🔵Interpersonal Skills and Productivity Report

METHODOLOGY

Australian Interpersonal Skills and Productivity Report (proposed)

The proposed report could serve as a sister publication to existing studies on technical and hard skills, focusing on the shortage of effective human skills that drive team and organisational behaviour.

Report on critical role of interpersonal skills on business success

Ive got all the tools I need to succeed. Cropped portrait of an attractive young female construction worker working on site.

Human skills, or soft skills, play a critical role in team performance, collaboration, and overall business success. The way team members interact has a prominent hand in productivity, workplace culture, and, ultimately, the broader economic landscape. While significant research has been conducted on individual skill development, there is a notable gap in reporting specific to Australia that examines how teams manage psychological safety and other human skill competencies.

Key outcomes of the proposed report

This report could help bridge this gap by providing a comprehensive analysis of the current state of human skills within Australian businesses (as a whole or across specific sectors), identifying key challenges, and offering actionable recommendations for improvement.

Human skills such as curiosity, innovative thinking, empathy, active listening, and collaborative thinking have often been of secondary concern due to (perceived) difficulties in measurement and correlation with tangible business outcomes. However, the long-term economic and productivity benefits of strong human skills are undeniable, especially in light of Australia's productivity reaching a 60-year low.

A dedicated report could complement existing hard skills reports and/or stand out on its own right, showing how both skill sets are equally essential. By linking human skills development to economic performance, this report could inform government policies, industry standards, and corporate strategies, ensuring a holistic approach to workforce improvement.

It can compliment projects and campaigns instituted by state and federal governments, and provide a 'blueprint' for local innovation and business districts.

The economic cost of poor human skills management

Productivity in Australia has hit a record 60-year low, and a currently flatlining economy based on many metrics often means that investment in people stays low. This is however, what drives successful economies, and to maintain our historic levels of success this century, we are going to need to turn our attention to our people, and let that sit equally alongside other important issues.

Productivity growth is at a 60-year low

"…there’s no time to waste in stimulating Australian output."

Hypothesis One: "Poorly managed human skills reduce the return on investment for businesses."

Without strong interpersonal skills, employees may operate at a reduced capacity, limiting innovation and collaboration.

The financial impact may include:
• Increased turnover due to workplace dissatisfaction.
• Lost productivity from unresolved conflicts and miscommunication.
• Decreased innovation from low psychological safety.
• Reduced workforce engagement leading to diminished performance.

Implications for the Australian economy

• Rising mental health-related workplace compensation claims.
• Stagnant economic growth due to ineffective team collaboration.
• Reduced global competitiveness due to workforce inefficiencies.

66%

of jobs will require human skills by 2030 (Deloitte Access Economics & DeakinCo). ▸

14.5%

increased employee work performance in the selected companies because of their employees’ acquisition of soft skills (European Journal of Training and Development). ▸

Poor communication

leads to project failures, lost sales, and low morale (The Economist Intelligence Unit). ▸

250%

return on investment within eight months of completion of in-factory soft skills training, based on increased revenue compared to program costs. (MIT Sloan Management) ▸

Implications for the Australian economy

Despite clear benefits, organisations face several obstacles in addressing human skills gaps:
• Limited time and resources for training.
• Short-term business priorities overshadowing long-term workforce development.
• Resistance from managers who lack human skills themselves.
• The challenge of quantifying human skills and linking them to financial performance (it takes work, but very doable).
• Lack of standardised training programs, leading to inconsistency.
• Skepticism toward human skills due to their perceived intangibility.

Business impact of the report

Creating a business-focused report on human skills offers several benefits



Synthesising research

To distill complex academic findings into an accessible format for business leaders.

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Providing an actionable blueprint

to highlight practical strategies for human skills development and implementation.

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Building a compelling case

to show evidence-based insights would demonstrate the ROI of human skills investment.

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Informing policymakers

to support government and industry leaders in designing workforce improvement policies.

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Guiding industry standards

to help bridge the gap between theory and business application, driving workforce capability improvements

Soft skills is an HR plaything, therefore, not impactful on the bottom line

This has done nothing to curb the rising number of psychological safety or mental health-related WorkCover cases. As has been seen in NSW around restructuring this system has lead to an uproar among mental health professionals that it will be a huge hurdle to lodge a claim, and bullying will be given free reign again.

Teams are doing fine and business culture is generally great

Perception of a ‘fine culture’ often doesn’t match measurable outcomes like retention, engagement, or innovation.

HBR: “Most executives don’t understand their own company culture. Leaders consistently overrate it.”
(Source: “What Do We Actually Know About Corporate Culture?” HBR, 2021)
Gartner: 69% of employees say their culture is not consistent with what leadership claims.
(Source: Gartner, “Culture Is the Key to Organizational Success,” 2020)

Cultural complacency is one of the biggest blind spots for leaders. It feels fine… until the market shifts or talent walks.

Edgar Schein (MIT / HBR contributor): “Culture is what you don’t notice until you hit a wall.”
(Schein's work on organizational culture is foundational and often cited in HBR pieces.)
Deloitte: 94% of executives and 88% of employees believe a distinct workplace culture is important to business success — but only 12% of companies believe they are driving the right culture.
(Deloitte Human Capital Trends Report, 2016 and follow-ups)

Since this isn't a priority for government and industry bodies, it can be ignored

It has become increasingly evident that human skills affect every team and every product, service and strategy. Ignoring their significance - whether due to perceived difficulty in measuring an ‘intangible' or because they are deemed secondary to technical (hard) skills - does not negate their real-world impact.

Due to changes in more remote work and greater AI, soft skills has less of an effect on productivity

It’s a common assumption about these both. However, remote work and AI make soft skills more necessary, not less. And as AI removes repetitive tasks, the remaining work is more human: collaboration, leadership, creativity. Those require strong soft skills. If soft skills didn’t matter in remote and AI-heavy environments, high-performance remote teams would be easy. But they aren’t — because they depend on trust, clarity, psychological safety, and initiative. Technology changes what we work on — but soft skills determine how well we work together. They aren’t becoming obsolete — they’re becoming the differentiator.

“As automation and AI eliminate routine tasks, uniquely human skills — empathy, communication, adaptability — are what drive performance.”
(HBR, "The Most Important Soft Skills for Remote Work", 2021)

“Soft skills such as emotional intelligence, leadership, and collaboration are increasing in demand — especially in hybrid and AI-enabled workplaces.”
(Source: The future of work after COVID-19, 2021)

“Soft skills will represent two-thirds of all jobs by 2030. With AI doing more technical work, human capabilities are the new competitive edge.”
(Source: Deloitte Access Economics, Soft Skills for Business Success)

“Top 10 job skills for the future (2025) include: resilience, emotional intelligence, leadership, and active learning.”
(Source: WEF Future of Jobs Report)

Gallup: Managers with high emotional intelligence retain employees 40% longer.

Microsoft 2022 Report: “Employees cite poor communication and unclear priorities as top barriers to productivity — not tech overload.”

Conclusion

Business NSW can help redefine how businesses and organsations approach team dynamics and human skills development.
This report could very well set a new benchmark, which would equip businesses and governments with a clear framework to implement and measure the impact of human skills programs while demonstrating tangible benefits - enhanced innovation, a stronger workplace culture, and improved business outcomes.
It presents a critical opportunity to analyse the role of human skills in workplace effectiveness and economic growth, providing a structured approach for assessment and improvement. By doing so, businesses and policymakers can take meaningful steps to strengthen workforce performance and innovative processes, and drive economic prosperity.