Disengaged workers cost New Zealand businesses billions of dollars in lost productivity each year. Some are stressed or overwhelmed, while others lack the resources or motivation to do more than the minimum.
Small and medium businesses often rely on perks, incentives and, increasingly, technology as the answers to higher productivity. Yet, the solution may be more fundamental – coming not from the business itself but from a leader who can maximise buy-in.
Leadership expert Kylie Paatsch believes connection is the true driver of workplace productivity, particularly in SMEs. “In small businesses, you often can’t compete with salary, so connection and culture is really, really important,” she says. “Human beings all want to feel like we’ve got a place that we belong, somewhere that we feel valued, somewhere that we matter.”
In her book The Connect Effect, Paatsch argues that the secret to higher performance is not pushing people harder; it’s forging smarter connections – and therefore a stronger culture – through trust, accountability and ownership.
Connection Is Key To Purpose And Productivity
Paatsch often meets small and medium business owners who view culture and connection as a nice-to-have. She understands the temptation to prioritise the more pressing and tangible aspects of running a business, but insists that is a mistake.
“As a small business owner, you get so caught up working in the business, and if you do make time to work on the business, often it’s not on people,” she says. “You’ll think about things like marketing or finances but don’t stop to think, okay, where are my people at? What’s working for them? What’s not working for them? What feedback might they need? What conversations might I need to have? How can I support them?”
Paatsch points out that if leaders aren’t asking themselves these questions, they’re not asking their staff either – and those staff will have noticed. “When they feel like a number or a resource or a transaction, they’ll just come in, do their work, do the bare minimum. They won’t go above and beyond,” she explains.
As the situation compounds, problems go unreported and initiative disappears. “When people don’t feel seen, heard and understood – which is essentially what connection is about – they don’t feel safe, and they don’t feel like they belong, so they hold back,” she says. While the impact of an employee ‘quiet quitting‘ can be absorbed in large business, one person holding back in a team of 5 or 10 can affect everyone’s performance. A resignation is even more damaging, considering it can cost a third of a worker’s salary to replace them.
The Assumption Trap That Kills Performance
One of the most common mistakes Paatsch sees is owners who appear to take employees for granted. “We assume that people know they’re valued because we pay them or we say thank you occasionally, but not everybody’s motivated by that,” she says.
That assumption creates a gap between what leaders think they are communicating and what employees actually experience. Paatsch points to a framework based on Harvard research that breaks down connection essentials: “Everybody has four basic rights they should get at work: number 1, know what’s expected of them; number 2, know what they’re doing well; number 3, know what they’re not doing so well; and then, have a collaborative conversation where you come up with a development plan.”
She says clarity removes the ambiguity that stifles productivity in small businesses where roles are fluid and expectations can go unstated. Discussions don’t need to be formal performance reviews, but should be diarised. “We think because we’ve had a conversation with someone at their desk or in the hallway or in the kitchen that we’re having one-on-one conversations with them, but we’re not,” Paatsch explains. “I think it’s really, really important to schedule regular time that’s purposeful and outcome-driven.”
Workers Need A Boss, Not A Mate
But when chatting with employees, Paatsch says an important distinction must be made between connection and friendship. She notes the desire to be liked is natural, especially in small and medium businesses where employers and employees work shoulder-to-shoulder. But she warns running the business will be harder if the lines between professional and personal relationships are blurred.
“If you are not being clear on expectations, you’re not challenging your people, if you’re not holding them to account, you’re not leaning in and having some of those uncomfortable and difficult conversations… you very rarely shift the dial,” she explains. “You might get some sort of loyalty, but you won’t get respect and you won’t get the levels of performance that you would like.”
Paatsch believes tough conversations are necessary to keep people accountable, but they must feel connected to a respected leader for the message to land. She says a phrase borrowed from parenting – ‘connect to correct’ – applies equally to adults.
“When you actually connect with someone before you correct, you’re more likely to get a shift in behaviour, in thinking. People get on board with you. They’ll go on the journey with you,” she argues.
She acknowledges that time-poor business owners may baulk at the idea but she frames connection-building conversations as an investment. “It can simply be validating them and saying, ‘I can see that that was really frustrating or annoying for you. Do you want to talk about it?’” she suggests. “We don’t have to do a lot for other people to feel like, ‘Oh, you actually see me. You get me.’”
How to Build Connection That Drives Results
For small business leaders wanting to better connect with their employees, Paatsch offers a framework with three pillars: Know Them, Show Them and Grow Them. None requires a corporate retreat or a large budget, but may benefit productivity and retention.
Know Them: start with observation and curiosity
Within small teams, the people who are helping an owner achieve their business dream should not be strangers, Paatsch says. “Spend some time noticing what’s important to them, what they might be experiencing and then ask some questions around it,” she suggests. “Never underestimate how powerful it can be to get curious and ask questions rather than just dictate or talk all the time. Those small things can really make a difference.”
Understanding an employee’s motivations, their preferred working style and what keeps them up at night gives leaders the insight to deploy people where they will be most effective.
Show Them: small gestures as signs of care
Effortless, everyday interactions can form the basis of genuine connection. “I don’t think we can ever underestimate the impact of things like ‘How did the Cats go on the weekend?’ Or, ‘I was at the park the other day and I saw a schnauzer that looked like yours,’” Paatsch notes. “They don’t have to be big things.”
She adds that workers are less likely to go above and beyond for a business if their sacrifice is not recognised. “I always used to do a little thank you card at the end of the financial year for partners or family members to say thank you for letting mum or dad or their partner come to work and putting in that extra effort,” she recalls, “and, oh my goodness, the impact that that had was huge.”
Grow Them: coach people to shared success
The final pillar, ‘Grow Them,’ involves a habit that directly undermines productivity in small teams: the owner who solves every problem themselves. “Instead of jumping in and fixing problems all the time and taking over, you actually hold back and ask others to do things and see if they can do them,” Paatsch advises. “You take more of a coach-like approach.”
Coaching also builds capability across the team, which means more problems can be solved faster without bottlenecking through the owner. Paatsch learned this early in her career from Graham Turner, CEO of Flight Centre Travel Group, whose goal was to see people walk away as “better business people and better people in life.”
“When you are a small business owner, you have the opportunity to have that sort of impact on people, because you are working closely with them, particularly younger people coming in,” Paatsch says. “It might be one or two things you say or do that they’ll remember for a really long time.”
And, she adds, the investment is generally returned. “They’ll treat you like family if you treat them like family, and they’ll commit and give that loyalty and all those other things that go with it.”
