As organisations grapple with declining engagement, many are still relying on outdated ways of measuring performance. Bonuses, targets and outputs fail to capture what truly drives people to perform at their best.
In reality, performance is shaped less by incentives and more by how people feel at work. When employees feel they belong, that they matter and that they are growing, performance follows. When these elements are missing, people don’t necessarily leave, but they disengage.
Insights from the Global Workplace Happiness Report 2026, drawing on more than 1.9 million data points from over 80,000 employees across 115 countries, support this. The report shows that belonging, inspiration and personal growth are among the strongest drivers of workplace happiness – not pay, title or process.
The business case for belonging
In my experience, this plays out every day. Through the Happiness Co, we see performance improve when people feel connected to themselves, to others, and to something bigger than their role.
When people feel they belong, they collaborate more. When they feel they matter, they contribute more. When they are growing, they stay.
But when those elements are missing, the opposite happens. People withdraw. They do the minimum. Culture might look fine on paper, but it’s not felt day to day.
One of the most overlooked drivers here is visibility. Without visibility, there is no validation. People need to be seen, heard and recognised to feel that they matter. When that doesn’t happen, disengagement is almost inevitable.
Performance rarely comes from isolated individuals. It is shaped by the quality of relationships around them. Strong managerial relationships lift performance and sales outcomes, while high levels of belonging are linked to higher performance and lower turnover. At scale, these effects translate into meaningful business outcomes.
Australia’s connection challenge
The World Happiness Report 2026 shows Australia has slipped in global rankings when it comes to happiness, connection and belonging, alongside rising loneliness and social disconnection.
Globally, the data shows that in North America and Western Europe, young people are significantly less happy than they were 15 years ago – a period that has coincided with a sharp rise in social media use. While the causes are complex, the pattern is clear: meaningful, day-to-day connection is declining and loneliness is increasing.
In Australia, workplaces sit at the centre of this shift because, for many people, work is their primary source of interaction, identity and purpose. When that environment lacks belonging, the effects extend beyond the organisation.
This sits within a broader mental health trend. In Australia, around one in five people experience a mental health condition each year, with anxiety and depression among the most common.
Suicide also remains a significant issue, with around nine lives lost every day. Increasingly, loneliness is being recognised as a key contributing factor. Research shows it is strongly linked to higher rates of anxiety, depression and suicidal behaviour, reinforcing the importance of social connection in everyday life.
Identity at work matters more than we often acknowledge. People derive a sense of who they are from what they do. When they don’t feel valued or recognised, it contributes not just to disengagement, but to a broader sense of isolation.
The flexibility paradox
At the same time, the way we work has changed, particularly since 2020. Working from home has improved efficiency for many people, but it has also reduced something fundamental to us as humans: connection.
Culture is not built on the walls, it’s built in the halls – in the small, everyday interactions that create trust, familiarity and shared experience.
When we remove those interactions, we risk removing the foundation of belonging. It’s hard to feel that you matter to someone who doesn’t really know you. It’s hard to grow when you’re not learning alongside others.
This doesn’t mean returning to rigid office models. The answer is not binary – it’s not office versus remote, it’s about flexibility.
True flexibility is about balancing efficiency with connection. It’s about finding ways of working that allow people to perform at their best while still feeling part of something.
The risk comes when convenience becomes the priority. While convenience can improve short-term efficiency, over time it can erode meaning, connection and culture. That’s a trade-off many organisations are only beginning to understand.
Rethinking performance and leadership
This requires a shift in how leaders think about performance. Too often, the focus is on results without helping employees understand what they’re working towards and why.
The reason behind the work is what creates belonging. I point to DHL as an example. On the surface, it’s a business built on efficiency – moving parcels from A to B. But internally, the focus is on something more meaningful, which is delivering people’s important packages.
That shift in perspective reinforces that each person in the company, regardless of their position, is contributing to something important. Results create efficiency, but reasons create belonging – and it’s belonging that drives sustained performance.
If leaders want better outcomes, they need to focus on why people come to work, not just what they produce when they’re there. That starts with mindset. Leaders must prioritise their approach to belonging, not just the optics of efficiency. A strong balance sheet doesn’t always reflect a healthy culture.
The next step is measurement. Traditional KPIs still matter, but they are no longer sufficient on their own. Organisations need to expand how they define success to include belonging, validation and growth. These may seem intangible, but the signals are clear: how people speak about the organisation when leaders aren’t in the room, whether they feel seen and valued, and whether their work feels meaningful.
Productivity also needs to be reframed. People feel most productive when they are motivated, informed and supported. Team enjoyment, collaboration and strong relationships are among the strongest predictors of performance.
We are at a point where the way we work is changing faster than the way we think about work. As we’ve seen with social media, convenience doesn’t always lead to connection. The workplace risks following the same path if we’re not intentional.
The organisations that will perform best in the next decade won’t just be the most efficient – they will be the most connected.
In the end, people don’t give their best to systems. They give their best to environments where they feel they belong, where they know they matter, and where they can see themselves growing.
