The arrival of artificial intelligence in Irish workplaces and classrooms has created an urgent imperative for organisations and educational institutions to rapidly develop AI literacy amongst their people, or risk falling behind in an increasingly automated world. With the European Union’s Artificial Intelligence Act now in force, this is no longer merely a strategic consideration but a legal requirement. Yet the challenge extends far beyond simple compliance, touching on fundamental questions about how we learn, work, and think in an age of intelligent machines.
AI literacy, as defined by the EU AI Act, encompasses “skills, knowledge and understanding that allow providers, deployers and affected persons, taking into account their respective rights and obligations in the context of this regulation, to make an informed deployment of AI systems, as well as to gain awareness about the opportunities and risks of AI and possible harm it can cause” [1]. This signals a shift from viewing AI as a specialist technical domain to recognising it as a foundational capability required across all sectors and levels of society.
The legislative push
The EU AI Act, which entered into force on 1 August 2024, introduces binding obligations for organisations to ensure adequate AI literacy amongst their employees and those impacted by AI outputs [2]. The Act follows a phased approach to enforcement, prioritising higher-risk areas first, a pragmatic acknowledgement of the complexity involved in implementing such sweeping changes.
For Irish organisations, the legislative timing coincides with a period of rapid AI adoption. According to PwC’s 2025 GenAI Business Leaders Survey, 86 per cent of Irish business leaders believe AI will positively impact the national economy within five years, with more than half anticipating significant or transformative effects on their own operations [3]. Yet this enthusiasm is tempered by practical challenges. Fewer than a quarter of companies can point to meaningful profitability improvements despite widespread AI experimentation [4].
David O’Sullivan, Director of Privacy, Digital Trust and AI Governance at Forvis Mazars, argues that ensuring AI literacy “isn’t just about compliance — it reduces risk, fosters innovation and drives competitive advantage” [5]. The regulatory requirement, whilst demanding, presents an opportunity for organisations to build capability that delivers tangible business benefits beyond mere legal adherence.
Strategic imperative
Ireland’s position in the global AI landscape has strengthened considerably. A November 2024 report by Stanford University’s Institute for Human-Centered Artificial Intelligence ranked Ireland sixth globally in terms of AI vibrancy per capita, ahead of technological powerhouses such as the UK, Israel and Sweden [6]. This achievement reflects deliberate policy choices, including the national AI strategy refreshed in November 2024, which builds on the original 2021 framework titled “AI — Here for Good” [7].
The refreshed strategy outlines seven strands addressing different aspects of AI development, with AI literacy featuring prominently across multiple domains. Strand one emphasises the importance of public trust, with the government committing to make AI literacy “an integral part of Ireland’s literacy, numeracy and digital literacy strategy 2024-2033” [8]. This ambitious goal recognises that AI literacy must extend beyond the workplace into broader civic engagement.
Leading global companies in AI development, including OpenAI, Anthropic, Meta, Microsoft and Google, have chosen Ireland as a strategic hub [9]. This concentration of AI expertise creates both opportunities and pressures for Irish organisations. Companies must compete not only with each other but with these technology giants for talent equipped with relevant AI capabilities.
Beyond one-size-fits-all
The most effective AI literacy programmes recognise that different stakeholders require different levels and types of knowledge. As O’Sullivan notes, “a one-size-fits-all approach to training rarely works” [10]. Foundational courses may suffice for employees with minimal AI interaction, whilst those developing AI systems require advanced technical training covering responsible AI, ethics and bias [11].
Kieran Harte, writing for the Irish Computer Society, outlines practical compliance steps that illustrate this stratified approach. Organisations must first evaluate current AI literacy levels, identifying gaps amongst staff and other affected persons involved in AI development, deployment and use [12]. Training must then be tailored to different roles. Management requires understanding of compliance and ethical considerations; developers need deep technical training; whilst general staff must grasp appropriate use cases and limitations [13].
Hands-on learning
Theoretical knowledge alone proves insufficient. O’Sullivan emphasises that “the best way to understand AI is to use it” [14]. Workshops, case studies and simulations help demonstrate AI’s practical impact, whilst sandbox environments allow safe experimentation [15]. This experiential approach mirrors broader educational trends recognising that active engagement drives deeper learning than passive instruction.
The value of practical application extends beyond individual skill development to organisational capability building. Companies implementing AI literacy programmes report significant benefits. One organisation documented in the EU’s AI Literacy Learning Repository saw a 30 per cent increase in AI training participation and a 65 per cent rise in AI tool utilisation [16]. These metrics suggest that effective training creates momentum, with initial adopters becoming advocates who encourage broader engagement.
Role-specific training ensures relevance. Finance teams, product managers and engineers interact with AI differently, requiring tailored approaches that address their particular workflows and challenges [17]. This specificity helps overcome the abstraction that can make generic AI training feel disconnected from daily work.
Education
Educational institutions face distinctive challenges in building AI literacy. Sean Nolan, business development manager for public sector at Agile Networks, draws parallels to historical technological disruptions: “There was a time when the calculator became pocket-sized, and this transformed how maths education worked. Maths changed from arithmetic to theoretical maths. I think AI will have a similar effect on education” [18].
Yet opinions diverge sharply on the appropriate response. Barry O’Sullivan, professor of computer science at University College Cork and member of the Government’s AI Advisory Council, urges caution. He warns that generative AI could “undermine the foundations of critical thinking, creativity and independent reasoning, the very skills that education is meant to foster” [19]. His concern centres on the writing process itself: “Writing is thinking, and if you’re not writing, you’re not thinking. There’s nothing like the writing process to help clarify your thoughts, and if you’re not doing that, if you’re just merely editing, it’s not the same thing” [20].
O’Sullivan cites MIT research finding that ChatGPT users consistently underperformed at neural, linguistic and behavioural levels when writing essays compared to ‘brain only’ and ‘google search’ users [21]. The level of originality amongst the ChatGPT group proved extremely low, as did their ability to recall what they had written. EEG analysis revealed the ChatGPT group exhibited the least brain activity [22].
Steven Duggan, vice president of Terawe and former teacher, presents a more optimistic perspective. He views generative AI as “a powerful learning assistant, capable of personalising education in ways previously unimaginable” [23]. Duggan argues that AI enables movement away from “the notion of one size fits all, by using gen AI to produce content that is tailored to different ability levels within a diverse classroom” [24].
This tension between caution and enthusiasm reflects legitimate concerns about assessment integrity, student development and the fundamental purpose of education. Duggan acknowledges these challenges but advocates for adaptation rather than resistance: “I’ve been around education technology long enough to remember when teachers were saying, ‘we can’t let students have calculators and we can’t have computers in the classroom’. It doesn’t work” [25].
Critical thinking
The proliferation of AI-generated content has created an urgent need for critical evaluation skills. Dr Barry Scannell, partner in the Technology Group at William Fry and member of the Irish Government’s AI Advisory Council, warns that “AI content in our daily feeds is becoming common. Deepfakes, AI generated text, and synthetic video and images have become part of the online experience” [26].
Despite transparency requirements in the EU AI Act mandating that AI-generated deepfakes be marked as such, Scannell observes that “this doesn’t stop people from sharing, commenting on and reacting to it as though it was real” [27]. The failure is not technological or regulatory but cognitive: many users across different age groups and education levels are “simply not engaging with digital content in a critical manner” [28].
Jean Noonan, Assistant Lecturer at TU Dublin and member of the Digital Business Ireland Advisory Council, frames this as a broader educational challenge. Quoting George Orwell’s 1984 — “It’s a beautiful thing, the destruction of words” — she asks whether AI is “empowering students or outsourcing the skills we aim to cultivate” [29]. AI literacy, she argues, “involves not only technical proficiency but also the ability to understand AI concepts, apply them across different contexts, and evaluate AI outputs” [30].
Organisational capacity
Effective implementation requires clear governance structures. Only 21 per cent of organisations have formal AI governance frameworks in place, and 69 per cent of business leaders do not believe AI will enhance shareholder trust in the coming year [31]. Yet there is strong support for regulation, with 86 per cent welcoming the EU AI Act as a necessary safeguard [32]. Risk management concerns are also widespread. Eighty-one per cent of respondents expect AI to increase cybersecurity risks over the next 12 months, whilst legal liabilities, reputational risks and misinformation feature prominently amongst leadership concerns [33].
Kate Colleary, founder and director of Pembroke Privacy, sees these challenges driving business opportunity. Her Dublin-based privacy consultancy has expanded from traditional data protection officer services into AI governance programmes and AI literacy training [34]. The company aims for 20 per cent revenue growth in 2026, reflecting growing demand for expertise in navigating the intersection of privacy regulation and AI deployment [35].
Continuous learning
AI’s rapid evolution demands ongoing engagement rather than one-off training interventions. O’Sullivan emphasises that “training should be ongoing with regular updates and refresher sessions to keep pace with advancements” [36]. This requirement for continuous learning extends beyond technical updates to encompass evolving regulatory expectations and emerging ethical considerations.
Organisations must balance immediate compliance needs with longer-term strategic capability building. McDonough notes: “Complying with the EU AI Act and ensuring AI literacy in your organisation will not be ‘finished’ in the next six months. Although compliance is achievable…monitoring, tracking and upskilling efforts will need to evolve continuously as the pace of AI change continues to accelerate” [37].
Moving forward
Ireland’s success in attracting AI investment, coupled with strong digital literacy rates, creates a foundation for leadership in AI adoption and deployment. Yet realising this potential requires sustained investment in human capability. The challenge extends beyond regulatory compliance to fundamental questions about education, work and human agency in an automated world. As Noonan observes, “the transformative power of AI in education has two sides to the coin, one of immense potential and the other of profound responsibility” [38].
Success will require collaboration between educational institutions and industry, between regulators and practitioners, and between technical specialists and domain experts. The EU AI Board’s promotion of AI literacy tools, public awareness initiatives and clarification of rights and obligations provides essential support [39]. Yet ultimately, organisations and institutions must take ownership of their AI literacy journeys, recognising that capability building represents investment in future competitiveness rather than mere compliance cost.
Ireland has positioned itself well in the global AI landscape. Whether this advantage translates into sustained competitive differentiation will depend substantially on how effectively the country develops AI literacy across its workforce and citizenry. The regulatory imperative provides impetus while the strategic opportunity provides motivation. The task now is execution.
Sources
[1] https://www.pwc.ie/services/workforce/insights/ai-literacy.html
[2] https://www.charteredaccountants.ie/News/six-tips-for-building-ai-literacy-in-your-organisation
[5] https://www.charteredaccountants.ie/News/six-tips-for-building-ai-literacy-in-your-organisation
[10] https://www.charteredaccountants.ie/News/six-tips-for-building-ai-literacy-in-your-organisation
[11] https://www.pwc.ie/services/workforce/insights/ai-literacy.html
[12] https://ics.ie/2024/08/30/guide-to-ai-act-literacy-requirements/
[13] https://ics.ie/2024/08/30/guide-to-ai-act-literacy-requirements/
[14] https://www.charteredaccountants.ie/News/six-tips-for-building-ai-literacy-in-your-organisation
[15] https://www.charteredaccountants.ie/News/six-tips-for-building-ai-literacy-in-your-organisation
[16] https://www.charteredaccountants.ie/News/six-tips-for-building-ai-literacy-in-your-organisation
[17] https://www.charteredaccountants.ie/News/six-tips-for-building-ai-literacy-in-your-organisation
[18] https://www.businesspost.ie/commercial-reports/ai-boom-boosts-network-demands-in-irish-education/
[36] https://www.charteredaccountants.ie/News/six-tips-for-building-ai-literacy-in-your-organisation
[37] https://www.pwc.ie/services/workforce/insights/ai-literacy.html
[39] https://ics.ie/2024/08/30/guide-to-ai-act-literacy-requirements/
Irish employers face a stark contradiction. Whilst three-quarters recognise their responsibility towards employee mental health, only one-third have implemented organisational responses to support it, and just one-fifth have allocated dedicated budgets for mental health initiatives [1]. This gap between intention and action reveals a fundamental challenge facing Irish businesses as they navigate work environments where mental health concerns have intensified rather than abated.
The scale of the problem is substantial. Mental health issues cost the Irish economy approximately eleven billion euros annually, largely through lost productivity [2]. The Irish Business and Employers Confederation estimates that eleven million days are lost through absenteeism every year at a cost of €1.5 billion, or €818 per employee [3]. Yet despite widespread recognition of these costs, meaningful investment in workplace mental health support remains the exception rather than the rule.
Ireland’s position
Recent data paints a particularly troubling picture of Ireland’s standing internationally. According to Eurofound’s Mind Health Report 2025, Ireland has the lowest average Mind Health score among nine EU countries surveyed, with forty-eight per cent of the population reporting they are struggling or languishing, compared to thirty-seven per cent in Switzerland, which had the highest score [4]. This represents a significant deterioration in national mental health, occurring despite a twenty per cent increase in Ireland’s mental health workforce over the past five years [5].
The workplace dimension of this crisis is especially pronounced. Nicole Paulie, Chartered Counselling Psychologist and Clinical Lead at laya healthcare’s 24/7 Mental Wellbeing Support Programme, notes that the Mind Health Report 2025 “mirrors the laya healthcare Workplace Wellbeing research over the last five years, highlighting the growing mental health needs of adults in Ireland” [6]. The research reveals that fifty-one per cent of Irish employees cite their salary level as negatively impacting their mental wellbeing, placing Ireland sixth among EU countries [7].
The consequences manifest in multiple ways. A substantial seventy-eight per cent of Irish employees who report work-related stress name at least one impact in their daily lives, with common issues including difficulty sleeping (forty per cent), increased irritability and mood swings (thirty-four per cent), and physical symptoms like headaches (thirty-four per cent) [8]. In the workplace itself, thirty per cent of employees experiencing stress report decreased motivation and productivity, whilst ten per cent report increased absenteeism or lateness [9].
Implementation gap
Research from Cork University Business School surveying 1,501 Irish firms reveals the extent of the implementation gap [8]. Eighteen per cent of companies experience employee absenteeism due to mental health reasons, rising to forty per cent among firms with fifty or more employees [8]. More than half of employers report that the proportion of absenteeism due to mental ill-health has increased in the last twelve months, and sixty-four per cent state that sickness absence adversely impacts business performance [10].
Despite this, the adoption of mental health support initiatives remains limited. The most widely adopted measure — having a health and wellbeing lead at board or senior level — exists in just thirty-two per cent of businesses [11]. Only twenty-three per cent have a mental health plan, twenty-two per cent use data to monitor employee health and wellbeing, and a mere ten per cent employ mental health champions. In-house mental health support and signposting of services is provided by twenty-nine per cent of firms [12].
The reluctance to invest is particularly evident in budget allocation. Eighty per cent of Irish employers do not have a dedicated budget for mental health and wellbeing [8]. As the Cork University Business School research notes, “This suggests a disparity in employers’ recognition of their responsibilities to and investment in workplace mental health and well-being. It also suggests that employers are more likely to implement mental health and well-being initiatives that do not involve a financial outlay” [13].
Firm size creates a stark divide in provision. Amongst larger firms with fifty or more employees, fifty-seven per cent implement in-house mental health support and signposting of services, compared to just twenty per cent of firms with ten to nineteen employees [14]. Similarly, forty-two per cent of larger firms have a mental health budget compared to thirteen per cent of smaller firms [15]. From a sectoral perspective, employers in business and non-business services are more likely to have a mental health budget (twenty-nine per cent) compared to employers in wholesale and retail (eleven per cent) and construction (twelve per cent) [16].
