Employee retention and engagement remain front and center for organizations in 2025. While business leaders are laser-focused on growth, keeping employees happy and on board is a critical concern. The lingering effects of the “Great Resignation” have started to wane, but new challenges – from shifting employee expectations to economic uncertainties – are redefining how companies approach retention.

Shorter tenures and heightened turnover risk have become the norm in many industries. According to Gallup, 51% of U.S. employees are actively watching for or seeking new job opportunities, the highest self-reported turnover risk since 2015. In other words, over half of workers have one foot out the door at any given time. This reality puts pressure on employers to double down on engagement, or risk losing talent to competitors.

Shifting Priorities and Turnover Trends

The good news is that overall turnover rates have begun to improve compared to the peak quit rates of a couple years ago. Mercer’s latest survey data shows the average U.S. voluntary turnover rate fell to 13.5% from 2023 to 2024, continuing a steady decline from 17.3% the prior year and a lofty 24.7% two years ago. In short, the tidal wave of resignations seen in 2021–2022 has eased. Many employees, facing an uncertain economy and fewer outside opportunities, are staying put longer than they were during the height of the talent wars.

Another indicator of this stabilization comes from Eagle Hill Consulting’s Employee Retention Index. In the first quarter of 2025, the index ticked up by 3.9 points to 102.5, reflecting rising confidence in employers and job satisfaction among U.S. workers. This suggests that, at least for now, employees feel a bit more inclined to stay in their current roles through mid-2025. (The index remains below its mid-2024 peak, but the recent uptick is an encouraging sign in a broader downward trend.) Eagle Hill’s data also reveals some interesting demographic splits: Gen Z employees currently show the highest intent to stay (a retention index of 112), whereas Millennials and women have lower scores (around 99 and 93, respectively), signaling a higher flight risk in those groups. Understanding which segments of the workforce feel more or less loyal can help leaders target their retention efforts where they’re needed most.

It’s worth noting that even as actual turnover rates cool, the perceived risk of turnover remains high. Over four in ten U.S. employees say they are seriously considering leaving their company within the next year. In many cases, these potential departures could be prevented. Gallup research found that 42% of employee turnover is preventable – in other words, nearly half of people who quit admit that management could have done something to keep them. Alarmingly, 45% of those who resigned said that neither their manager nor any company leader spoke with them about their job satisfaction or future in the three months before they left. This is a huge wake-up call: proactive communication and intervention by managers might have retained a significant portion of would-be quitters. As we’ll see, re-focusing on employee engagement is not just a feel-good initiative – it’s directly tied to keeping talent on board.

Employee Engagement and Satisfaction in 2025

1. Recognize Great Work — Every Day, Not Just at Year-End

Employee morale and engagement levels have been volatile in recent years, and 2024 was a case in point. BambooHR’s Global Employee Happiness Index recorded a surprising slump in satisfaction in Q4 2024, with the average employee Net Promoter Score (eNPS) dropping to 35 (down one point from Q3.) This pushed overall employee happiness near a five-year low as 2024 came to a close. The slump was broad-based across industries – an unusual trend, given that the end of the year typically brings a boost in morale from holiday cheer and year-end bonuses. Instead, most sectors saw declines in Q4, making it clear that the usual seasonal uplift was overshadowed by underlying issues.

What caused this dip in late 2024? Economic uncertainty and post-pandemic adjustments likely played a role, as did fatigue in hard-hit industries. In fact, every industry except tech saw happiness decrease at the end of 2024, and even typically upbeat sectors like Travel & Hospitality saw employee sentiment fall from recent highs. HR analysts dubbed it the “holiday blues” for workplaces. Fortunately, as 2025 began, there were signs of a rebound. Many companies kicked off the new year with refreshed engagement efforts, and it showed in the data: by Q1 2025, employee satisfaction ticked back up modestly in most sectors. For example, the finance industry saw its eNPS rise from 34 to 35 between Q4 and Q1 – a 3% improvement that marked a slight recovery from the late-2024 dip. Several other industries experienced similar 1–4 point eNPS gains in early 2025, indicating that employees started the year on a more positive note. While these gains are small, they suggest that some of the factors dragging down morale (economic worries, change fatigue) eased up as companies entered 2025 with new focus.

