63% of Indian Firms Report Decline in Employee Discretionary Effort, Study Finds

A recent study by Great Place To Work India has identified a trend it terms 'effort recession', where employees are less willing to go beyond their basic job requirements. The study, based on a survey of 380 Indian organisations, found that 63% of companies experienced a decline in discretionary effort—work that is not mandated but reflects extra commitment, such as staying late or solving problems outside one's role.

According to the study, the average drop in discretionary effort was 5%. The decline is most pronounced in the retail sector, where 88% of companies reported a decrease, followed by IT and professional services at 77%, and construction and real estate at 71%. Financial services saw a lower rate of 62%, while manufacturing proved most resilient, with only 44% of companies reporting a decline and an average drop of just 3%.

The report suggests that sectors with high employee turnover and routine tasks are more affected, whereas those requiring specialised skills and longer tenures maintain steadier effort levels. The key factor influencing discretionary effort appears to be leadership behaviour. The study found that when employees perceive their leaders as genuinely caring, discretionary effort reaches 99%; when that care is absent, it drops to 29%—a 70-point difference. Similarly, inspiration from leadership correlates with 98% effort, falling to 32% when lacking.

Interestingly, training and development showed a smaller impact, with a 25-point gap between high and low effort. The report indicates that companies focusing on learning budgets or career progression may be addressing the wrong issue; instead, daily human connection from managers is critical.

The study also highlights a generational shift, with Gen Z now comprising 26% of India's workforce, nearly double their share in 2023. This change, combined with AI disruption, challenges leadership: 58% of chief human resources officers reported struggling to manage both generational change and AI transformation, and half admitted they do not fully understand what motivates younger employees.

The findings suggest that the decline in discretionary effort is not due to employees caring less about work, but rather a perception that leaders care less about them.