International comparison
When benchmarked against England, Irish firms demonstrate notably less engagement with mental health support despite reporting somewhat lower incidences of mental health absence. The proportion of Irish firms reporting incidents of mental health sickness absence (eighteen per cent) is lower than in England (twenty-six per cent), a pattern repeated across sectors and firm size bands [17]. However, Irish firms are notably less likely to have a mental health plan (twenty-three per cent versus thirty-one per cent in England), a mental health lead at board level (thirty-two per cent versus forty-three per cent), and are significantly less likely to monitor employee wellbeing (twenty-two per cent versus forty-four per cent) [18].
Conversely, presenteeism — working whilst unwell — is reported by twenty-seven per cent of Irish firms, higher than the twenty-one per cent reporting it in England [19]. Irish employers attribute this primarily to the need to meet deadlines and client demand (thirty-nine per cent) compared to twenty-seven per cent of English businesses [20].
Stigma
Persistent stigma continues to inhibit open discussion about mental health in Irish workplaces. St Patrick’s Mental Health Services’ annual survey of one thousand adults found that forty-seven per cent were unaware that employers are obliged to provide reasonable accommodations for staff experiencing mental health difficulties, whilst forty-two per cent would not be comfortable explaining to their boss that they needed time off for such difficulties [21]. Thirty-seven per cent of respondents cited work-related issues as a factor influencing their mental wellbeing, yet thirty-nine per cent do not believe that someone who experiences panic attacks could work as head of a large company [22].
The survey also revealed that fifty-two per cent believe Irish workplaces are not open to employing people with mental health difficulties [23]. Paul Gilligan, CEO of St Patrick’s Mental Health Services, acknowledges that whilst attitudes are gradually improving, substantial work remains: “Most organisations still see mental health as a challenge, but in reality, good mental health in the workplace is the foundation on which success is built. Coming to work should enhance our mental health, rather than impact it negatively” [24].
The fear of disclosure is particularly acute amongst those living with mental health conditions. Laya healthcare’s Workplace Wellbeing Index 2025 revealed that one in two employees report living with an underlying health condition or mental wellbeing issue, with anxiety and depression as the most cited conditions [25]. However, fifty-four per cent of those with a health condition or disability admit they would be embarrassed to speak to their employer about it, whilst one in two with a mental health condition fear being treated differently if they disclose it to their employer [26].
Sinéad Proos, Head of Health and Wellbeing at laya healthcare, emphasises the importance of addressing this communication breakdown: “Employers and employees need to communicate more openly about health conditions and disabilities. Not having a diagnosis or feeling unable to discuss needed support can cause unnecessary stress and hardship for team members. It’s crucial that organisations prioritise clear communication about health and wellbeing resources, making them easily accessible so employees can get the support they deserve” [27].
The disclosure challenge extends beyond mental health to other dimensions of diversity. Fifteen per cent of employees report living with a neurodiverse condition, yet less than half have told their employers [28]. Similarly, one in ten employees identifies as LGBTQ+, yet sixty-eight per cent of HR leaders were either unaware of any LGBTQ+ people in their organisations or put their estimate at five per cent [29]. Gay, lesbian, or bisexual employees are more likely than their straight peers to report feeling lonely on a daily basis and more likely to feel disconnected from colleagues [30].
Coping
Perhaps most concerning are findings about how employees cope with workplace pressures. The laya healthcare Workplace Wellbeing Index revealed that sixteen per cent of employees are addicted to or have an unhealthy relationship with Class A or illicit drugs. Two in five Irish workers report addiction to or an unhealthy relationship with at least one substance, with nicotine (twenty-nine per cent) and alcohol (twenty-one per cent) being most prevalent [31].
As Sinéad Proos observes: “Employers should recognise addiction as a serious issue impacting Irish workplaces, encompassing substance use, gambling and social media. While these results are concerning, they also present a valuable opportunity for employers to prioritise employee wellbeing. By fostering a supportive culture and providing access to resources like counselling and employee assistance programs, we can support and empower employees to make the first steps towards improving their health and wellbeing” [32].
Financial stress emerges as a particularly significant driver of poor mental health. Brian O’Donovan, Health and Wellness Service Development Manager at laya healthcare, notes: “We’ve seen overall intense anxiety reduce slightly which is good news but financial concerns are still the biggest drivers of anxiety. While concerns about the Irish economy dropped significantly, smaller drops were found in concerns about personal money worries and financial wellbeing” [33]. This aligns with broader Eurofound findings that thirty-two per cent of the Irish population cite the current economic climate and twenty-six per cent cite the housing crisis as negatively affecting their mental health [34].
Access
Beyond workplace support, access to mental health services remains a critical barrier in Ireland. Eurofound’s analysis shows that in 2023, nearly forty per cent of people who delayed seeking help cited stigma or fear of judgement, whilst a third did not know where to turn [35]. Shortages and long waiting times, particularly for child and adolescent services, compound the problem, with seventeen per cent of people in rural areas citing a lack of local services [36]. Although free counselling is available in some areas, waiting times and other accessibility issues often mean that the private sector is the only feasible option.
A stark two-tier system exists for accessing mental health services, with the public system plagued by long delays and under-resourcing whilst private services offer faster access but at prohibitive cost. Mental Health Reform, a coalition of charities, warns that if Ireland is to meet a long-standing target of ten per cent of the health budget being allocated to mental health by 2030, as set out in Sláintecare, then there needs to be a real change of gear. Currently, under six per cent of the total health budget is allocated to mental health [37].
Dr Louise Rooney, Policy and Research Manager at Mental Health Reform, notes: “In 2023, the European Union revealed that Ireland was the most difficult country in Europe in which to access mental health services. In fact, last year we spent approximately €93 million on outsourcing mental health care, made up of €13 million for the Treatment Abroad Scheme, and €79.66 million for private mental health services — funds that could instead be redirected to build our own public and voluntary service capacity” [38].
Investment
Despite the clear need and business case for workplace mental health investment, understanding of the potential returns remains limited. International research demonstrates that investment in manager mental health training programmes can lead to significant reductions in work-related sickness absence, with an associated return on investment of £9.98 for each pound spent on such training [39]. Organisations implementing comprehensive mental health support report increased staff morale, reduced absenteeism and presenteeism, improved work performance and productivity, and enhanced recruitment and retention.
The Health Service Executive’s experience during the pandemic demonstrates what comprehensive, coordinated support can achieve. The HSE Workplace Health and Wellbeing Unit mobilised and adapted pre-existing structures to safeguard mental health, including an Employee Assistance Programme providing free, confidential counselling; a National Health and Safety Function implementing psychosocial risk management; and Organisational Health Services supporting evidence-based best practices. Analysis showed that Covid-related absence accounted for 2.8 per cent of total 2021 absence, whilst the overall absence rate in 2020 (6.1 per cent) was 1.4 percentage points higher than in 2019 (4.7 per cent) [40].
However, as the Cork University Business School research questions: “Why are Irish employers, the majority of whom acknowledge their responsibilities, not investing in workplace mental health and wellbeing to a greater extent? It may be that the business case for investing in mental health and wellbeing is unclear to Irish businesses. In the international literature, the wealth of practices and interventions in use, and the lack of standardisation of approach, makes comparison of firm approaches challenging” [41].
Moving forward
The evidence suggests that addressing workplace mental health requires more than acknowledgement. It demands investment, structural change, and genuine commitment. Until Irish employers close the gap between acknowledging their responsibilities and investing in comprehensive mental health support, the workplace will continue to suffer in silence. With Ireland now ranking bottom of EU mental health rankings and mental health-related absence increasing post-pandemic, the cost of continued inaction is high.
Sources
[2] https://healthyworkplace.ie/areas/wellbeing-areas/mental-health/
[3] https://healthyworkplace.ie/areas/wellbeing-areas/mental-health/
Ireland’s economic model is built on attracting multinational investment and high-skilled workers. Yet it faces mounting pressure from housing shortages, rising living costs, and an increasingly competitive global market for talent. As Paul Sweetman, Chief Executive of the American Chamber of Commerce Ireland, puts it: “Ireland’s talent is our greatest strength — but immigration delays risk losing it” [1].
Recent data reveals both the scale of Ireland’s success in attracting migrants and the emerging cracks in its competitive position. In 2024, Ireland recorded 149,200 immigrants, a 17-year high, with net inward migration of 79,300 persons [2]. Yet this achievement masks a troubling counter-trend. Namely that emigration has surged by 37% since 2020, with particularly stark increases amongst young Irish nationals and women [3]. This simultaneous rise in both immigration and emigration during a period of strong economic growth represents an unusual pattern that demands attention from policymakers and business leaders alike.
Ireland’s talent advantage
Ireland’s transformation from a country of emigration to one of immigration reflects decades of strategic positioning. One-fifth of Ireland’s workforce today is international, and this blend of homegrown and international expertise has become central to the country’s value proposition for foreign direct investment [4]. According to a recent AmCham member survey, 90% of US multinationals with a presence in Ireland hold a positive view of the country as an investment location, with 63% identifying access to Ireland’s highly educated and skilled talent pool as the country’s strongest competitive advantage [5].
The numbers underscore Ireland’s distinctive position within Europe. Graduate immigration to Ireland has been an engine of economic growth, with over 60% of working-age immigrants holding graduate qualifications, roughly double the EU average [6]. As economist John FitzGerald observes, “More than 40 per cent of those working in our IT sector are immigrants, where average pay is almost €90,000” [7]. This concentration of highly skilled workers has enabled Ireland to punch above its weight in sectors from pharmaceuticals to financial services.
The financial services sector exemplifies this dependence on international talent. Almost 30% of health service workers have come from abroad, whilst 40% of IT sector employees are immigrants [8]. These figures represent not simply labour market statistics but the operational reality of Ireland’s economic model. Without sustained inward migration of skilled workers, many multinational operations in Ireland would struggle to maintain their current scale.
Talent shortage
Ireland’s headline success in attracting global talent masks the deeper structural vulnerability of a widening skills gap that is increasingly constraining employers across multiple sectors. While one-fifth of the workforce is now international, 64% of AmCham members report experiencing a skills shortage, signalling that Ireland’s talent pipeline is struggling to keep pace with the economy’s needs. [9]
The shortages emerging in financial services, technology, healthcare and construction are not the result of an absolute lack of workers, but of a mismatch between the speed at which industries are evolving and the capacity of the domestic labour market to respond. As Róisín Fitzpatrick of Deloitte notes, Ireland’s economy “needs to get the right talent into the right roles,” a challenge that has become acute as unemployment has fallen to pre-pandemic lows and demand for specialised workers has surged. [10]
Healthcare provides one of the clearest examples. When acute shortages of care staff became impossible to fill domestically, the government expanded the employment permits system in 2021 to allow international recruitment of healthcare assistants. Permit approvals in this category surged from 121 in 2020 to 1,345 in 2022, enabling nursing homes and care facilities to stabilise operations that had been under severe strain [11].
The corporate sector has also become more reliant on alternative talent pathways, such as hiring spouses and partners of Critical Skills Employment Permit holders, or employing international protection applicants after six months in the system. These mechanisms allow firms to access a broader pool of potential workers and partially offset shortages where traditional recruitment is falling short
Yet these adaptive measures highlight a more fundamental problem: Ireland’s long-term competitiveness increasingly depends on sustained inward migration, not only to fill gaps but to enable strategic growth. As Fitzpatrick emphasises, if employers cannot access the skills they need, they will simply move roles elsewhere [12]. This is already evident in sectors where delays or shortages have directly impeded expansion plans or pushed investment to competing jurisdictions with smoother access to international talent.
In this context, the talent shortage is best understood not as a temporary imbalance but as a structural feature of Ireland’s economic model. High-value industries from pharmaceuticals to digital services depend on specialised labour that the domestic system cannot produce at sufficient scale or speed. Migration has been the safety valve that keeps these sectors functioning. Maintaining that flow of skills is central to Ireland’s ability to remain a leading destination for multinational business and to deliver the growth that underpins its wider economic strategy.
Immigration system
Ireland’s immigration infrastructure, designed during an era of more modest inflows, struggles to keep pace with demand. Current processing times for overseas employees average four to eight weeks across multiple government departments. This is a stark disadvantage compared with the UK’s five to seven day average [13]. These delays have real commercial consequences, with employers reporting project cancellations and businesses choosing alternative jurisdictions for investment.
The employment permits system has expanded dramatically to meet demand. From 2020 to 2024, employment permits more than doubled, reaching nearly 40,000 persons in 2024 [14]. India now dominates permit allocations, accounting for over a third of all permits issued, followed by Brazil and the Philippines [15]. The health sector has been the major beneficiary, representing 32.5% of all permits, followed by ICT at 18.4% [16].
Yet this expansion raises questions about system sustainability. December 2023 saw the largest ever expansion to the employment permits system, adding 11 roles to the Critical Skills Occupation List and 32 roles to the General Employment Permits list [17]. Whilst these changes demonstrate responsiveness to market needs, they also highlight the persistent gap between domestic labour supply and employer demand across an ever-widening range of occupations.
Emigration
Perhaps most concerning for Irish policymakers is the surge in emigration despite strong economic growth. Female emigration increased by 56% from 2020 to 2024, compared with just 12% for males [18]. Since 2022, female emigration amongst the 15-24 age cohort has been nearly double that of males (39,100 versus 26,300) [19]. Irish nationals aged 25-44 have shown a 17.5% annual increase in emigration since 2021 [20].
The Growing Up in Ireland survey provides insight into these choices. One in eight respondents had emigrated, with employment opportunities (43.4%) the most common reason, followed by education and training (21.2%) [21]. Critically, over one-third said they had difficulties making ends meet, and 97.7% were concerned with the housing situation in Ireland [22]. Almost half planned to return to Ireland, but one-fifth stated they did not intend to return, with 30% undecided [23].
This represents a worrying erosion of Ireland’s competitive position. As Paschal Donohoe, Minister for Finance, notes: “Continued skilled inward migration will be vital to maintain growth in the labour force. Our openness will continue to be a great source of strength and a competitive advantage. We need to manage this well” [24].
European context
Ireland’s migration challenges must be understood within a broader European context. On a per capita basis, Ireland ranks seventh highest for net inward migration amongst EU27 countries since 2020 [25]. Irish inward migration flows are approximately twice the European average, a pattern that has persisted over the past decade [26]. Similarly, outward flows from Ireland are roughly twice the European average, with Ireland ranked fourth in per capita outward flows [27].
This high degree of labour market mobility reflects both Ireland’s economic openness and its attractiveness to international workers. Yet it also exposes vulnerabilities. Countries such as Denmark, Sweden, France, Spain and the Netherlands increasingly compete for the same global talent pool [28]. Many offer comparable or superior earnings for graduates, with Ireland holding only the 14th highest graduate earnings in real terms across EU countries [29].
The expansion of the EU labour market following enlargement provides opportunities but no guarantee of meeting Ireland’s needs. Analysis suggests that whilst demand for unskilled labour can likely be met from within the expanded EU, high-skilled migration requirements are unlikely to be filled entirely from EEA sources [30]. Just 6 million EU graduates actually work in countries where average wages are significantly lower than Irish wages — 16.8% of the total graduate workforce [31].
What to do
Addressing these challenges requires both immediate reforms and longer-term strategic thinking. In the short term, the introduction of a “one stop shop” for immigration services represents a crucial step towards improving processing efficiency [32]. Creating a unified permit combining the Irish residence permit card, employment permit and entry visa would greatly enhance the user experience and reduce administrative burden.
More fundamentally, Ireland must consider whether its temporary work permit system adequately serves the country’s needs. The Expert Group on Future Skills Needs has proposed a dual system: a Green Card programme leading to permanent residency for high-skilled migrants, alongside a reformed work permit system for temporary migration [33]. Such an approach would better align Ireland with international competitors who offer clear pathways to permanency for desired talent.
The integration of international students into the labour market presents another underutilised opportunity. Over 40,000 international students were enrolled in Irish academic institutions in 2023/2024 [34]. Yet the current system requires non-EEA students to leave the country before applying for work visas, an inefficient process that represents “a significant disadvantage to the Irish enterprise sector” [35]. Schemes similar to Scotland’s Fresh Talent programme, which allows non-EEA students with honours degrees to remain for two years after graduation whilst seeking employment, merit serious consideration.