Globally, however, engagement levels leave much room for improvement. Gallup’s research has consistently found that only about 21% of the global workforce is “engaged” at work, meaning truly passionate and committed to their jobs. In the U.S., engagement is higher but still barely a third of employees on average. That means the majority of workers are doing just enough to get by or, worse, actively disengaged – a mindset that often precedes a decision to quit. It’s no wonder, then, that only 1 in 4 employees would strongly recommend their organization as a great place to work. When three-quarters of your people are hesitant to endorse the company, it signals deeper cultural and leadership issues that directly undermine retention. A common adage holds that “people don’t leave jobs, they leave managers,” and data in 2025 backs this up: nearly 7 in 10 U.S. workers say they would quit their job because of a bad manager. Clearly, effective leadership and a positive workplace culture are prerequisites for retaining talent – no matter how competitive your salaries or perks might be. When engagement falters and employees feel undervalued or poorly managed, they will eventually head for the exits.

Why Employees Leave (Beyond the Paycheck)

Compensation will always matter to employees, but interestingly, it is often not the primary reason people jump ship. Recent research into quit reasons paints a striking picture: issues related to “engagement and culture” and “well-being and work-life balance” account for 69% of the reasons employees leave, far outweighing pure pay or benefits concerns. In fact, Gallup’s Global Retention report found that four times as many people quit due to problems with their work environment, development opportunities, or work-life balance than because they wanted more. This doesn’t mean salary can be ignored – in Gallup’s tracking, pay and benefits did emerge as the single most common individual reason for leaving in 2024 – but it does mean that fixating on pay alone is insufficient. Employers must address the less tangible drivers of turnover, like culture, growth, and management quality, to truly stem the tide.

Let’s break down some top drivers of turnover in 2025:

• Lack of Career Growth & Development: Stagnation is a deal-breaker, especially for younger workers. Amazon’s Workplace Intelligence study found 74% of Millennial and Gen Z employees would likely quit within a year if they aren’t given skill-building and career growth opportunities. People crave advancement; if they can’t see a future at your company, they’ll look elsewhere. This ties into Gallup’s finding that advancement opportunities (or lack thereof) are a major component of the “engagement and culture” reasons for leaving.
• Poor Recognition & Engagement: Feeling appreciated is more than a nice-to-have – it’s a retention necessity. According to a recent survey, 71% of employees would be less likely to leave if they felt recognized more frequently for their work. Unfortunately, many companies fall short here, creating frustration for high performers. It’s telling that in almost half of preventable turnovers, the employee said no one even discussed their dissatisfaction before they left. A lack of engagement or acknowledgement from managers can push valuable people out the door.
• Work-Life Imbalance & Burnout: After the pandemic, workers have been rethinking priorities and demanding better balance. 59% of employees say that greater work-life balance and personal wellbeing are “very important” factors in choosing their next job. When overtime, stress, or rigid schedules pile up, retention suffers. Burnout from constant high pressure is one reason front-line turnover spiked in recent years, and why flexibility (remote work options, flexible hours) has become such a hot item for job seekers.
• Toxic or Misaligned Culture: A dysfunctional workplace culture – whether it’s poor communication, mismanagement, or misaligned values – drives people away fast. As noted, engagement/culture issues collectively are the #1 category of quit reasons (accounting for roughly 37% of all reasons employees leave in one analysis.) Within this category, things like bad bosses, lack of trust, feeling unvalued, and unrealistic job expectations all contribute. The old saying, “culture eats strategy for breakfast,” could be amended to “culture determines retention.” Employees who don’t feel a sense of connection and positive culture will leave even if pay is good.

