripled in many organisations, from five to fifteen, between 2017 and 2023.
These are rational decisions when viewed through a cost and efficiency lens. They become less rational when placed alongside research showing that the direct manager is the single most significant factor in team engagement, and that the human capabilities Deloitte identified — not the technology — are what distinguish teams that perform from those that don't.
The global cost of this misalignment is not abstract. Gallup estimates $438 billion in lost productivity from disengagement in a single year. IDC projects that skills shortages will cost the global economy $5.5 trillion by the end of 2026.
There is a further layer to this that's worth examining. Even where organisations do invest in leadership and team development, the design of that investment often falls short of what the research says works.
Bersin's research found that fewer than 30% of leadership development programs produce sustained behaviour change. The majority generate awareness — participants leave with new frameworks, models, and language — but the shift doesn't hold once they return to the operating rhythm of their role.
McKinsey found that up to 40% of leaders fail within the first 18 months of a role transition, often because the complexity of what they're stepping into exceeds what their development prepared them for. Gartner reports that fewer than 20% of HR leaders believe they can effectively measure the business impact of their leadership development.
What we observe in practice aligns with these findings. Development that is designed as an event — a program, a workshop, a two-day offsite — tends to produce a temporary lift in confidence and connection. Development that is embedded in the work, reinforced over time, and connected to real performance outcomes tends to produce lasting shifts in how a leader or team operates.
The difference is structural, not motivational. It comes down to whether the development is designed around how behaviour actually changes — through practice, reflection, feedback, and accountability over time — or around how organisations prefer to buy it, which is typically as a contained event with a clear start and end date.
Across the organisations we work with — in government, infrastructure, corporate, and not-for-profit settings — the pattern is consistent. The teams that shift are the ones where three things are present.
First, there's a genuine baseline. Not an assumption about where the team is, but a diagnostic that surfaces how the team actually operates — where trust sits, where communication breaks down, where decision-making slows. Leaders are often surprised by the gap between how they perceive the team's functioning and what the data reveals. Deloitte's own study found that team leaders were significantly more likely than team members to believe they belonged to a high-performing team. That perception gap is common and consequential.
Second, the development work is connected to execution. It runs alongside the team's real work, not separate from it. The concepts are applied to actual decisions, actual friction, actual deadlines. This is where capability is built — not in the workshop, but in the thirty days after it.
Third, there's measurement that goes beyond satisfaction. Not just "did people find it useful" but "has the team's behaviour shifted in ways that affect performance." When that measurement exists, it changes the conversation. It turns development from a discretionary spend into an investment with a visible return.
The research published over the past twelve months presents an unusually unified position. Human capability — not technology, not structure — is the primary driver of team performance. Manager quality is the single largest lever for engagement. And the organisations extracting the most value from AI are the ones that invested in their people's ability to use it well, not simply in the tools themselves.
For leaders reviewing their investment priorities this year, the question worth asking may not be whether people development matters. Most would agree that it does. The more useful question is whether the current investment — in its design, its depth, and its proximity to real work — reflects what the evidence now clearly shows about how performance is actually built.
And if it doesn't, what would need to change for it to?
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