Housing
Underlying many of Ireland’s migration challenges is the accommodation crisis. Róisín Fitzpatrick of Deloitte notes that family decisions on whether to relocate to a new country often hinge on dependent partners’ access to the labour market [36]. But housing availability increasingly trumps labour market access in location decisions.
The Growing Up in Ireland survey data confirms that housing concerns significantly influence emigration decisions, particularly amongst younger cohorts [37]. This creates a vicious cycle where inadequate housing discourages both international talent from arriving and Irish talent from remaining, which in turn constrains economic growth and the resources available to address housing shortages.
As ESRI research indicates, if all migrants resident in Ireland were employed at levels matching their educational qualifications, it would add between 3.5% and 3.7% to GNP [38]. This “occupational gap” reflects not only qualification recognition issues but also the constraints imposed by inadequate housing and infrastructure on migrants’ ability to fully contribute to the economy.
Crossroads
Ireland’s economic model increasingly depends on its ability to attract and retain global talent. The post-pandemic surge in immigration — 149,200 persons in 2024 — demonstrates the country’s continued appeal. The employment permits system has proven flexible and responsive, with Dublin hosting 55% of all new permits and the health sector successfully accessing international labour markets [39].
Yet sustainability questions persist. The Department of Finance forecasts annual net migration of 35,000 persons from 2025 to 2030, with scenarios ranging from 25,000 to 45,000 depending on housing supply and other factors [40]. Under even the higher scenario, meeting the Programme for Government target of 300,000 additional jobs by 2030 will require maximising labour force participation alongside sustained immigration.
The simultaneous rise in immigration and emigration, particularly amongst young Irish nationals, suggests Ireland stands at a crossroads. Without addressing housing costs, improving immigration processing efficiency, and creating clearer pathways to permanency for desired talent, the country risks losing its competitive advantage in the global war for skills.
Sources
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[14] https://enterprise.gov.ie/en/publications/publication-files/recent-trends-in-migration-flows-impacting-the-irish-labour-market.pdf
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[24] https://www.irishtimes.com/opinion/2025/11/04/opinion-continued-skilled-inward-migration-will-be-vital-to-our-future/
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[34] https://www.businesspost.ie/analysis-opinion/paul-sweetman-irelands-talent-is-our-greatest-strength-but-immigration-delays-risk-losing-it/
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[38] https://www.irishtimes.com/business/economy/2025/03/14/st-patrick-was-an-immigrant-and-ireland-continues-to-benefit-from-them/
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[41] https://enterprise.gov.ie/en/publications/publication-files/recent-trends-in-migration-flows-impacting-the-irish-labour-market.pdf
Something curious has happened in Silicon Valley. The debate about whether artificial intelligence represents a speculative bubble has effectively ended. Not because investors have concluded it isn’t a bubble, but because they’ve decided bubbles don’t matter. This intellectual pivot, from denial to acceptance to enthusiastic embrace, represents either sophisticated long-term thinking or a spectacular failure of collective rationality. The stakes are high enough that getting the answer wrong could reshape the global financial system.
Consider the remarkable candour now commonplace amongst those with the most to lose. “Of course there’s a bubble,” says Hemant Taneja, chief executive of General Catalyst, a venture capital firm that raised an eight billion dollar fund and backed AI companies including Anthropic and Mistral [1]. Sam Altman, whose OpenAI sits at the epicentre of the frenzy, offers investors words they rarely hear from chief executives: “I do think some investors are likely to lose a lot of money” [2]. Even Jeff Bezos, who built Amazon amidst the dotcom carnage, now draws careful distinctions between financial bubbles (bad) and industrial bubbles (possibly good) [3].
This shift from “there is no AI bubble” to “AI is a bubble and bubbles are great” suggests we’ve moved through Elisabeth Kübler-Ross’s stages of grief at remarkable speed [4]. What it doesn’t suggest is any lessening of the mania itself.
The mathematics of madness
The scale of capital deployment defies easy comprehension. US venture capitalists have committed 161 billion dollars to AI companies over the year to date, two-thirds of their total spending [5]. Ten loss-making AI start-ups have gained close to one trillion dollars in valuation over the past twelve months alone [6]. Google, Amazon, Microsoft and Meta will spend 750 billion dollars on data centres this year and next, with Morgan Stanley projecting total global spending to reach three trillion dollars by 2029 [7]. That final figure equals roughly fifteen per cent of the European Union’s entire GDP [8].
Historical context makes these numbers even more startling. When venture capitalists funded the original dotcom boom, they invested 10.5 billion dollars into internet companies in 2000, approximately twenty billion dollars in today’s money. During 2021’s software frenzy, they deployed 135 billion dollars into software-as-a-service start-ups. This year, they’re on course to exceed 200 billion dollars on AI alone [9].
Yet valuations have become untethered even by the generous standards of venture capital. Start-ups generating merely five million dollars in annual recurring revenue now seek valuations exceeding 500 million dollars, according to a senior Silicon Valley venture capitalist. “Even during peak Zirp (zero-interest rate policies), these would have been 250 million to 300 million dollar valuations,” he notes [10]. The market, as he puts it more bluntly, “is investing as if all these companies are outliers. That’s generally not the way it works out” [11].
Goldman Sachs chief global equity strategist Peter Oppenheimer maintains that we’re witnessing “not a bubble… yet” [12]. His analysis comparing the Magnificent Seven tech companies to definitive historical bubbles finds them relatively reasonable on forward price-to-earnings ratios compared to 2000, 1989 or 1973 [13]. Yet other metrics flash warnings. The technology, media and telecoms sector trades richer on a price-to-book basis than at the 2000 peak. Palantir, the data and AI company, commands a forward price-to-earnings multiple of 225, the highest valuation of any S&P 500 company [14].
By October, a Bank of America survey found that an AI bubble had become perceived as the number one downside risk to global growth, overtaking even concerns about Trump administration policies that had dominated for most of the year [15]. More than half of fund managers in an earlier survey believed AI stocks were already in bubble territory [16].
Productive mania
The intellectual defence of AI excess rests on historical precedent and economic theory. Eric Schmidt, Google’s former boss, makes the case enthusiastically: “Bubbles are great. May the bubbles continue” [17]. Their function, he argues, is to redirect vast pools of capital into frontier technology and infrastructure, which ultimately benefits society regardless of what happens to investors.
Schmidt poses a thought experiment that clarifies the logic. What if a technology company achieved artificial general intelligence, then superintelligence? Such technology would exceed the sum of human knowledge and solve humanity’s hardest problems. “What’s the value of that company?” he asks. “It’s a very, very large number. Much larger than any other company in history, forever, probably” [18].
This isn’t merely Silicon Valley self-justification. Nobel laureate William Nordhaus estimated that between 1948 and 2001, innovating companies captured only 3.7 per cent of the value their innovations created, with 96.3 per cent flowing to society at large, mostly through consumer benefits. Put differently, spillover benefits were 26 times larger than private profits [19]. If AI follows this pattern, investments could generate enormous social value whilst destroying investor capital, a painful irony that nevertheless represents economic progress.
The canonical example remains Britain’s railway mania of the 1840s. Investors lost fortunes. Share prices collapsed. Yet Britain ended up with railways that transformed the economy for generations. As Victorian historian John Francis wrote: “It is not the promoters, but the opponents of railways, who are the madmen” [20].
Marc Benioff, Salesforce’s co-founder and chief executive, estimates that perhaps one trillion dollars of AI investment might be wasted, but that the technology will ultimately yield ten times that in new value. “The only way we know how to build great technology,” he argues, “is to throw as much against the wall as possible, see what sticks, and then focus on the winners” [21].
Inconvenient complications
This sanguine narrative glosses over substantial problems. William Quinn, co-author of Boom and Bust: A Global History of Financial Bubbles, notes that funding railways through a bubble rather than central planning “left Britain with a very inefficiently designed rail network. That’s caused problems right up to the present day” [22].
George Hudson, the “railway king” who controlled four of Britain’s largest railway companies whilst simultaneously serving as mayor of York and an MP, kept his empire afloat through distinctly Ponzi-like operations. He funded dividends for existing shareholders from freshly raised capital and defrauded investors by having companies he controlled buy his personal shares at above-market prices. Only parliamentary immunity from arrest for unpaid debts kept him from ruin before his eventual exile to France [23].
Historian William J. Bernstein notes that “the closest modern equivalent would be the chairman of Goldman Sachs simultaneously serving in the US Senate” [24]. One need not work hard to imagine contemporary parallels.
Profitability vacuum
The gap between investment and return is already uncomfortably wide. Research from the Massachusetts Institute of Technology found that 95 per cent of companies surveyed were getting zero return from their investments in generative AI [25]. OpenAI, three years after launching ChatGPT, has reached thirteen billion dollars in annualised revenue, unprecedented growth for a start-up. Yet the company is on course to burn 8.5 billion dollars in cash this year [26].
Is OpenAI worth 500 billion dollars? The question seems absurd until one considers the alternative. If the company achieves AGI, perhaps any finite valuation is too low. If it doesn’t, the current valuation is fantastical.
This binary logic pervades the entire sector. OpenAI and competitors are racing against Meta, Google and others in a capital-intensive contest to train ever-better models, meaning the path to profitability extends further than for previous start-up generations [27]. The deals with chipmakers and cloud providers represent bets that AI demand will continue its stratospheric growth, enabled by research breakthroughs and new products that remain hypothetical.
About one-third of AI-related capital expenditure is sinking into short-lived assets like Nvidia’s graphics processing units, which have a useful life for frontier applications of roughly three years [28]. Tech analysts Azeem Azhar and Nathan Warren note that GPUs “age in dog years” [29]. Unlike railways or power grids that serve for generations, this infrastructure may become obsolete before generating returns, though the depreciation pressure might impose discipline that was absent in earlier bubbles.
Geopolitical wildcard
China’s rapid advancement at dramatically lower costs introduces another dimension of uncertainty. Beijing-based Moonshot AI unveiled its Kimi K2 Thinking model for less than five million dollars in training costs [30]. When Chinese firm DeepSeek launched a low-cost ChatGPT competitor earlier this year, Nvidia lost nearly 600 billion dollars in market value in a single day [31].
Jensen Huang, Nvidia’s chief executive, recently warned that China will “win the AI war” as it becomes a tech superpower [32]. This wasn’t defeatism but frustration; Trump’s administration won’t allow Nvidia to sell advanced chips in China, potentially ceding ground in the world’s second-largest economy. If Chinese companies can match or exceed Western AI capabilities at a fraction of the cost, what does that imply for the trillion-dollar bets being placed in Silicon Valley?
Crashes
Carlota Perez, author of Technological Revolutions and Financial Capital, sees AI as an extension of the information technology revolution beginning in the 1970s, the fifth great technological revolution she identifies. Her framework describes a predictable pattern: an installation phase featuring creative destruction, social disruption, over-investment, financial mania and bubbles. Those bubbles fund vital infrastructure enabling subsequent mass rollout and broader economic benefits through what she terms a “golden age” [33].
“I have not seen a golden age happening without a crash,” Perez states [34]. She warns that capital markets are currently misfiring, focusing more on speculative games like crypto than productive investments, with global debt exceeding three times GDP. “This could also be a trigger for gigantic instability,” she adds [35].
Recent market action offers a preview. Tech stocks experienced their worst week in seven months during early November, with Nvidia losing 500 billion dollars in market value over five days [36]. The Nasdaq fell more than 4.5 per cent over the week, with firms investing heavily in AI losing nearly one trillion euros in market value amid investor anxiety that billions deployed may not generate hoped-for returns [37].
Patrick Honohan, former governor of the Central Bank of Ireland, warns starkly that the AI bubble now ranks amongst the biggest threats to the global financial system. Whilst equity fluctuations might seem inconsequential, he notes, “they have an effect on what’s happening — what’s being bought using these valuations — and raising capital” [38]. His nightmare scenario envisions investors gradually realising that AGI is “not five or ten years away, it’s 50 or 100 years away,” triggering substantial falls that ripple through interconnected markets [39].
Asked whether we’re in an AI bubble, scientist and entrepreneur Stephen Wolfram says: “The answer is obviously yes.” As for talk about AGI? “It’s a meaningless thing” [40]. Andrew Odlyzko is similarly unimpressed by analogies between railways and AI. People at least understood how railways worked and what they were supposed to do. This is not the case with generative AI. “We are losing contact with reality,” he says [41].
Strategic response
For executives and investors, the question is not whether to engage with AI — the technology’s potential is too significant to ignore — but how to do so with appropriate scepticism. Simon Edelsten, fund manager at Goshawk Asset Management, counsels against trying to time the market perfectly. “Watch individual stocks and sell if they are too aggressively valued,” he advises [42]. His firm has reduced exposure to Magnificent Seven stocks from twenty per cent to roughly nine per cent by selling Tesla, Nvidia and Meta whilst retaining positions in Microsoft and Amazon where valuations “look merely stretched, not ridiculous” [43].
William Quinn offers comfort in noting that when banks stay away from bubbles, their bursting has limited effects, true in the 1840s and potentially true today [44]. Unlike the dotcom era, leading AI companies have genuine cash flow and profits. The critical question is whether they’re deploying that capital wisely, which recent earnings reactions suggest investors are beginning to scrutinise more carefully.
The lesson from 2000, Edelsten argues, was that “if the valuations of the shares you are buying seem reasonable then you need not worry too much about the stretched valuations of the shares others own” [45]. Long-neglected sectors like healthcare and consumer staples offer alternative homes for capital. His firm recently bought Nestlé — about as far from AI excitement as one can get — whose nearly four per cent yield in Swiss francs “looks pretty sweet” [46].
A bit of both
Perhaps both camps are correct. AI likely represents genuinely transformative technology whilst simultaneously existing in a bubble characterised by irrational exuberance and catastrophic capital misallocation. Bret Taylor, OpenAI’s chair, articulates this duality clearly: AI will “transform the economy”, he says, and “create huge amounts of economic value in the future. But I think we’re also in a bubble, and a lot of people will lose a lot of money” [47].
The challenge for business leaders is distinguishing between revolutionary technology and revolutionary valuations. History suggests bubbles often fund important infrastructure whilst leaving wreckage in their wake. The winners will be those who can maintain that distinction even as markets lose contact with reality.
Sources
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[12] https://www.ft.com/content/e65579d3-f513-44f4-91e0-246fefe66e4c
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[15] https://www.businesspost.ie/markets/ai-bubble-main-perceived-risk-to-global-growth-bank-of-america/
[16] https://www.businesspost.ie/markets/wall-street-speaks-bubble-talk-grows-around-ai-and-beyond/
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Ireland has long been celebrated globally for its warmth, wit, and “céad míle fáilte” — a hundred thousand welcomes. Yet recent data reveals that this nation renowned for its hospitality now ranks as the loneliest place in Europe. Official figures from the Joint Research Centre report on loneliness prevalence in the EU show that 20 per cent of Irish people have reported feeling lonely most or all of the time, the highest level in the EU, where the average is just 13 per cent [1]. For a country that prides itself on community and connection, this signals a fundamental challenge to social cohesion, public health, and economic productivity.
