Is Your Organisation Team Customer or Team Employee? What Does the Data Say?

While a mere 21% of employees are engaged at work, most organisations still respond with customer-facing fixes rather than addressing engagement first. Engaged employees drive higher customer ratings, loyalty and profitability, meaning the sequence most businesses default to is backwards. Corporate Training programs in Australia develop managers and teams together, and help you close this gap.

Only 21% of Australian employees are currently engaged at work, according to Gallup’s State of the Global Workplace 2026 report – in line with the regional average, but a two-point drop on the prior three-year trend. Most organisations respond to numbers like that with a customer-facing fix: better service scripts, tighter Service Level Agreements, a new Customer Experience initiative. Almost none respond by asking whether the sequence is backwards.

Ian Hutchinson, author of People Glue, argues, “Your number one customers are your people. Look after employees first and then customers last.” It’s not a case against caring about customers. It’s a case about the correct order. And increasingly, the data backs him up.

The sequence problem – measured

Gallup’s long-running Q12 research, a meta-analysis spanning over 1,100 business units, found that companies in the top quartile for employee engagement outperform those in the bottom quartile by a median of 10% in customer ratings, 21% in profitability, and up to 59% in turnover (in low-turnover organisations). Separately, Gallup’s more recent workplace data shows highly engaged business units achieve 10% higher customer loyalty and 78% less absenteeism than disengaged ones.

The mechanism isn’t mysterious. Engaged employees show up consistently, care more about the quality of what they deliver and pass that state on to whoever they’re serving next, whether that’s a colleague or a customer. Disengagement travels the same path. You cannot train a front-line team to perform warmth and initiative that doesn’t exist anywhere else in the business.

What does disengagement cost Australian businesses?

The financial case for getting the sequence right is harder to ignore than the cultural one. The Australian HR Institute (AHRI) estimates that replacing an employee costs between 16% and 200% of their annual salary once recruitment, onboarding, lost productivity and the client-relationship disruption of the handover are factored in. Deloitte’s estimate sits in a similar range, at 1.5 to 2 times annual salary for a replaced employee.

Average turnover across Australian organisations currently sits around 14%, with AHRI reporting that many organisations are running well above 20%. For a business with 20 staff on average salaries, that turnover band alone can represent hundreds of thousands of dollars a year, before the cost of the skills gaps it leaves behind. AHRI’s own research links this directly to capability: 22% of Australian employers cite high turnover itself as a direct cause of further skills gaps, and there’s a measurable correlation between the size of an organisation’s skills gap and how fast people are leaving.

None of that shows up as a line item marked “customer experience.” It shows up as service inconsistency, in institutional knowledge walking out the door, and in the training and onboarding cycle starting over before the last one has paid for itself.

What ‘employees first’ looked like on the Eras Tour?

Taylor Swift’s recent Eras Tour offers an unusually public, unusually large-scale example of employee-first thinking backed by real investment rather than sentiment. At the close of the tour’s US leg in 2023, approximately 50 truck drivers who had hauled the tour’s stage and equipment across the country received a $100,000 bonus each.

Shomotion CEO Mike Scherkenbach, whose company handled the tour transport, noted that the industry standard for a bonus in that role typically sits between $5,000 and $10,000, which means that Swift’s bonus ran close to ten times the norm. By the time the tour wrapped globally in December 2024, total bonuses paid across the crew — dancers, caterers, sound and lighting technicians, riggers, security, wardrobe and more- reportedly reached around $197 million.

The detail worth borrowing isn’t the dollar figure most businesses will never be able to match. It’s the how: personal, specific, and tied to a genuine acknowledgement of what the work actually cost people – Months away from home, physically demanding conditions, long stretches out of contact with family. That’s the part that scales down to any size organisation, even without a touring budget behind it.

The more scalable version: investing in development, not just dollars

For most organisations, the realistic equivalent of Swift’s bonus isn’t a bonus at all; it’s professional development. LinkedIn’s Workplace Learning Report has consistently found that 94% of employees say they’d stay at a company longer if it simply invested in helping them learn, and that companies with strong internal mobility retain staff roughly twice as long as those without it (5.4 years versus 2.9). Development sends a different signal to a team than a one-off reward does: a bonus says thank you for what you did; a genuine investment in someone’s capability says we’re planning around you being here in three years.

That distinction is exactly why ‘employee first and customer first aren’t competing priorities. A well-developed manager who can plan workloads realistically, communicate clearly and give useful feedback is already doing most of the work of both retention and customer experience, because a team that isn’t stretched thin, unclear on expectations, or quietly disengaged is a team that shows up better for the customer on the other end, without needing to be told to.

Why L&D shouldn’t be the line item that flexes

There’s a reason so many businesses treat Learning & Development (L&D) as the first thing to trim when conditions tighten. It’s rarely protected the way compliance spend or super contributions are. It sits in the “nice to have” column, reviewed and cut before anything else is touched.

The data suggests that’s a false economy. Deloitte Access Economics estimated Australian businesses would spend around $8 billion on L&D in 2024, yet nearly half of businesses surveyed admitted their training budgets weren’t sized actually to close their skills gaps, and one in eight were planning to halve their L&D spend regardless. RMIT’s research on that same trend found the real cost of cutting: for every $1 pulled from an L&D budget, the business loses skills valued at $3.40 on average. It isn’t a saving so much as a deferred, larger loss.

Employees can see the gap too. In the same research, 70% of Australian employees said they wanted their employer to invest more in their learning and development, not less. For organisations with mature L&D programs, the going benchmark sits somewhere between 0.5% and 2% of revenue, or roughly $500 to $2,000 per employee a year, a range worth treating as a floor to protect rather than a ceiling to negotiate down whenever the budget gets tight.

How to tell what team your organisation is?

What leaders should do?

• Leaders should start by asking whether their next investment is going toward the customer or the person serving them, and default to the latter when the two compete for budget.
• Protect L&D spend the same way you’d protect any revenue-tied line item, not as the first thing cut when conditions tighten.
• Give managers the real skills to plan workloads, communicate clearly and develop their people, since that capability is what turns engagement data into results on both sides of the sequence.

The takeaway: Build the leadership capability that puts people first

Getting the sequence right – People before Process- isn’t solved with a single engagement survey or a one-off thank-you. It’s built the way any cultural shift is built. By equipping managers with the skills to plan workloads realistically, develop their people deliberately, and lead teams that genuinely feel looked after.

CTO’s Leadership & Management training and Customer Service training give your managers and teams the practical tools to close that gap, backed by over 30 years of experience delivering customised Professional Development programs across Australia.

Frequently Asked Questions

Does looking after employees first actually come at the expense of customers?

No, the research points the other way. Gallup’s engagement research links higher employee engagement to a median 10% lift in customer ratings and 10% higher customer loyalty, because engaged employees consistently deliver more consistent, higher-quality service.

What’s the real cost of high staff turnover in Australia?

Estimates vary by role and seniority, but AHRI puts the cost of replacing an employee at between 16% and 200% of their annual salary, while Deloitte estimates 1.5 to 2 times salary once recruitment, onboarding and lost productivity are included.

Do employees actually value professional development over pay or bonuses?

Development consistently ranks among the strongest retention levers available. LinkedIn’s research found 94% of employees would stay longer at a company that invested in their learning, and organisations with strong internal mobility retain staff roughly twice as long.

Is the Taylor Swift Eras Tour bonus a realistic benchmark for most businesses?

Not the dollar figure, no. What is transferable is the underlying principle: specific, personal, well-communicated investment in the people doing the work, rather than treating recognition as an afterthought once customer metrics are handled.