By Christine Medrano – Managing Director and Founder, 3Minds Consulting Group
Listen to the blog narrated by Christine Medrano here.
I’m very lucky to have the capacity to work in both the not-for-profit and corporate spaces, often supporting organisations with growth and development. One of the areas I’ve noticed starting to decrease in interest, though, is staff and leadership development.
Usually, we get quite a few calls from organisations wanting to develop their staff so they can keep them, grow them, build their capability and help them move onto the next stage. But lately, I’ve started wondering if there is a shift happening.
Is this in some way connected to AI? Are organisations starting to invest less in developing people because they are instead looking to AI to supplement what their staff are not providing? Or is it something bigger?
If AI is replacing staff, what risk does that create? And if it is bigger, what is it then?
Because at the same time, we are seeing what feels like a constant cycle of redundancies, restructures, reframing positions and shifting roles. AI is increasingly part of that conversation, but I’m not convinced AI is the whole story. Roles change, responsibilities are redistributed, positions disappear, and then sometimes, somewhere down the track, there is a realisation that actually, we still need someone to do that work.
Perhaps we needed the right person in the role. Perhaps we needed to invest a little more in the person who was already there to get more from them. Or, and this is one of the pricklier ideas, perhaps we need to look at our own professional development too.
What if some of this stems from the leadership level? We are asking staff to adapt, use new technology, work differently, do more with less and keep developing, but are the people leading them doing the same? When was the last time you actually invested in your own leadership development, changed the way you manage people or had someone challenge the way you are doing things?
I understand why development might be taking a back seat. Income is under pressure, overheads are increasing and organisations are looking everywhere for savings. Training, coaching and professional development are easy things to defer because the cost is right there in front of you. AI also offers a very attractive proposition: reduce costs, increase productivity and potentially do more with fewer people.
But are we doing the full cost-benefit analysis?
What did the restructure cost? What did the redundancy cost? What does it cost to recruit again, onboard again, train again and wait for the new person to understand the organisation, the role, the relationships and all of the things the previous person already knew?
Interestingly, the Australian HR Institute’s 2026 Managing the 5Rs report found that Australian employers estimate the average cost of replacing one employee at around $28,500. Around two-thirds of organisations had also undertaken at least one significant reorganisation in the previous three years.
$28,500 to replace one employee.
That makes the cost of a coaching program, some leadership development or investing some time in supporting the person already there look a little different.
There is almost a recycling element to staff at the moment. We restructure, remove positions, redistribute the work, expect the people who remain to absorb more and then, sometimes, create another position because we realise we still need the capability.
So was it really cheaper?
And I am not suggesting that we should keep someone who is clearly wrong for a role simply because replacing them costs money. Sometimes we hire the wrong person. Sometimes someone needs to move on, or they realise for themselves that the role is not right for them.
But there is a big space between this person is not right for the role and this person could be great at the role if we actually developed them.
One of the things I often talk about is hiring people into positions they are passionate about. I have been hiring staff for more than 20 years and I can tell you that when someone takes a role they are not passionate about, often because they simply need to pay their bills, it rarely works in quite the same way.
I am not saying they do a bad job. Often they absolutely do their job. But someone who genuinely cares about the work usually brings something different. They want to understand more, they want to improve, they care about the outcome and they are more likely to see what the role or the organisation could become.
So what happens when you do have that person, but they need development?
Are we actually working with them? Are we telling them clearly where they need to improve? Are we having the difficult conversations? Are we coaching them, supporting them and understanding what they are good at? Or do we allow things to continue until eventually everyone is frustrated and the person is moved on?
And perhaps an even harder question: was the staff member the only person who needed to develop?
If you have not updated your leadership skills in five, ten or fifteen years, perhaps there is something in that too. The workplace has changed. People have changed. Expectations have changed. Technology has certainly changed.
Yet sometimes we expect the person underneath us to change while continuing to lead them exactly as we always have.
This is where I think the budget argument gets really interesting.
An Australian HR Institute article on learning and development quoted McKinsey’s Rod Farmer saying:
“The cost of churn … is far greater than implementing an upskilling program.”
He also argued that even a small improvement in retention could make the economics of upskilling worthwhile once you factor in lost productivity, recruitment costs and the disruption caused by churn.