The scale and consequences of this epidemic extend far beyond emotional discomfort. Professor Brian Lawlor, professor of old-age psychiatry and site director of the Global Brain Health Institute at Trinity College Dublin, has researched loneliness for three decades. “For people who are more lonely or isolated, their cognitive reserve is decreased so they’re more at risk of developing dementia,” he explains. “People who are lonely are also at an increased risk of developing depression. Physical health wise, there’s increased risk of mortality for people who are chronically lonely. Heart attack, stroke, hypertension, sleep disturbance — all of these things are associated with loneliness.” [2]
The comparison to other health risks is stark. As Dr Maureen Gaffney notes, “the adverse effect of loneliness on your health is roughly equivalent to the damage done by smoking 15 cigarettes a day or being an alcoholic, and is greater than the effect of chronic obesity.” [3] In the United States, Medicare spends almost $7 billion annually treating the effects of social isolation on elderly patients [4]. The World Health Organisation recognised the gravity of the situation when it declared loneliness a “pressing health threat” in November 2023 and launched a new commission to foster social connections. [5]
The roots of the crisis
Understanding why Ireland has become Europe’s loneliest nation requires examining multiple intersecting factors. Professor Lawlor identifies increasing individualism as a primary driver. “I think a number of things are happening, the first of which is that Ireland has become more individualistic, no doubt about that,” he says. “I think people are looking to be more independent and not show vulnerability. I think that can bring risks.” [6]
The housing crisis has placed enormous strain on social life. High rents and scarcity have left young adults unable to secure independent homes, forcing them to remain in multigenerational households or shared accommodations. “I do think other trends, like the housing crisis and homelessness, are having an impact, on a generation of younger people particularly,” Professor Lawlor adds. “If they have to stay at home, it’s harder to connect to their peers. The sense that they may never have their own independence or their own home probably causes a degree of stress and loneliness as well.” [7]
Dr Joanna McHugh Power, associate professor in psychology at Maynooth University and chair of the Loneliness Taskforce Research Network, points to structural factors. “Ireland may have high levels of loneliness because of its age profile, rurality and high levels of inward and outward migration,” she explains. [8] Indeed, both inward and outward migration have been associated with increased levels of loneliness, affecting those who depart and those left behind. Ireland also has one of the lowest population densities of all EU countries, with more people living outside urban areas than in many other states. [9]
The COVID-19 pandemic served as what Professor Lawlor calls “a horrible human experiment which really showed up the impact of restrictions and isolation”. Whilst many aspects of life have recovered, the social dimension has not fully rebounded. “We have recovered from that, but maybe not completely,” he notes. “There’s this hybrid model of working from home, and people are more inclined to text us or go online. When was the last time you said you were going to call someone? There’s a loss of touch and a lot of physical, face-to-face contact. That does change the landscape.” [10]
The US surgeon general Vivek Murthy lamented that “it’s not the culture for people to talk to each other anymore. Many of us are more likely to wish someone we know a happy birthday on Facebook or abbreviate a text to HBD rather than pick up the phone and say it to them.” [11] This digital displacement of genuine connection represents a profound shift in how relationships are maintained.
The victims
Whilst loneliness was once primarily associated with older and rural people, in modern Ireland it doesn’t discriminate. Research from the University of Limerick has revealed particularly concerning trends among young adults. “The one thing people said that was quite interesting was that, because they’re not expecting to be lonely, they don’t have anywhere to go with it,” explains Ann-Marie Creaven, senior lecturer in psychology at UL. “People say to them, ‘Surely you’re having the time of your life?’ or ‘But sure you have 20 million followers on Instagram?’ They don’t want to go to their friends about feeling lonely because they felt it might be insulting to tell a friend, because what are you saying about your friendships if it’s not enough for you?” [12]
Joanna McHugh-Power emphasises the particular vulnerability of those who came of age during the pandemic. “The group I’d feel most sorry for and concerned about in terms of chronic loneliness would be that group who were teenagers or moving into early adulthood during the COVID pandemic,” she says. “Those are the years that you really lay down those social habits. And if they’re not there, I think it could be very difficult.” [13]
An OECD report published in October 2025 confirmed that people aged 16 to 24 were found to be the most likely group in Ireland to report feeling “lonely most or all of the time over the past four weeks”, with the reported loneliness figure significantly ahead of the rate for those aged 65 or over. Only Sweden, Switzerland and Denmark mirrored this pattern among the 23 countries covered. [14] CSO figures for 2022 indicated a fifth of all young people experienced feelings of loneliness, with 5.6 per cent saying they were lonely most or all of the time, a figure that remained unchanged in 2024 despite the passing of the pandemic. [15]
The loneliness affecting young people manifests differently than in older populations. Creaven notes that some of those interviewed in the University of Limerick research “gave very detailed descriptions of their loneliness. Some described it as painful, others as an emptiness. It was often about other people not valuing them. They felt no one cared enough about them. They weren’t someone’s ‘person’. I thought it was an interesting thing to hear from that age group. There’s also a sense among young people that loneliness is stigmatised, and they don’t want people to know they’re lonely, so they try to hide it a bit.” [16]
Mike Mansfield of Jigsaw, a charity that campaigns on young people’s mental health, emphasises the pandemic’s lasting impact. “You can’t have a conversation about loneliness without talking about Covid. That had a really significant impact on young people, massively disturbing their daily life and pulling them out of the social connections and structures they had and away from groups of mates. Then they were thrown back into it and I think for a huge number of people that reintegration back into society, probably more so even than the actual lockdown itself, has been really difficult as they found it very difficult to navigate how to form and maintain decent, meaningful relationships.” [17]
Among older adults, the situation remains acute. TILDA research has found loneliness to be “a persistent and powerful factor influencing the health and wellbeing of older adults”. Whilst loneliness scores more than doubled during the pandemic, a significant proportion of older adults continue to experience loneliness, and this experience is associated with poorer health outcomes including functional limitations, poorer self-rated health, and a higher number of depressive symptoms. Loneliness has also been linked to the wish to die among older adults. [18]
The male loneliness epidemic
The experience of loneliness differs markedly by gender, with men facing particular challenges in forming and maintaining meaningful connections. Louise McSharry, writing about the male loneliness epidemic, recounts a telling anecdote: “Years ago, I enquired about one of my partner’s friends who had recently gone through a break-up. ‘How’s he doing after the break-up?’ I asked. ‘Oh I dunno, we didn’t talk about it,’ was the response. What had they talked about? Well, they spent the evening coming up with their ultimate football squad. As a woman, it is absolutely unthinkable that you would meet a friend who had recently broken up with a partner and not spend at least an hour discussing it. Emotional support is the basis of most of my female friendships.” [19]
This observation is supported by research on BFFinder, a website co-founded by Liam Burke and Louanne Howley in 2019 to help Irish people find friendships. Seventy per cent of the site’s users are female. “Men can be a bit more closed off in terms of making friends,” Burke explains. “If you can’t talk about football as a man, you can’t really talk to anyone. Women are probably more comfortable having the chats.” [20]
Conor Creighton, who co-founded Dublin Boys Club with artist Maser in response to rising suicide levels, anxiety and depression among young men, identifies the roots of this problem. “I do a lot of coaching work and I hear a lot about loneliness from people. This is a result of the programming of masculinity — we’re taught as men to repress our emotions and never show weakness. I think this is where loneliness comes in. Some people are just avoiding big parts of themselves as a way of surviving.” [21]
The consequences are severe. In Ireland, men die by suicide four times more than women. Whilst it would be overly simplistic to attribute this solely to loneliness, the connection between social isolation and mental health outcomes cannot be ignored. [22] Marketing and communications company Core released research in 2023 which found that three in five Irish adults experience loneliness at times, with single men lonelier than single women. [23]
Structural barriers
Beyond individual circumstances, Ireland faces significant structural challenges that impede social connection. Joanna McHugh-Power highlights a critical infrastructure gap: “The thing with Ireland is we have great commercial spaces for people to get together. If you’re willing to spend money on cafes and things like that, you can meet your friends. But we have pretty poor other ‘third spaces’ available to us. All of that stuff amounts to the social infrastructure of a country, and it’s pretty poor in Ireland. At a policy level, these are things that could be changed, providing people with spaces where they can meet up in a way that’s cost neutral. We have the added challenge in Ireland because of the weather, so we have to be really thoughtful about how we create those social spaces.” [24]
Christopher Swader, associate professor at Lund University in Sweden and co-author of research on Ireland’s loneliness crisis, goes further, describing Ireland as having “park, cafe and library deserts”. He suggests that Ireland is the only country in all the EU countries surveyed that relies on “commercial pathways” to resolving loneliness, lacking free social spaces for the population to meet and socialise. [25]
Ann-Marie Creaven points to changes in child-rearing practices that have long-term social consequences. “Parents are more safety conscious, and are having smaller families as well. You’re not getting to know your siblings’ friends or neighbours out on the road. You don’t have those extra connections. You’re not as free range as you were before, and you don’t have as wide a network. There’s something missing around the child-rearing village. It’s not about help, it’s that kids got to know other people. Now you’re being driven to activities, and ‘I wouldn’t let you in that house if I didn’t know them’.” [26]
Confronting the crisis
The severity of Ireland’s loneliness epidemic demands comprehensive policy responses. The Loneliness Taskforce, a cross-agency and multi-expert coalition established in 2018 by former senator Keith Swanwick, has been urging the government to develop an action plan for combating loneliness. As of late June 2024, the decision to establish a specialist government group relating to older people’s mental health remained under review. [27] By September 2024, the Taskforce was calling on the government to commit to targets in Budget 2025 to address what member organisations describe as “a growing health and social issue which poses a significant problem for their service users, who come from all age groups and backgrounds.” [28]
Sean Moynihan, CEO of Alone, which works with older people including those who are lonely and isolated, emphasises that whilst older people living alone are more likely to be lonely, “loneliness is an issue which affects all age groups, and is a nationwide issue.” [29] The charity believes the government must play its part, noting that “the lack of a single public office in the healthcare system tasked with getting to grips with loneliness tells its own story.” Alone advocates for an action plan funded by the government to deliver targeted, research-based actions. [30]
Several international models offer guidance. The United Kingdom established a dedicated Minister for Loneliness in 2018, Japan created its own loneliness ministerial post, and the United States Surgeon General declared loneliness a public health crisis in a 2023 advisory. In 2023, Canada became the first country to create both individual and community level public health guidelines for social connection. [31]
Professor Lawlor argues for systemic change: “One important message we need to get across to people is that anyone and everyone can become lonely. We need to get loneliness into the programme for government, and you need to introduce change at a population level, at a systemic level. We need to do more research in terms of understanding the precise approaches that they need to treat their loneliness. We know one size doesn’t fit all. If you build a society for connection, you will prevent a lot of bad things happening, not just loneliness.” [32]
Community-led solutions
Whilst awaiting comprehensive government action, numerous grassroots initiatives have emerged to combat isolation. Men’s Sheds have been joined by Women’s Sheds and Sister Sheds, the latter now boasting around 1,000 members in 23 branches across the country. “Coming out of lockdown, we identified a need where we women were all anxious to get back to society, to make friends and reduce isolation,” says Sherin Hughes, co-founder and CEO of Sister Sheds. “Twenty or 30 people showed up to our first one in Finglas, and I was shocked to see that.” [33]
For Ann Burke, a Wexford-based woman who experienced profound loneliness after losing her partner Tom in 2019, followed by both parents within four months, joining a local sea swimming group proved transformative. “I wanted to do it for my physical well-being, but it became much more than that. We sit around afterwards and we chat. What I love about it is that it doesn’t matter where you’re from and what your background is. It gives you back the confidence that grief takes away. It’s personally been a life-saver for me.” [34]
Technology-enabled solutions have also emerged. Elena Stropute, country manager for Timeleft, an app that algorithmically matches six people to go for a meal together offline, reports strong uptake since launching in Dublin in early March 2024 and Cork in April, with over 6,000 users in Dublin alone. “We’ve gotten great feedback, saying how it has gotten people out of their comfort zone, and everyone’s been pleasantly surprised. We want to bring real-life connections back in.” [35]
Social prescribing, where health professionals refer people to community-based activities such as community gardening, walking groups, and parkruns, represents another promising approach. Dr David Robinson, consultant geriatrician at St James’s Hospital and co-chair of the All Ireland Social Prescribing Network, notes that whilst Ireland lacks domestic evidence, “in the UK, there is evidence that it reduces loneliness.” A Donegal study found a 20 per cent reduction in GP visits among those who took up activities of their choice. [36]
Next steps
Ireland stands at a critical juncture. The European Commission’s recognition that “loneliness is not inevitable and it is not an individual but a societal issue” points the way forward. [37] Addressing Ireland’s loneliness epidemic requires action across multiple fronts: ministerial leadership and dedicated funding, expansion of non-commercial social spaces, reform of housing policy to enable young adults to establish independent households, thoughtful regulation of digital platforms, workplace models that balance flexibility with social connection, and integration of loneliness screening into primary healthcare.
As the feelings of anger and hostility fostered by loneliness reshape political landscapes globally, with those who feel isolated and abandoned more likely to support extremist parties, Ireland must recognise that social connection is not merely a matter of individual wellbeing but a foundation of social cohesion. [38]
The irony is profound: a nation globally celebrated for its hospitality and warmth now leads Europe in loneliness. Yet within that irony lies hope. Ireland’s cultural traditions of storytelling, music, and communal gathering have not disappeared; they require conscious revival and protection. The solutions exist, from policy reform to community initiatives to individual choices about how we connect. What’s required now is the collective will to act, before more people suffer alone in a land once famous for ensuring no one did.
Sources
When Kathleen Linehan pulled her organisation’s gender pay data last week, she felt an unexpected surge of satisfaction. As group strategic director of human resources at Cork’s Trigon Hotels Group, she discovered what many Irish employers are still struggling to achieve, namely genuine balance across their pay scales. “I took enormous pleasure in seeing the great balance we have,” she says, “so I only see gender pay gap reporting as a positive” [1].
Linehan’s perspective stands in sharp contrast to the scrambling currently underway across Irish boardrooms. With reporting requirements expanding dramatically in 2025, thousands of organisations are confronting the uncomfortable reality that what you measure, you must eventually manage. The question facing Irish business is no longer whether to report their gender pay gaps, but what they’ll do when those gaps become impossible to ignore.
The Latest Regulations
Ireland’s approach to gender pay transparency has been deliberately incremental. The Gender Pay Gap Information Act 2021 began modestly in 2022, requiring only organisations with more than 250 employees to publish their data. By 2024, this threshold dropped to 150 employees, and this year marks the most significant expansion yet as any organisation with 50 or more employees must now comply [2].
The practical implications are substantial. Where previously several hundred large employers faced scrutiny, approximately 6,000 public and private sector organisations will now be required to report on their gender pay gaps [3]. The deadline has also tightened. Organisations must now publish their reports within five months of their chosen snapshot date in June, rather than the previous six-month window, with all reports due by November rather than December [4].
These aren’t merely administrative adjustments. As Alison Hodgson, CIPD’s market director for Ireland, notes: “This means setting a snapshot date this month, and issuing the report in November 2025” [5]. For organisations experiencing this requirement for the first time, the compressed timeline creates genuine pressure to get their data systems and analytical processes right.
Behind the Numbers
The data emerging from the first waves of reporting reveals patterns that challenge convenient assumptions about workplace equality. Analysis from PayGap.ie shows that approximately three-quarters of companies report a median hourly wage gap favouring men, with some disparities reaching shocking proportions [6].
Goodbody Stockbrokers reported a median hourly wage gap of 46.6 per cent, acknowledging that “fewer females than males continue to occupy the highest paid roles in the firm”, with just 15 per cent of its highest paid quartile being women despite women comprising 55 per cent of its lowest quartile [7]. The Irish Aviation Authority’s claims its 54 per cent median pay gap “primarily arises due to lower numbers of females in specialist aviation roles such as pilot and engineering roles, as well as low numbers in managerial roles” [8].
The technology sector presents similarly troubling patterns. Meta saw its mean gender pay gap widen from 14.2 per cent in 2023 to 19.2 per cent in 2024 — not only the biggest increase among major tech employers but also the largest gap overall [9]. The company acknowledged that women are “better represented in non-tech roles” whilst tech jobs are “typically paid more” and have a “disproportionate impact on pay gaps” [10].
