Lower productivity results in poor performance of employees which affects the quality of deliverables. When the end-users are not satisfied with the product/service, profitability will go down.

Moreover, time and cost spent on the resources that are not performing at their best also reduce the profit margins. Productivity is, therefore, a major deciding factor in the profit margins for the organization.

Low productivity influences the team morale and engagement. There is a decline in initiatives taken by employees. Besides, employees will be least interested in resolving business issues.

With employee disengagement comes lowered team spirit. Team members do not feel valued which affects their performance and may eventually lead to their separation from the organisation

Even if employees are 100% utilized, it does not imply that they are productive. There is a chance they are spending their time on mundane admin tasks or non-billable activities.

This will further reduce their productivity. The other employees will also be at risk of being over-utilized on high-priority billable tasks.

Over-utilization is another major cause of reduced work-rate. Thus, the low productivity of one employee causes a domino effect on the entire team leading to overall poor performance.

Innovation is the key to gain a competitive advantage in the business industry. If your employees’ are not working at their best due to low productivity, they will not be motivated to come up with creative ideas. More so even, they will not be able to provide solutions to the existing problems.

Low productivity causes a ripple effect of inefficiency in the organization. Lowered team spirits and a team of unmotivated employees eventually leads to delays in meeting client needs. Productivity essentially means doing more in less time. 

When the company fails to deliver to customers on time, they will look for alternatives, which will cost you the loss of an existing client.

An external influence is imperative when employees are unproductive. However, if their managers are also reacting unfavorably, it will make the work environment toxic. A study by SHRM shows that nearly one-fifth of the employees left their jobs in last 5 years because of toxic work culture.

This study clearly explains how workplace toxicity and employee turnover are correlated.  Also, when the word about toxic work culture goes out, you also scare away potential talent from joining.