McKinsey’s own research has similarly found that reskilling existing employees can be 20 to 30 per cent more cost-efficient than recruiting new talent.
That is the part I think we sometimes miss.
We see the $10,000, $20,000 or $30,000 development budget because it is a line item. We do not necessarily see the cost of the person leaving, the knowledge leaving with them, the recruitment process, the months it takes someone new to come up to speed, the additional work carried by everybody else or the manager spending hours recruiting instead of actually managing.
Investing in your people will pay dividends.
And there is plenty of evidence that it does. Gallup’s large-scale research found that highly engaged teams had 23 per cent higher profitability, along with higher productivity and considerably lower turnover than poorly engaged teams.
I do not need hundreds of statistics to convince me of this because I see it in organisations all the time.
You see it when someone who lacked confidence starts making decisions for themselves. You see it when a manager finally learns how to have the difficult conversation rather than avoiding it. You see it when someone who was struggling starts performing because they finally understand what is expected of them. You see it when somebody good becomes excellent because someone actually took the time to develop them.
And you see it when leaders themselves are willing to stop, reflect and say, maybe I need to develop too.
I keep thinking about this in the same way I think about buying something cheap versus buying something that actually lasts.
Any time I buy something for five dollars from one of the cheap online places or retail chains and compare it with something I paid three or four times the price for, the difference becomes pretty obvious over time. It is similar to fast fashion.
I look at some of my clothes and think, I bought that 15 years ago and it is still relevant today. I still wear it and people still say, “That’s really nice, where did you get that?”
But I also looked after it.
I washed it properly. I took it to the dry cleaner. I hung it properly. When it needed looking after, I looked after it again. Of course, at some point I probably need to move on my 15-year-old jacket, but for 15 years I have retained it, nurtured it, utilised it and continued to get value from it.
And I wonder whether there is something in that when it comes to our people.
Are we becoming too quick to replace rather than develop? Too quick to put someone in the too-hard basket rather than have the difficult conversation, provide some support and give them an opportunity to become better?
AI can absolutely help us do things more efficiently. I use it myself and I think there are enormous opportunities in what it can do. But AI is not the answer to every people problem.
It is not the answer to poor leadership. It is not the answer to unclear expectations. It is not the answer to avoiding difficult conversations. It is not the answer to someone being in the wrong role, and it should not become the reason we stop investing in people because development looks too expensive.
I do not think any of this means keeping people in roles forever, or pretending every performance issue can be fixed with training. Sometimes the wrong person is simply in the wrong role and something needs to change. But I do think we need to be more thoughtful before we assume the answer is always a restructure, another redundancy, a new role or another AI tool.
Perhaps before we do any of those things, the first questions should be much simpler.
Do we have the right person in the role? Have we actually invested in them? Have we taken the time to understand what they are good at and where they need support? Have we had the conversations we needed to have? Have we given them the opportunity to develop?
And have we looked at ourselves as leaders and asked whether we are still developing too?
Because I keep wondering whether some of the recycling we are seeing in workplaces could be avoided if we invested a little more in the people already there.
AI will absolutely change the way we work, and there are parts of that I am genuinely excited about. But I would hate for us to become so focused on what technology can replace that we stop asking what people could become if we actually invested in them.
So before the next restructure, the next redundancy, the next reshaping of a role or the next investment in AI, perhaps stop and ask one more question: have we invested enough in our people first?
References
Australian HR Institute, Managing the 5Rs in a Rapidly Changing Environment, April 2026. Australian employers estimated the average cost of replacing an employee at approximately $28,500.
AHRI: Managing the 5Rs report
Australian HR Institute, “3 tips to make your learning and development more impactful”, April 2024. Includes comments from McKinsey & Company’s Rod Farmer on the commercial case for upskilling and the cost of employee churn.
AHRI: Learning and development article
McKinsey & Company, “Reshaping retail banks: Enhancing banking for the next digital age”. McKinsey reports that reskilling can be 20 to 30 per cent more cost-efficient than recruiting new talent.
McKinsey research
Gallup, Q12 Meta-Analysis, 11th Edition. Gallup’s analysis reports a 23 per cent difference in profitability between top and bottom quartile employee-engagement business units, together with differences in productivity and turnover.
Gallup Q12 Meta-Analysis