Yet the picture isn’t uniformly bleak. Research by the Chartered Institute of Personnel and Development found that one third of reporting organisations have seen their gender pay gap reduce [11]. At 49 per cent of organisations, the gap remained unchanged, whilst 18 per cent noted an increase [12]. The Economic & Social Research Institute reported an average median pay gap of 30.9 per cent in favour of women, “reflecting not just the higher proportion of females in senior roles but also the fact that pay scales are wider at senior levels” [13].
The Drivers
The reasons behind gender pay gaps prove consistently more complex than simple discrimination. Based on previous reports, the most common stated drivers include lack of female representation at senior levels, with predominantly males in board and leadership roles; occupational segregation where many occupations are gender-dominated; more women holding part-time roles, which has negatively affected their bonus pay and overall earnings; a higher proportion of male employees tending to voluntarily opt for overtime; and bonus structures where men typically receive higher amounts, likely because bonus pay is connected to salary and more men than women hold senior positions [14].
Construction companies are a prime illustration of occupational segregation. Eight of the fifteen companies with the lowest representation of women in the top 25 per cent of earners operate in this sector [15]. Conversely, twelve of the fifteen companies with the lowest representation of men in the bottom quartile work in health and social care, with women comprising between 83.6 and 96 per cent of top earners in these organisations [16].
These structural patterns explain why organisations can simultaneously maintain rigorous equal pay policies — ensuring people receive identical compensation for identical work — whilst reporting substantial gender pay gaps. It’s worth emphasising that the gender pay gap measures the difference between average hourly wages of all men and all women in an organisation, regardless of seniority or role [17]. It’s fundamentally about workforce composition rather than pay discrimination per se.
Transparency
The immediate challenge for many organisations lies simply in compliance. Research reveals that 45 per cent of employers still hadn’t submitted a gender pay gap report more than a month after the closing date last year, a troubling indicator of either capacity constraints or reluctance to engage with the requirement [18].
Yet compliance represents merely the first hurdle. The Department of Children, Disability and Equality announced plans for a centralised reporting portal, though its rollout has proven more limited than initially promised. Originally envisaged to encompass all 6,000 reporting organisations this autumn, the portal will now launch as a pilot scheme for just 600-1,000 companies with more than 100 employees [19]. Mandatory reporting through the portal for all organisations with 50 or more employees has been pushed to 2026, pending additional legislation currently in development [20].
This delay hasn’t diminished the portal’s ultimate significance. As Hodgson explains: “This portal will play an important part in Ireland’s gender pay gap reporting system. It’s hoped that the portal will be searchable and easy to navigate along factors such as industries and size of the business” [21]. The transparency this creates could prove transformative. Current and prospective employees will be able to see precisely how organisations compare, potentially influencing recruitment and retention in ways that abstract commitment statements never could.
The European Context
Ireland’s reporting requirements, whilst increasingly rigorous, represent only the beginning of what’s coming. The EU Pay Transparency Directive will significantly expand obligations across member states, including Ireland, with implementation required by June 2026.
Under the directive, companies in Ireland with 100 or more employees will be required to publicly disclose and fix any unexplained gender pay gaps. By June 2027, companies with 150 or more employees must submit their first report using 2026 payroll data, with companies of 250 or more employees reporting annually thereafter and those with 150-249 employees reporting every three years [22]. Companies with 100-149 employees must submit their first report by June 2031.
Beyond reporting, the directive introduces substantive new requirements. Job advertisements must include salary levels or ranges — information that will interest existing employees as much as applicants. Employees gain the right to proactively request information on pay levels for their positions and to see how career progression affects pay. Where pay gaps above 5 per cent exist at any organisational level that cannot be justified using objective gender-neutral criteria, employers must explain them and may need to consult with workers’ representatives or undergo joint pay assessments [23].
The burden of proof shifts decisively. As Danny Mansergh, leader of the Career Practice at Mercer Ireland, observes: “Employers regularly assert that the existence of a gender pay gap does not mean that they are engaging in unfair pay practices. This is usually a fair assertion… but employers have rarely been required to prove that their pay practices are fair. Under the Pay Transparency Directive, the burden of proof on pay equity moves pretty decisively to the employer in the event of claims of unfair practice” [24].
What To Do
The real question facing Irish organisations isn’t whether transparency will arrive, as it’s already here. The question is what they’ll do with it.
Ireland’s legislation requires more than numerical disclosure. Employers must prepare a supplemental narrative explaining the reasons for differences in pay and any measures being taken or proposed to eliminate or reduce pay gaps. This requirement pushes organisations beyond passive reporting toward active remediation.
Some employers have already moved decisively. Companies report implementing gender-neutral job descriptions, balanced recruitment processes, leadership development for line managers, and talent development through mentorship programmes. Linehan’s approach at Trigon Hotels exemplifies proactive engagement by introducing structured, transparent pay scales and training to support career progression, tracking gender balance and nationality mix monthly, and treating pay equity as a continuous improvement process rather than a compliance exercise [25].
Yet Mansergh acknowledges the complexity: “Arguments over fairness of pay can become toxic in a non-transparent world, with misinformation sometimes playing a very destructive role” [26]. Transparency creates its own tensions, particularly when employees discover new hires receive premium salaries in hot job markets. “Managerial discretion in setting pay can lead to perceptions of unfairness, especially when employees can compare their salaries with new hires,” he notes [27].
His prescription is that companies should conduct comprehensive pay equity analysis to assess current structures and identify discrepancies; establish clear pay ranges for all roles that reflect both market standards and organisational reality; communicate clear guidelines on how pay is determined based on allowable factors like experience, performance and qualifications; train hiring managers and HR personnel to handle pay inquiries; and engage employees through surveys or focus groups to understand their perceptions [28].
Moving Forward
Ultimately, transparency transforms gender pay from a compliance obligation into a competitive factor. Organisations demonstrating genuine progress will find it easier to attract talent in a market where prospective employees can readily compare employers. Those with persistent, unexplained gaps may find themselves at a disadvantage regardless of their other attractions.
“It has long been said that what you don’t measure, you can’t manage,” argues Mansergh. “Gender pay gap reporting will give employers valuable insights into their internal pay and talent dynamics. For those serious about tackling inequity, it will be an early step towards a fairer and more inclusive environment that will benefit both employees and the organisation itself” [29].
The evidence suggests that progress is possible but not inevitable. If efforts to close the gender pay gap globally continue at their current rate, it would take women 134 years to reach full parity, according to the World Economic Forum [30]. Ireland’s women earn on average 8.6 per cent less than men according to 2023 EU estimates, whilst 2019 analysis from the Economic and Social Research Institute found women retired earning 35 per cent less than men, creating long-term economic consequences that extend well beyond working years [31].
The expansion of reporting requirements to encompass organisations with 50 or more employees represents a watershed. With thousands of additional employers now subject to scrutiny, and a centralised portal making comparisons inevitable, the conversation shifts from whether gaps exist to what organisations will do about them. Those treating transparency as opportunity rather than obligation will likely find themselves better positioned for the labour market of the next decade, one where information asymmetries between employers and employees continue to erode, and where demonstrated commitment to equity matters more than stated intentions.
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[2] https://synd.io/global-pay-gap-reporting-guides/ireland/
[3] https://www.businesspost.ie/article/one-third-of-companies-see-gender-pay-gap-reducing-cipd/
[6] https://www.irishtimes.com/business/2025/05/08/gender-pay-gap-ireland/
[7] https://www.irishtimes.com/business/2025/05/08/gender-pay-gap-ireland/
[8] https://www.irishtimes.com/business/2025/05/08/gender-pay-gap-ireland/
[11] https://www.businesspost.ie/article/one-third-of-companies-see-gender-pay-gap-reducing-cipd/
[12] https://www.rte.ie/news/business/2025/0625/1520207-cipd-gender-pay-gap-research/
[13] https://www.irishtimes.com/business/2025/05/08/gender-pay-gap-ireland/
[15] https://www.irishtimes.com/business/2025/05/08/gender-pay-gap-ireland/
[16] https://www.irishtimes.com/business/2025/05/08/gender-pay-gap-ireland/
[17] https://www.pwc.ie/services/workforce/gender-pay-gap-reporting.html
[22] https://synd.io/global-pay-gap-reporting-guides/ireland/
[23] https://synd.io/global-pay-gap-reporting-guides/ireland/
The relief of receiving a job offer is often short-lived. What follows is what Senior Forbes Contributor contributor Jack Kelly ornately describes as “the delicate dance of salary negotiation” [1]. For many professionals, this final hurdle proves as nerve-wracking as the interview process itself, filled with concerns about appearing greedy or jeopardising the opportunity altogether.
Indeed, research shows that 55% of professionals accept initial job offers without negotiating, whilst nearly 78% of those who do negotiate end up with higher salaries [2]. And it’s not just a short-term gain. Negotiating just £5,000 more on a starting salary, with average annual raises of 5%, translates to an extra £27,500 over five years [3]. Since future employers often base offers partly on current salary, a successful negotiation can significantly boost earnings throughout an entire career [4].
The tension candidates face is whether to push too hard and risk being perceived as greedy or settle for less and face future regret. But with the right preparation and approach, securing fair compensation needn’t damage relationships or opportunities.
Reframing the Conversation
“Why are you thinking of a negotiation as a conflict?” asks Linda Babcock, economics professor at Carnegie Mellon University and author of Ask for It [5]. She emphasises that negotiations should be conversations, not confrontations. When done properly, both parties achieve their objectives. Employees receive fair compensation, whilst employers retain quality talent who aren’t spending half the day updating their CVs [6].
This collaborative mindset matters particularly in corporate environments. As Max, a contributor to the Financial Times’ ‘Working It’ podcast, makes the case, “It wasn’t my boss’s money. It wasn’t her that was paying me directly. So it’s about how do you build a convincing argument that it makes sense for the business to give me a pay rise” [7]. Understanding that you’re ultimately making a business case to people further up the chain can remove emotion from the equation and focus the conversation on rational justifications.
The cultural context matters too. Just as haggling is expected when buying cars or houses, salary negotiation should be viewed as a standard practice. If an employer has reached the stage of making an offer, they want you to accept. The costs of hiring new employees are substantial, and negotiating for your salary shouldn’t change their decision.
Doing your Homework
Effective negotiation begins long before any conversation takes place. Researching industry-specific salary ranges, accounting for factors such as location, company size, and personal experience, provides a solid foundation for establishing reasonable compensation expectations. Resources like Glassdoor offer valuable data for understanding market rates [8].
Here, again, Max provides a great example. He approached his negotiation by speaking with multiple recruiters and getting a feel for the market. “The strategy I took was to speak to a number of different people and get what I thought was a sensible benchmark for what I actually thought was my job versus what they thought my job was,” he explains [9]. This research allowed him to make two compelling arguments. First, that the company’s benchmark was outdated based on current market rates. Second, given his strong performance over three years, he should be positioned at the higher end of whatever new benchmark was established [10].
Gillian Ku of London Business School also emphasises the importance of comprehensive information gathering. “Arm yourself with information,” she says. “In salary negotiations, think about what you are worth. This means knowing what those in your position (internally and externally) are paid” [11]. Online salary surveys prove helpful, but conversations with friends, mentors, and contacts comfortable sharing information can be equally valuable.
At an absolute minimum, Forbes’ Caroline Castrillon makes the case that it’s vital to establish three key figures. Your ideal number (the salary you’d be excited to receive based on research and qualifications), your target number (a realistic figure slightly above expectations, allowing negotiation room), and your walk-away number (the absolute minimum acceptable based on financial needs and the position’s career value) [12].
Comprehensive Compensation
Whilst salary often dominates discussions, savvy negotiators understand that compensation extends far beyond base pay. Health benefits packages, corporate titles, bonus structures (preferably documented in writing), retirement plans, stock options, and increasingly, remote or hybrid work arrangements all contribute to overall job satisfaction and work-life balance.
For those working in countries in which they may be leaving money behind at current employers — unvested equity grants, stock options, unvested 401(k) contributions, or tuition reimbursement funds requiring repayment — these amounts provide realistic starting points for sign-on bonus requests [13].
For others, simply asking “Is a sign-on bonus available?” and letting the employer name a figure first can prove effective. If pressed for specifics, requesting 10-15% of base salary provides a reasonable starting position [14].
Worth noting is that companies often demonstrate more flexibility with one-time payments like signing bonuses than with permanent salary increases. Similarly, additional equity grants may be easier to secure than higher base pay if budgets are constrained. The key is understanding where flexibility exists and where ironclad constraints like salary caps leave no room for negotiation [15].
Cynthia Saunders-Cheatham of Cornell University’s Johnson Graduate School of Management advises considering vacation time, relocation packages, start dates, and training opportunities [16]. In some cases, negotiating a six-month performance appraisal rather than the typical annual review can create an opportunity for salary increases sooner [17].
Strategic Timing
The timing of negotiations matters considerably. Generally speaking, it’s best to let the employer raise compensation first. Discussing salary too early signals that money is your primary concern rather than the role itself. The ideal moment to negotiate arrives after receiving a formal offer but before accepting it.
When multiple interviews are in progress, consider timing carefully. Having competing offers provides extra bargaining power and demonstrates how in-demand you are. The New York Times spoke to one data analyst who used this strategy effectively, asking her top-choice company for a week to decide whilst awaiting a competitor’s offer. During that time, she requested additional perks never previously considered, including restricted stock units, ultimately receiving £15,400 worth of equity and complete schedule flexibility [18].
When presenting your case, try to frame requests positively. Express genuine enthusiasm for the role and company before discussing compensation, establishing a collaborative tone. Rather than simply stating desired figures, it’s important to explain precisely why they’re justified, such as the reasons you deserve more than others hired, or why specific arrangements suit both parties.
As Deepak Malhotra of Harvard Business School advises: “Never let your proposal speak for itself — always tell the story that goes with it” [19]. If you have no justification for a demand, making it may prove unwise. The inherent tension between likability and demonstrating value requires careful management. Suggesting exceptional value can sound arrogant without thoughtful communication.
Gender Dynamics
Unfortunately, negotiation carries gendered implications requiring careful navigation. Babcock’s research demonstrates that both men and women penalise female employees when they initiate salary negotiations [20]. A 2007 study published in Organizational Behavior and Human Decision showed this pattern consistently across genders [21].
“The style that a woman uses to negotiate can backfire and can create backlash, but using a cooperative style can get you what you want and help you avoid the backlash,” Babcock explains [22]. Meanwhile, paying close attention to body language during negotiations is vital so you can gauge reactions in real time. If your manager’s posture changes, tune in and adjust accordingly [24].
Difficult Moments
Preparation for tough questions is also essential. Common challenges include: “Do you have any other offers?” “If we make you an offer tomorrow, will you say yes?” “Are we your top choice?” [25] Being unprepared risks evasive or untruthful responses. Malhotra’s categorical advice is to never lie in a negotiation. It frequently comes back to bite you, and even if it doesn’t, it’s unethical [26].
When Things Don’t Go to Plan
If employers resist counteroffers, Castrillon recommends avoiding immediate concession. Instead, ask questions to understand constraints and explore creative solutions. You might say: “I understand there may be budget considerations. Could we discuss a performance review after six months with potential for adjustment based on results? Or are there other elements of the compensation package we could explore?” [28]
She also suggests one should never apologise for discussing higher salary; negotiation is standard practice employers expect [29]. Nor should one reveal their current salary; it’s irrelevant to market value for the new position. Keep discussions professional rather than personal, focusing on professional value and market rates, not personal financial needs. And be sure to maintain a collaborative tone throughout. After all, how you negotiate can be as important as what you negotiate. As Babcock reminds us: “There’s no cost to being gracious, and if you’re colleagues, you’re in a long-term relationship with this person” [31].
Kim Churches, chief executive of the American Association of University Women, advises employees to “listen to your gut on how much you can go back and forth, then make some decisions. It takes two parties to negotiate” [30]. If the other party shows no interest in continuing dialogue, determine how to move forward. You can attempt one final effort or begin to look elsewhere for employment.
The Long Game
Remember that what’s not negotiable today may become negotiable tomorrow. Over time, interests and constraints change. When someone says no, they’re saying “no, given how I see the world today.” A month later, circumstances may shift. A boss denying requests to work from home on Fridays may lack flexibility on the issue, or you may not yet have built sufficient trust for that arrangement. Six months in, you’ll likely be better positioned to demonstrate you’ll work conscientiously away from the office, or that you deserve that extra zero on your paycheck.
Sources
[5] https://www.nytimes.com/2018/08/10/smarter-living/how-to-negotiate-salary.html
[6] https://www.nytimes.com/2018/08/10/smarter-living/how-to-negotiate-salary.html
[7] https://www.ft.com/content/412c6b12-c9cb-4118-9573-143f0e3308f2
[9] https://www.ft.com/content/412c6b12-c9cb-4118-9573-143f0e3308f2
[10] https://www.ft.com/content/412c6b12-c9cb-4118-9573-143f0e3308f2
[11] https://www.ft.com/content/4bf4493c-918c-11e8-9609-3d3b945e78cf
[13] https://www.nytimes.com/2022/04/15/business/new-job-negotiate-pay-benefits.html
[14] https://www.nytimes.com/2022/04/15/business/new-job-negotiate-pay-benefits.html
[15] https://hbr.org/2014/04/15-rules-for-negotiating-a-job-offer
[16] https://www.ft.com/content/977a1364-0495-11e5-95ad-00144feabdc0
[17] https://www.ft.com/content/977a1364-0495-11e5-95ad-00144feabdc0
[18] https://www.nytimes.com/2022/04/15/business/new-job-negotiate-pay-benefits.html
[19] https://hbr.org/2014/04/15-rules-for-negotiating-a-job-offer
[20] https://www.nytimes.com/2018/08/10/smarter-living/how-to-negotiate-salary.html
[21] https://www.nytimes.com/2018/08/10/smarter-living/how-to-negotiate-salary.html
[22] https://www.nytimes.com/2018/08/10/smarter-living/how-to-negotiate-salary.html
[23] https://www.nytimes.com/2018/08/10/smarter-living/how-to-negotiate-salary.html
[24] https://www.nytimes.com/2018/08/10/smarter-living/how-to-negotiate-salary.html
[25] https://hbr.org/2014/04/15-rules-for-negotiating-a-job-offer
[26] https://hbr.org/2014/04/15-rules-for-negotiating-a-job-offer
[27] https://hbr.org/2014/04/15-rules-for-negotiating-a-job-offer
[29] https://www.forbes.com/sites/carolinecastrillon/2025/04/03/3-steps-to-negotiate-a-higher-salary-before-accepting-a-job-offer/ [30] https://www.nytimes.com/2018/08/10/smarter-living/how-to-negotiate-salary.html
There’s a peculiar irony at the heart of corporate life. The moment professionals reach the upper echelons of leadership, the scaffolding of support that helped them climb suddenly disappears. Mid-level managers enjoy structured onboarding, regular one-to-ones, skip-level meetings, and formal mentorship. Junior members of staff enjoy a never-ending slew of self-betterment opportunities. Senior leaders, by contrast, often transition into new roles and are met by silence [1]. They’re expected to set vision, guide others, and deliver results immediately, all whilst navigating unfamiliar terrain without a safety net.
Writing in Harvard Business Review, executive coach Marlo Lyons, who has observed this pattern repeatedly, argues that this invisible drop-off represents one of the least-recognised risks in organisations today [2]. The assumption underlying this abandonment is seductive in its simplicity. We are to believe that these individuals have “arrived”. They are masters of their craft who no longer require handholding. Yet this mastery is a myth. The belief that executives inherently “know what they’re doing” simply because they’ve reached the top fundamentally misunderstands the nature of leadership development [3].
The consequences extend far beyond individual executives. When senior leaders lack adequate support, the effects ripple through entire organisations. Decision quality suffers. Cultural stability erodes. Performance declines. And the very people entrusted to set the course for everyone else may find themselves questioning the capabilities that brought them to senior positions, either making poor decisions or hesitating to make them at all.
The Economics of Neglect
The leadership development industry represents a multi-billion-pound global enterprise, yet it harbours what Senior Forbes Contributor Mark Murphy calls the “dirty secret” that most leadership programmes are evaluated by the people who design and deliver them, not by the employees who are supposed to benefit [4]. This fundamental flaw in evaluation methodology helps explain why leadership training continues to disappoint despite massive corporate investment.
Murphy’s research, involving surveys of over 150,000 employees, managers, and executives across hundreds of organisations, reveals a shocking disconnect. Whilst training departments celebrate completion rates and executives praise programme design, the people actually led by these “developed” leaders tell a dramatically different story [5].
Consider the findings from a study of 21,008 employees evaluating their leaders across seven critical competencies. Only 29% say their leader’s vision aligns with organisational goals. Despite countless hours spent in strategic leadership training, more than two-thirds of employees see their leaders as misaligned with organisational direction [6]. Only 20% report that their leader always shares the challenges the organisation faces, despite transparency being a core component of virtually every leadership programme [7]. And merely 27% say their leader always encourages and recognises suggestions for improvement, even though creative leadership and employee engagement have become ubiquitous buzzwords in professional development [8].
The business impact proves even more damning. Employees who believe their leaders demonstrate strong leadership are dramatically more engaged and productive. Those whose leaders share organisational challenges are ten times more likely to recommend their company as a great employer. Employees whose leaders encourage suggestions for improvement are twelve times more likely to recommend their organisation [9]. The return on investment potential is enormous, if leadership development actually produced effective leaders.
Why Support Evaporates at the Top
Several interlocking factors explain why organisations cease investing in talent development precisely when the stakes are highest. Beyond the mastery myth, there’s the matter of programme prioritisation. Companies direct resources towards directors and vice presidents, where leadership pipelines are built and turnover is higher [10]. This makes intuitive sense from a resource allocation perspective, but it ignores the exponentially greater impact (both positive and negative) that senior leaders wield.
Then there’s what Lyons identifies as “the stoicism culture” [11]. Admitting uncertainty at senior levels is perceived as weakness, particularly when executives were hired to “figure it out” on their own. This creates a vicious cycle in which senior leaders don’t ask for development or support because they believe they should already have the answers, which reinforces organisational assumptions that such support is unnecessary [12].
This stoicism and resistance can lead to isolation and anxiety at the top. SVPs, EVPs, and C-level leaders may begin questioning the very capabilities that elevated them to these positions. Some respond by reverting to old habits such as getting into the weeds on execution instead of strategy, because that’s where it feels safe and how they rose through the ranks [13].
Writing in Forbes, Professor of Leadership at Henley Business School Benjamin Laker frames the problem more broadly: “The higher someone climbs, the less likely they are to be formally supported in thinking critically, creatively or ethically” [14]. This isn’t merely short-sighted. It’s genuinely risky. The most senior people in firms hold decision rights over the biggest levers, be it strategic priorities, organisational culture, financial bets, technology adoption, or workforce policies. When their thinking becomes stale or reactive, the consequences echo far beyond the boardroom.
A Dearth of Thinking
Much of what’s celebrated in business relies on what psychologists call System 1 thinking. It’s fast, intuitive, and efficient. But when complexity enters the picture, instinct isn’t enough. The messy, high-stakes challenges that now define leadership, such as climate change, geopolitical tension, workforce transformation, or AI ethics, cannot be solved on autopilot [15].
As Daniel Kahneman observed in Thinking Fast and Slow, “Thinking is to humans as swimming is to cats. We can do it, but we’d rather not” [16]. Deep, reflective thought is cognitively expensive, and most of us avoid it. That becomes problematic when leaders are tasked with navigating uncertainty, interpreting ambiguous data, and making decisions affecting hundreds or thousands of lives.
The World Economic Forum lists analytical and creative thinking as the top skills needed in the global workforce [17]. Yet in many leadership pipelines, these skills are underdeveloped and under-supported [18]. The danger is compounded by artificial intelligence tools that, whilst streamlining tasks, also discourage hard thinking. When tools generate plausible answers before leaders finish formulating their questions, the temptation to skip the difficult parts such as wrestling with ambiguity, weighing nuance, or facing doubt becomes stronger [19].
The risk isn’t that AI provides bad answers. It’s that it delivers “good enough” ones that sound right, feel familiar, and allow us to move on. But effective leadership isn’t about sounding right. It’s about being right, at the right time, for the right reasons [20].
Five strategies
Addressing this paradox requires deliberate intervention. Lyons proposes five strategies to close the gap between senior leaders’ needs and the support organisations provide [21].
First, normalise executive onboarding every time. One successful senior executive Lyons onboarded received personalised training covering company and product history, the history of the team they were hired to lead, and company-culture nuances. Within two weeks, she had gained deep knowledge that accelerated her ability to make an impact [22]. Not every company can create personalised onboarding for every senior leader, but they do need executive onboarding that’s more comprehensive than what’s provided to all new hires. This should include specialised sessions focusing on expectations, company-specific leadership styles, and culture dynamics, scheduled meet-and-greets with cross-functional stakeholders, and daily touchpoints during the first two weeks to answer questions so mistakes are minimal and confidence can build quickly.
Second, build confidential peer-coaching opportunities. Every senior leader needs a safe space to test ideas without fear of judgement. Coaching that pairs leaders with peers from different functions can create that outlet. Rotating peer-coaching partners quarterly for the first year can broaden perspectives and relationships. Small senior leadership group forums where executives workshop challenges can reframe vulnerability as a strength and collaboration as the norm, reducing isolation whilst normalising learning [23].
Third, facilitate reflection early and often. Executives benefit from structured reflection time, particularly in their first six months. Sessions where leaders examine what’s going well, what’s unclear, and where adjustments are needed, facilitated by neutral internal or external facilitators, reduce performance pressure and create space for vulnerability. Positioning reflection as an investment in accelerating impact provides executives time and permission to adjust before small issues escalate [24].
Fourth, introduce focused 360-degree assessments at key intervals. Feedback doesn’t end at the director or vice president level. In fact, it’s even more critical at the top, where blind spots carry organisational consequences. Lyons has witnessed senior executives hesitate to give direct feedback to a new peer, choosing instead to discuss concerns privately and hoping the individual will “figure it out” [25]. The results are predictable. It ends in misunderstandings, misinterpretations, and eventual failure . Running a 360 assessment to capture early impressions can shape direct feedback and help a leader pivot quickly. Conducting another at six months evaluates growth and alignment. This practice reinforces a culture of continuous learning, even at the highest levels [26].
Fifth, formalise upstream mentorship and coaching. Senior leaders need trusted guides, sometimes a board member, other times an external executive coach. Pairing new executives with mentors who understand the unique stakes of senior leadership provides essential guidance and perspective. External coaches bring not only impartiality but also insight about navigating company culture. Connecting new leaders with board sponsors can accelerate their understanding of the organisation’s higher-level risk and governance approach, grounding them in the strategic, financial, and reputational considerations that drive board-level priorities [27].
Learning leaders
There’s a tendency in both business and policy to cut the ladder after the climb, assuming that those who’ve reached the top no longer need support for their continued ascent. The evidence suggests otherwise. Leadership is a practice that deteriorates without deliberate effort. Smart firms won’t wait to be told this. They’ll invest in learning not because it’s mandated, but because it’s mission-critical. Because once thinking stops, leadership does too.
Sources
[1] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[2] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[3] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[10] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[11] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[12] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[13] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[21] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[22] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[23] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[24] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[25] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[26] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
[27] https://hbr.org/2025/10/senior-leaders-still-need-learning-and-development
Meetings have become the defining ritual of corporate life. They structure our calendars, consume our energy, and far too often erode our productivity. According to the Wall Street Journal, the average worker spends two days a week in meetings and on email, equating to 40% of their time at work, while executives spend an astonishing 23 hours a week in meetings alone, according to MIT’s Sloan School of Management [1]. In the US, this translates to a staggering cost of at least $25,000 per employee annually in lost productivity, representing one of the most significant drains on organisational resources in contemporary business [2].
The shift to remote and hybrid work has exacerbated these challenges, as organisations increasingly rely on meetings to maintain alignment, ensure visibility, and compensate for the perceived loss of in-person interaction [3]. In some company cultures, meetings have even evolved into monitoring tools rather than collaborative spaces for meaningful exchange. Yet despite this proliferation, Harvard Business Review research reveals that 70% of meetings impede employees’ efforts to accomplish “productive work” [4]. The data is unequivocal in showing that not only do we have too many meetings, but many of them are unnecessary or downright counterproductive.
Anatomy of meeting dysfunction
The dysfunction begins with fundamental misunderstandings about when meetings are actually necessary. Organisational psychologist Adam Grant identifies only four legitimate reasons to convene a meeting, “to decide, learn, bond, and do” [5]. If a meeting doesn’t accomplish any one of these objectives, Grant offers blunt advice: “Cancel it” [6]. Yet organisations routinely schedule gatherings that could be replaced by a simple email, consuming valuable time that could be devoted to substantive work.
Recent research illuminates the scope of this problem. When asked about work meetings, 29% of respondents said they were often very long and unproductive, whilst 42% reported that no decisions were made during these gatherings [7]. This tendency to “gather” leads to enormous waste of time and prevents organisations from capitalising on opportunities to align teams and set guidelines for improving business performance.
The problem extends beyond mere inefficiency. As José Luís González Rodriguez, Partner of ActionCOACH Spain, notes, “Any activity that is unproductive involves a no-return expense for the company. To the extent that there are several people gathered using part of their working day without adding value to the company, we are incurring an unnecessary and absurd expense, which makes the company less efficient and less competitive — not to mention the demotivating effect of attending meetings that waste their time” [8].
The executive trap
Perhaps nowhere is meeting dysfunction more pronounced than at the executive level, where the very structure of one-on-one meetings works against organisational interests. Writing in Harvard Business Review, Ron Carucci, cofounder and managing partner at Navalent, argues that the proliferation of executive one-on-ones creates four core problems: fragmented governance, functional bias, decision repackaging, and executive rivalry and collusion [9].
Carucci documents the experience of Melissa, a CEO of a tech company in the healthcare sector, who discovered that her well-intentioned one-on-ones were creating organisational dysfunction. Despite priding herself on being a transparent, inclusive leader, she learned that critical decisions affecting multiple departments were being made in isolation, with affected parties learning about changes from their peers rather than directly from leadership [10]. The VP of engineering learned about a deprioritised product feature from the VP of marketing, whilst the VP of quality discovered a new project to accelerate product delivery from the VP of operations.
This fragmentation occurs because “each one-on-one functions like a mini steering committee, but with no one else in the room. Governance becomes informal and duplicative, requiring rework and follow-up meetings just to keep others up to speed” [11]. The result is not efficiency but rather a multiplication of meetings and misalignment that could have been avoided through more thoughtful meeting design.
Meeting hangovers
The impact of dysfunctional meetings extends far beyond the conference room. Assistant Professor of Psychological and Organizational Science at the University of North Carolina Brent N. Reed identifies the phenomenon of “meeting hangovers”, the lingering effects of bad meetings that drain productivity and morale long after participants have returned to their desks [12]. These hangovers manifest when meetings lack clear objectives, include unnecessary participants, fail to produce actionable outcomes, or run over their allocated time.
To prevent these productivity drains, organisations must focus on fundamental meeting hygiene. This includes facilitating rather than dominating discussions, cutting guest lists to include only essential participants, transforming agendas into action plans, and demanding accountability for follow-through [5]. As the research suggests, “Fewer attendees mean more-focused conversations — and ultimately better outcomes” [13].
The importance of disciplined meeting management becomes even more critical in hybrid work environments. Mike Tolliver and Jonathan Sass, Director of Product Management and Vice President of Product and Marketing at Vyopta, note that “hybrid work has changed meetings forever,” with participation rates declining and virtual fatigue becoming widespread [14]. Their research reveals that 54% of all meetings are hosted by just 10% of employees, suggesting that targeted training for these “power users” can help promote a healthier meeting culture across entire organisations [15].
Reclaiming meeting culture
Transforming meeting culture requires a fundamental shift from viewing meetings as default activities to treating them as strategic investments. Forbes writer Caroline Castrillon advocates for implementing a “meeting budget system” that treats leaders’ time as finite resources, quantifying available meeting hours and prioritising only those gatherings that create genuine value [16]. This approach has shown remarkable results. Netflix’s implementation of strict meeting disciplines, including a 30-minute maximum duration, has reduced meetings by more than 65%, with over 85% of employees reporting improved productivity [17].
The key lies in recognising that different types of meetings serve different purposes and require distinct approaches. McKinsey research identifies three categories. They are decision-making meetings that result in final decisions, creative solutions and coordination meetings that generate potential solutions, and information-sharing meetings that should be the first target for elimination [18]. By clearly defining the purpose of each gathering, organisations can ensure that participants arrive with appropriate expectations and are prepared to contribute meaningfully.
Curiosity and structure
Global CEO coach and keynote speaker Sabina Nawaz advocates for using curiosity as a tool to keep meetings focused and engaging [19]. Rather than dominating discussions, meeting leaders should ask participants to define the goal in one sentence, actively listen to diverse perspectives, and provide feedback without judgmental language. This approach not only maintains meeting momentum but also empowers participants to contribute more authentically.
The structural elements of effective meetings cannot be overlooked. President and CEO of Tech Alpharetta Karen Cashion emphasises five critical attributes. She recommends advance preparation with clear agendas, punctual starts that signal respect for participants’ time, staying on agenda whilst maintaining control, having materials ready before the meeting begins, and ending precisely on schedule [20]. These seemingly elementary points address fundamental failures that plague most organisational meetings.
Accountability systems
The true measure of meeting effectiveness lies not in what happens during the session but in what unfolds afterward. Too often, meetings generate good intentions that dissipate amidst other pressing demands. Successful organisations implement robust accountability systems that include ending each meeting with clear action plans, documenting and distributing action items within 24 hours, and beginning subsequent meetings by reviewing progress on previous commitments [21].
This accountability loop ensures that meetings drive real progress rather than becoming isolated events disconnected from actual work. As González Rodriguez notes, “Meetings should be short and very executive. The leader of the meeting must know how to handle very well the contents of the meeting, as well as the time allocated to each item on the agenda” [22].
How to have productive meetings
The organisations that thrive moving forward will be those that master the art of productive meetings by treating them not merely as efficiency exercises but as demonstrations of respect for their teams’ most valuable resource –– time and attention. This requires moving beyond traditional approaches to embrace new models that prioritise quality over quantity.
For senior executives, this may mean shifting from frequent one-on-ones to quarterly development conversations and implementing “capability meetings” that bring together cross-functional leaders around specific business outcomes [23]. For all leaders, it means developing the discipline to ask hard questions about meeting necessity, designing gatherings that serve clear purposes, and creating systems that ensure follow-through on decisions and commitments.
The cost of maintaining the status quo is too high to ignore. When meetings consume significant portions of working time without delivering proportionate value, they represent a form of organisational self-sabotage that undermines competitiveness and employee engagement. By implementing strategic meeting disciplines, leaders can reclaim their organisation’s most precious resource and create environments where focus, innovation, and execution can flourish.
Sources
[1] https://hbr.org/2025/02/the-hidden-toll-of-meeting-hangovers
[9] https://hbr.org/2025/07/why-senior-leaders-should-stop-having-so-many-one-on-ones
[10] https://hbr.org/2025/07/why-senior-leaders-should-stop-having-so-many-one-on-ones
[11] https://hbr.org/2025/07/why-senior-leaders-should-stop-having-so-many-one-on-ones
[12] https://hbr.org/2025/02/the-hidden-toll-of-meeting-hangovers
[13] https://hbr.org/2025/02/the-hidden-toll-of-meeting-hangovers
[14] https://hbr.org/2024/06/hybrid-work-has-changed-meetings-forever
[15] https://hbr.org/2024/06/hybrid-work-has-changed-meetings-forever
[19] https://hbr.org/2024/01/how-curiosity-can-make-your-meetings-and-team-better
[23] https://hbr.org/2025/07/why-senior-leaders-should-stop-having-so-many-one-on-ones
The modern workplace faces a peculiar paradox. Whilst organisations invest heavily in strategic planning and leadership development, a growing chasm exists between executive decision-making and operational execution. This disconnect manifests in multiple ways, from C-suite indecision that paralyses middle management to misalignment between human resources teams and senior leadership that undermines people strategies. The result is organisational inertia at precisely the moment when agility and clarity are most needed.
Writing in Harvard Business Review on the issue of managing a team when the C-suite isn’t providing strategic direction, Jenny Fernandez and Kathryn Landis give the example of Lauren, a VP of operations at a high-growth technology firm, who found herself caught in an all-too-familiar predicament. The C-suite kept stalling on key decisions, including product investments, organisational restructuring, and resource allocations [1]. As leadership froze, accountability rolled downhill, leaving Lauren to manage confusion, stalled progress, and a restless team. Her situation reflects a broader crisis of executive effectiveness that is costing organisations dearly.
According to McKinsey, slow decision-making is a major driver of organisational underperformance and employee burnout, wasting over 500,000 manager days annually and costing Fortune 500 companies around £200 million in lost wages annually [2]. Meanwhile, Gallup research indicates that unclear expectations are a leading cause of employee disengagement [3]. These statistics paint a stark picture of leadership failure that extends far beyond individual cases.
Executive paralysis
The roots of C-suite indecision often lie in an organisational culture that treats reversible decisions as irreversible ones. This phenomenon becomes particularly pronounced during periods of economic uncertainty or transformation, when executive hesitation erodes momentum, weakens credibility, and drives high performers to disengage. The psychological barrier to decision-making increases when proposals feel large, final, or irreversible, even when they need not be.
Amazon’s distinction between Type 1 and Type 2 decisions offers a useful framework for understanding this paralysis [4]. Type 1 decisions are high-stakes, irreversible “one-way doors” that require careful deliberation due to their lasting impact. Type 2 decisions are low-risk, reversible “two-way doors” that can be made quickly because they’re easy to revisit or revise. The critical error many organisations make is treating the reversible as irreversible, causing them to overanalyse, overprocess, and slow down unnecessarily.
This misclassification of decisions creates a cascade of problems throughout the organisation. When senior leaders fail to provide clear strategic direction, middle managers, who serve as the crucial link between executive vision and operational reality, find themselves adrift. As one team member in Lauren’s situation observed: “We’re driving in circles. What’s the actual destination?” [5].
The HR disconnect
The leadership gap extends beyond operational decision-making into the realm of people strategy, where a troubling disconnect exists between human resources teams and the C-suite. Recent survey data from Lattice reveals only 48% of HR leaders say their C-suite takes employee engagement survey data seriously, whilst a mere 27% believe their C-suite sees HR’s impact on business revenue [6]. Perhaps most concerning, 44% of HR leaders feel increased pressure from the C-suite to justify the investment in people programmes [7].
This disconnect represents a fundamental failure of strategic alignment. As Cara Brennan Allamano, Lattice’s chief people officer, notes: “A strong, strategic CPO should have a deep understanding of the company’s business goals and objectives, using those as a north star to design talent strategies that contribute directly to achieving those goals” [8]. Yet many HR leaders walk into organisations with their own ideals about how companies should operate, with limited regard for broader organisational goals and existing culture.
The consequences of this misalignment are severe. In an era where companies routinely proclaim that people are their most valuable asset, the message rings hollow when C-suite leaders and HR aren’t working in harmony. The irony is particularly acute given that robust people strategy has become essential for company success in today’s business environment.
Change vs resistance
Compounding these challenges is the fundamental paradox of leadership transitions. Companies hire executives to drive change, but their cultures are often built to defend the status quo. This resistance to change isn’t always about defiance. More often, it stems from fear. Employees who have spent years mastering a system worry that change will diminish their expertise, reduce their influence, or put their jobs at risk.
This fear extends even to senior executives themselves. Recent survey data shows that whilst 91% of C-suite leaders are adopting generative AI, 87% also express deep concerns about its risks [9]. Such hesitation at the top trickles down throughout the organisation, creating what Sabeer Nelliparamban, writing in Forbes, describes as “leadership inertia.” [10]
The Center for Creative Leadership reports that failure rates for newly appointed executives range from 30% to 50% within the first 18 months of their tenure, typically due to unclear expectations, lack of alignment, and internal resistance [11]. For incoming leaders, this creates a high-stakes dilemma. If they push too hard, too fast, they risk alienating the very people needed for success. If they move too cautiously, they risk being absorbed into the inertia they were hired to break.
Bridging the strategic divide
Successful navigation of these challenges requires a multifaceted approach that addresses both decision-making processes and communication structures. The most effective leaders learn to reframe requests in ways that reduce psychological barriers to approval. Fernandez and Landis argue that instead of presenting proposals as comprehensive, final plans requiring immediate commitment, companies should position initiatives as “30-day pilots to gather insights before scaling” [12]. This shift transforms high-stakes decisions into low-risk experiments, enabling faster progress whilst managing perceived risk.
Equally important is the ability to quantify the cost of inaction. When executives hesitate, effective leaders make delay costs visible through real data demonstrating how stalled decisions affect business performance, employee morale, or competitive advantage. As one example illustrates, by presenting hard numbers (£180,000 in monthly churn losses and a 12% drop in engagement linked to delay) a leader shifted executive mindset and secured approval within a week [13].
The role of middle management becomes crucial in this context. These leaders serve as strategic connectors between the top floor and shop floor, and their empowerment is essential for organisational success. Research suggests that rather than eliminating middle management layers, organisations should involve these leaders in setting key performance indicators, ensuring they are bought in and can champion goals to frontline employees whilst providing candid feedback to senior leaders [14].
Technology
In today’s sophisticated, tech-savvy boardroom environment, the ability to communicate impact through data has become essential. HR leaders who exceed their goals are almost three times more likely to use performance management software and more likely to employ advanced tools for employee engagement, learning, and analytics [15]. Conversely, 65% of low-performing teams rely on simplistic tools [16].
This technology gap represents more than just operational efficiency. It demonstrates a fundamental shift in how organisational impact is measured and communicated. The rise of artificial intelligence has made clear that technological innovation isn’t slowing, with 76% of HR leaders exploring ways to incorporate AI into their practices [17]. As Donald Knight, CPO at Greenhouse, told Forbes, “HR leaders view AI as a tool, rather than a threat,” seeing it as a means of automating repetitive tasks to allow focus on more strategic initiatives [18].
Rebuilding trust
The foundation for bridging these leadership gaps lies in rebuilding trust through transparency and authentic communication. This requires what Gianna Driver, chief human resources officer at Exabeam, describes as embracing “the art of having a difficult conversation” [19]. Research indicates that transparent communications from leadership is the top driver of workplace culture [20], yet many leaders shy away from the challenging discussions that could resolve misalignments.
Effective communication at the senior level is not about simply sharing decisions but about explaining the thought process behind those decisions. As Nicky Hancock of the Forbes Human Resources Council notes, “The C-suite must show its thought process so middle managers can better understand how it supports the long-term strategy. Otherwise, they may feel they aren’t being heard, valued or trusted” [21].
This transparency extends to acknowledging when decisions are delayed or uncertain. Rather than leaving teams to speculate about direction, successful leaders maintain open channels of communication about what’s known, what’s unknown, and what’s being done to resolve ambiguity. They recognise that their role becomes that of translator, motivator, and shock absorber during periods of executive uncertainty.
What to do when the C-suite fails
The challenges of leadership alignment in modern organisations are not insurmountable, but they require deliberate effort and sustained commitment from all levels of leadership. Successful organisations recognise that strategic indecision at the top represents both a leadership stress test and a proving ground for emerging leaders.
The solution lies not in eliminating uncertainty, which is impossible in today’s volatile business environment, but in building organisational capabilities to navigate ambiguity effectively. This means creating decision-making frameworks that distinguish between reversible and irreversible choices, empowering middle management to act within defined parameters, and ensuring that support functions like HR are strategically aligned with business objectives.
Perhaps most importantly, it requires a fundamental shift in how organisations think about leadership itself. Rather than viewing leadership as a top-down function concentrated in the C-suite, successful organisations recognise that leadership capability must be distributed throughout the organisation. As Fernandez and Landis observe, “Leadership isn’t just about making decisions. It’s about how you lead through the space between them” [22].
Sources
The MIT Media Lab/Project NANDA recently released findings showing that 95% of investments in generative AI have produced zero returns [1]. This revelation comes at a time when the underwhelming launch of OpenAI’s GPT-5 has provided ammunition for sceptics questioning whether AI’s progress is slowing, with The Economist suggesting that generative AI is entering its “trough of disillusionment” era [2].
Yet these headlines tell only part of the story. The MIT report itself is more nuanced, acknowledging that whilst individuals are successfully adopting generative AI tools that increase their productivity, such results aren’t measurable at a profit and loss level, and companies are struggling with enterprise-wide deployments [3]. More tellingly, most spending on AI experiments goes to sales and marketing initiatives, despite the fact that back-end transformations tend to produce the biggest return on investment [4].
For business leaders, this presents a familiar dilemma. How can companies learn to harness these transformative tools without falling into the same traps that ensnared so many during the digital transformation era? The answer lies in understanding that experimentation, whilst essential, must be purposeful rather than scattershot.
Déjà vu
The current AI experimentation frenzy bears uncomfortable similarities to the digital transformation mistakes of the previous decade. When many leaders felt confused about digital transformation and the path forward, they embraced innovation and experimentation with a “let 10,000 flowers bloom” approach, hoping that a few experiments would produce unicorn-level returns [5].
This lack of focus proved to be a blunder. Without a clear connection to real business opportunity, the result, as described by Professor of Strategy at INSEAD Nathan Furr and John H. Loudon Chaired Professor of International Management at INSEAD Andrew Shipilov, was “a morass of unfocused, under-resourced teams that produced few scalable results” [6]. Facing disappointing returns, many leaders naturally concluded that experimentation with digital was broken and shut down the experiments, either returning to business as usual or refocusing on safer bets like replacing ageing IT systems [7].
The fundamental error was losing sight of business’s most basic objective: solving problems for customers. By framing AI as radical and disruptive, organisations often disconnect from this core purpose [8]. As one CEO admitted to Forbes’ Andrew Binns, “we are going to spend $2 billion on AI, I don’t know what on, but we are going to invest” [9]. This statement reveals the danger of investment without strategic direction.
The Broader Context
To avoid repeating past mistakes, leaders must first understand AI within the larger arc of transformation. The true change organisations are wrestling with isn’t simply about AI. Rather, it’s about a fundamental shift from digital technology operating at the periphery of organisations to digital technology operating at the very core [10].
Previously, IT was about laptops, Wi-Fi, printing, and databases for registry of core activities. Now, organisations are built around digital workflows and customer journeys rather than their own production activities [11]. In essence, every company is becoming a technology company, moving from people performing tasks based on human judgement and intuition to a world of data- and AI-driven decisions, overseen by humans but not necessarily with people as the core engine of activity [12].
Consider how Ant Financial makes lending decisions or Amazon makes pricing decisions, with humans only overseeing, not doing, the activity [13]. This represents a profound shift that will take many years to complete but will ultimately lead to a fundamentally different kind of organisation.
Understanding this bigger picture helps leaders remember that the point is to transform the business to use technology to serve customers better, faster, easier, and cheaper. All forms of AI, including generative AI, are simply tools — one of many — that can help accomplish this objective [14].
The Four Traps
Whilst strategic misalignment represents the overarching challenge, companies face several specific traps that can derail their AI initiatives. The first is resisting adoption altogether due to discomfort with the unknown [15]. Yet as Holly Shipley, a Google alumna and strategic leader spearheading generative AI efforts at a Fortune 200 tech company, notes: “Employees should be focused on the basic functionality of genAI tools like ChatGPT. This will reduce the learning curve when genAI is integrated into tools employees already use” [16].
The second trap involves fearing AI will replace human workers entirely. However, research reveals that more than 70% of workers would delegate tasks to AI to lighten their load, with organisational psychology professor Adam Grant observing, “It’s fascinating that people are more excited about AI rescuing them from burnout than they are worried about it eliminating their jobs” [17]. The reality is that individuals won’t be replaced by AI, but they will be replaced by someone who knows how to use AI [18].
The third trap represents a fundamental misunderstanding of technology’s role in solving problems. Companies often expect AI to fix cultural problems that require human intervention. For instance, AI can speed up email responses, but if companies judge employee performance by response time, it may actually increase email volume rather than reducing it [19]. Similarly, AI might help prioritise meetings, but it cannot address the underlying cultural issue of using meeting invitations as affirmations of influence and worth [20].
The fourth trap involves immediately backfilling any time AI saves with additional tasks [21]. The margins that AI could create would be beneficially used for rest, white space, relationships, and creative brainstorming, but organisational obsession with busyness often leads to filling any created space with more work [22].
The Perils of Overinvestment
The current AI investment frenzy recalls other innovation trends, particularly the “big data” revolution of the early 2000s. General Electric’s ambitious bid to become a “top ten software company” serves as a cautionary tale [23]. Seeing the possibility for an Industrial Internet of Things, GE forecast a market worth $500 billion by 2020 and committed itself to achieving first-mover advantage. It tripled its R&D budget, built a 1,000-person software division, and launched its own big data platform, Predix [24].
Five years later, the strategy had failed spectacularly. The CEO was fired, the company dropped out of the Dow Jones 30 for the first time, and GE’s software ambitions folded [25]. The problem wasn’t technical. It was that GE built a big data platform that was a mismatch with the diversity of the manufacturing sector, treating an emerging, uncertain market the same way they handled mature ones [26].
Most of GE’s toxic assumptions were about non-technical topics like customer priorities, similarities between manufacturers, ease of capturing data, and IT organisations’ readiness for new roles [27]. These critical assumptions were knowable in advance, but GE lacked the patience and humility to discover what potential customers actually wanted before launching.
Focused Experimentation
Furr and Shipilov argue that successful AI experimentation requires balancing three elements: connection to true value creation, low costs that allow multiple learning cycles, and design with an eye toward eventual scaling [28]. This sounds simple but proves difficult in practice, with leaders either charging ahead without considering scalability or becoming bogged down obsessing about enterprise readiness from day one.
The solution lies in striking a balance through what Furr and Shipilov call the IFD framework, standing for intensity, frequency, and density [29]. When evaluating potential AI applications, leaders should assess how intense the problem is, how frequently it occurs, and how many users or instances of the problem exist. For example, developing digital tools to help apartment managers order repair services might seem valuable, but parents wanting to ensure their child’s safety every night represents a more intense, frequent, and dense problem worth solving [30].
Once experiments prove their value, scaling requires careful attention and dedicated resources. Someone with power to create change must own the initiative, leading a “ninja” team with air cover from senior leadership, company-wide connections to secure resources, and focus to scale effectively [31]. These teams, observed at companies like Amazon, Qualtrics, and 7-Eleven, possess the organisational clout necessary to transform experiments into enterprise-wide solutions [32].
Going Forward
As organisations enter what some call the post-enthusiasm wave of AI, many leaders risk misinterpreting implementation challenges as signals that AI cannot create value [33]. They face the same danger that plagued digital transformation. That is, falling behind whilst competitors advance.
The truth is that AI can create significant value. But creating value always returns to the initial moment of experiment design, when teams can see how new tools create value for customers.
Success requires de-risking business models through small, relatively cheap experiments that test hypotheses before committing substantial resources. As Henley Business School’s Narendra Laljani argues, every business has a “mental model” that explains the world through unconscious, unarticulated assumptions about success [34]. When pressure mounts, organisations default to these models, which for corporates often means “go big or go home” [35].
Just because generative AI could represent innovation on the scale of the printing press doesn’t justify indiscriminate spending. Instead, leaders must de-risk their innovations with rapid experiments testing critical assumptions underlying their investments. Fortune favours the learner, not merely the brave.
The fundamental lesson remains unchanged. Regardless of what new tools emerge, business’s purpose will always be solving important problems for customers. Companies that remember this whilst thoughtfully experimenting with AI will avoid the experimentation trap and unlock genuine transformation. Those that don’t risk joining the 95% whose investments produce zero returns, a fate as avoidable as it is expensive.
Sources
[1] https://fortune.com/2025/08/18/mit-report-95-percent-generative-ai-pilots-at-companies-failing-cfo/
[2] https://www.economist.com/business/2025/05/21/welcome-to-the-ai-trough-of-disillusionment
[3] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[4] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[5] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
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[7] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[8] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[10] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[11] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[12] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[13] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[14] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[28] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[29] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[30] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[31] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[32] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
[33] https://hbr.org/2025/08/beware-the-ai-experimentation-trap?ab=HP-hero-latest-3
The collapse of Color Labs in 2012 stands as a stark reminder that massive early funding can become a startup’s greatest liability. Despite raising £41 million before even launching their photo-sharing app, the company shuttered operations within two years, leaving £25 million unspent [1]. The failure wasn’t due to lack of capital, but rather the wrong kind of capital at the wrong time, a phenomenon that’s reshaping how entrepreneurs and investors approach startup financing in an increasingly complex market.
Color Labs’ demise illustrates a critical but often overlooked principle: when startups receive funding can have as significant an impact on innovation as how much funding they secure. The company’s massive early investment created pressure to scale rapidly instead of refining the product, ultimately shifting the focus from experimentation to exploitation too quickly [2]. This cautionary tale has profound implications for today’s startup ecosystem, where artificial intelligence tools are fundamentally altering traditional funding models whilst economic uncertainty demands more strategic approaches to investment timing.
The Innovation Paradox of Early Funding
Recent research by Harsh Ketkar of the University of Texas and Maria Roche of Harvard Business School challenges conventional wisdom about startup financing. Their analysis of 11,853 US tech companies founded between 2010 and 2019 reveals a counterintuitive truth that financial constraints can actually benefit startups by forcing them to be scrappy and resourceful [3].
“We wanted to conduct this research because we were always baffled by prior studies that said being constrained is actually very good for startups,” explains Roche. “How can not having a lot of cash be a good thing?” [4]. The answer lies in how funding timing affects a company’s willingness to experiment and innovate.
The researchers measured innovation by examining how unconventional the combinations of technologies used in each startup’s product were compared to industry peers. Companies using novel technology combinations tend to create more innovative and functional products than those relying on popular tech stacks [5]. Their findings are striking. Startups that receive their first funding round later are more likely to continue experimenting after the money arrives, whilst those receiving larger early investments use more technologies but combine them in less unusual ways, signalling reduced experimentation [6].
This suggests that “although earlier (and/or higher) availability of funding may ease survival pangs during a firm’s infancy, it also may diminish the need to experiment and search for technological combinations that constitute an innovative product” [7]. The implications extend beyond immediate product development. Early access to capital may prevent firms from developing innovation-oriented capabilities that would benefit them throughout their lifecycle.
The AI Revolution
The landscape described by Ketkar and Roche’s research is evolving rapidly thanks to artificial intelligence. Silicon Valley is witnessing a fundamental shift away from the traditional model of raising massive sums to hire armies of workers. Instead, AI-powered startups are achieving remarkable efficiency with minimal staffing [8].
Grant Lee, founder of Gamma, exemplifies this new approach. His AI startup has achieved “tens of millions” in annual recurring revenue and nearly 50 million users with just 28 employees (and importantly, the company is profitable) [9]. “If we were from the generation before, we would easily be at 200 employees,” Lee observes. “We get a chance to rethink that, basically rewrite the playbook” [10].
This efficiency revolution has created what venture capitalists call “tiny team” success stories. Anysphere, maker of the coding software Cursor, reached $100 million in annual recurring revenue in less than two years with just 20 employees, whilst ElevenLabs, an AI voice startup, achieved similar results with around 50 workers [11]. These examples represent a fundamental departure from the old Silicon Valley model where bigger was inherently better.
The financial implications are significant. Before the AI boom, startups generally burned $1 million to generate $1 million in revenue. Now, according to analysis by venture firm Afore Capital, getting to $1 million in revenue costs one-fifth as much and could eventually drop to one-tenth of previous costs [12]. As investor Gaurav Jain notes, “This time we’re automating humans as opposed to just the data centers” [13].
Strategic Investor Selection in the New Paradigm
The changing economics of startup development doesn’t diminish the importance of choosing the right investors. If anything, it makes it more critical. Roche’s research suggests entrepreneurs building technology products should ask three fundamental questions before accepting investment [13].
The first concerns alignment on experimentation. “Firms that don’t accept early funding can afford to wait and experiment until they find the innovation that separates them from the competition,” Roche explains [14]. Startups that wait to accept funding aren’t constrained by investor oversight and the pressure for immediate success, allowing experimentation to become part of the company’s DNA. This suggests finding investors who value experimentation and tolerate risk as much as the founders do, rather than large institutions demanding immediate or short-term financial results.
Strategic fit represents the second crucial consideration. Investors’ preferred exit strategies — acquisition, IPO, or allowing sustained growth as a profitable standalone company — significantly impact operational decisions and growth trajectories. Those seeking near-term IPOs are more likely to push for quicker results over constant experimentation, whilst hands-on investors who want to select technologies can close firms off to the change that drives innovation [15].
The third factor involves investor experience and reputation. “The experience and approach of investors can significantly impact a startup’s ability to remain flexible, innovative, and unconventional, even when they receive large amounts of funding,” Roche emphasises [16]. Experienced tech investors who have worked with resource-constrained startups understand the balance between growth and innovation, making them more likely to encourage experimentation and scrappiness than first-time investors or those lacking technology company experience.
Rethinking Investment Myths
The current investment landscape requires startups to navigate what Karen Grant and David Wright, seasoned investors, describe as a “perfect storm” [17]. Rising interest rates and inflation have created conditions that favour safer investments, whilst founders are seeking funding earlier than ever, often relying on external sources to kickstart entrepreneurial endeavours [18].
Wright highlights the mathematical reality: “When interest rates go up, valuation multiples come down. The glory days of the VC era are behind us” [19]. His analysis of venture capital performance over 40 years reveals that despite including standout periods in the mid to late 1990s, average returns from VC investments have been about 9%, comparable to public markets. More tellingly, the median return stands at just 1.8%, indicating that only a handful of VCs have achieved substantial returns whilst the majority have largely underperformed [20].
This reality has profound implications for the funding myth that persists among founders. As Grant observes, there’s often a fundamental gap between what investors expect and what founders believe when it comes to funding, attributed to disparity in goals and perspectives [21]. Investors focus primarily on maximising returns whilst managing risks, whereas founders are emotionally attached to their ideas and prioritise growth and innovation.
The myth that funding guarantees success proves particularly dangerous in this environment. Grant recalls numerous occasions where companies secure funding only to proceed with strategic hiring without clear direction, often recruiting friends rather than the best candidates for roles [22]. “They’re focusing on the wrong thing,” she notes. “They should be celebrating every time they break a million in their revenue stream” [23].
The Power of Bootstrapping
The research and current market conditions converge on the crucial insight that bootstrapping early can build investor confidence whilst strategic dilution later can accelerate growth. “There used to be an old saying, the best source of capital is sales because it does two things: it keeps your staff fed and watered and it adds value to the company at the same time,” Grant explains [24].
Wright elaborates on how successful market establishment through bootstrapping can demonstrate founder reliability. “By doing so,” she says, “prospective investors can watch the company’s performance over time. This builds confidence in the founder’s ability to forecast, execute plans, achieve milestones, and enhance the company’s value while being under scrutiny” [25]. This approach effectively lowers the company’s risk profile with investors.
The emotional challenge of dilution, however, remains significant for founders. Wright illustrates the mathematics, showing that an entrepreneur who initially owns 100% of their company whilst bootstrapping might sell 10% for £1 million, reducing their ownership to 90% but injecting capital to potentially double the company’s valuation [26]. If successful, their 90% stake in a £20 million company represents £18 million compared to £9 million previously, demonstrating how dilution can increase absolute value even as percentage ownership decreases.
“It’s more emotional than logical,” Grant observes. “If you can get the founders to go through the logic and actually run the numbers, they start to see and relax about selling off more of their company” [27].
Alternative Models
The Silicon Valley model of disruptive innovation isn’t universal. Research by King’s Business School suggests that South-East Asia’s tech scene could achieve greater success by following collaborative innovation strategies from Japan and South Korea, where big businesses tend to collaborate with startups rather than view them as challengers [28].
“We see the Silicon Valley approach as somewhat outdated and tied closely to the unique economic conditions of the US in the latter half of the 20th century,” explains Robyn Klingler-Vidra, associate professor at King’s Business School [29]. The collaborative approach allows large companies to stay competitive in fast-changing markets whilst providing startups with the resources and networks needed to scale.
Recent examples include Toyota’s $44.4 million investment in Japanese startup Interstellar Technologies, facilitating mass production of rockets whilst enabling Toyota’s expansion in the space industry [30]. This model of open innovation, where startups inject “innovative DNA” whilst benefiting from conglomerates’ supply chains and distribution networks, offers an alternative to the zero-sum Silicon Valley approach.
Financing Infrastructure
For capital-intensive projects such as renewable energy developments, the timing and structure of financing becomes even more critical. Marie Lucey of Deloitte explains that “as the project progresses through key development milestones, different financing options become available, offering opportunities for both equity and debt investment” [31].
The risk profile evolution of major projects creates distinct financing windows. In Ireland, investor appetite tends to increase significantly in the post-permitting phase, where various larger risks have been sufficiently mitigated [32]. Wind and solar developers frequently use internal financing to reach key milestones before seeking additional structured funding options.
Project finance has become crucial for large-scale infrastructure, allowing developers to secure financing based on future cash flows rather than their own assets. The rise of Corporate Power Purchase Agreements has been particularly significant, driven by price volatility and corporate net-zero targets [33].
Implications for the Future
The convergence of AI efficiency, economic uncertainty, and evolving investor expectations is creating a new paradigm for startup financing. The traditional model of massive early funding to scale rapidly is being replaced by more nuanced approaches that prioritise sustainable growth and genuine innovation over headline valuations.
This shift presents both opportunities and challenges. Startups can achieve profitability with less capital, reducing dependency on external funding whilst maintaining greater control over their destiny. However, this efficiency may also create challenges for venture capitalists who need to deploy large amounts of capital to generate meaningful returns.
The key insight emerging from current research and market trends is that timing truly matters as much as the amount of funding. Startups that wait until they’ve established product-market fit and demonstrated genuine innovation capabilities are better positioned to use investment capital effectively. Conversely, those that accept large early investments may find themselves constrained by investor expectations that prioritise rapid scaling over sustainable innovation.
The most successful approach appears to combine the scrappiness and experimentation encouraged by initial resource constraints with strategic capital deployment once core innovations have been validated. This requires founders to think beyond traditional fundraising milestones and consider how different types of capital can support different phases of growth whilst preserving the innovative DNA that creates sustainable competitive advantage.
In an era where technology enables unprecedented efficiency and global economic conditions demand more thoughtful capital allocation, the startups that master this strategic timing will be best positioned to create lasting value for all stakeholders.
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