It’s also worth noting tenure plays a role in turnover risk. Newer hires are statistically much more likely to leave: employees with two years or less at a company are 38% more likely to quit within the next 12 months than longer-tenured colleagues. Early employment experiences are critical – if onboarding and integration are poor, newcomers often check out quickly. On the flip side, those who stay past the two-year mark tend to become more embedded. (In fact, BambooHR’s data showed that companies with primarily tenured employees – 3+ years – had workers about 3% happier on average than companies full of brand-new hires.) This means employers need to pay special attention to retaining recent hires through mentorship, training, and clear career paths before that risky two-year window passes.

Strategies to Boost Retention and Engagement

With these trends in mind, what can organizations do to hold onto their talent in 2025? There’s no single silver bullet, but a combination of thoughtful strategies can significantly improve retention. Here are some key approaches – backed by data – that companies should prioritize:

• Invest in Employee Growth and Learning: A culture of continuous development is arguably the strongest retention tool. Companies that champion career development are 67% more confident in their ability to retain talent than those that don’t. Offering upskilling, clear advancement paths, and mentorship keeps ambitious employees motivated to stay. Internal mobility is especially powerful – employees who make an internal career move have a 75% likelihood of staying, compared to just 56% for those who stagnate in the same role. The message is clear: if people can grow with you, they won’t have to go elsewhere. Consider robust training programs, tuition assistance, or defined promotion tracks to quench that thirst for growth. Remember, three in four younger workers will walk away if they feel their skills are stagnating, so catch them before they give up and leave.
• Recognize and Engage Your Team: Consistent recognition and a positive day-to-day work experience go a long way toward building loyalty. Create a culture where managers and peers frequently acknowledge contributions – given that 71% of employees say more frequent recognition would keep them around, this is a low-cost, high-impact practice. Use employee surveys, one-on-one check-ins, and stay interviews to keep a pulse on satisfaction. When issues arise, address them before they fester; remember that almost half of voluntary quits could potentially be averted through better communication and responsiveness to concerns. Also, take a hard look at your leadership quality – nearly 70% would quit over a bad boss, so ensure managers are trained to support, not micromanage or mistreat, their teams. Fostering an inclusive, appreciative culture where people feel valued and connected will naturally improve retention (and make your company one that employees are proud to recommend).
• Prioritize Work-Life Balance and Well-Being: Burnout is the enemy of retention. Especially in the wake of COVID-19, employees are unwilling to sacrifice their health and personal lives for a job. Make work-life balance a core part of your employee value proposition. This can include flexible scheduling, remote/hybrid work options, generous PTO, and wellness benefits. In a recent survey, professionals ranked a flexible schedule, competitive pay, and strong company culture as the top three reasons they stay at a job. Notice that flexibility and culture rivaled compensation in importance. Additionally, 59% of workers now prioritize well-being and balance in evaluating job opportunities. By offering flexibility and demonstrating empathy for employees’ lives outside of work, companies can significantly reduce attrition. Simple steps like discouraging after-hours emails, providing mental health resources, or allowing occasional remote days can signal to employees that you care about their well-being – which in turn fosters loyalty.

In essence, winning the retention battle in 2025 means creating an environment where employees can thrive, feel appreciated, and see a future for themselves. Competitive pay and benefits are table stakes, but they are not enough on their own. The organizations best positioned to keep their top talent are those that address the full spectrum of employee needs – meaningful work, growth opportunities, supportive management, recognition, and balance.

Bottom Line: The latest retention statistics paint a picture of a workforce hungry for engagement, respect, and growth. With over half of employees open to new opportunities and many departures avoidable, the onus is on employers to act. Retention is no longer just about cutting turnover costs (though those are huge – replacing an employee can cost up to 200% of their salary in the case of senior roles). It’s about maintaining the knowledge, relationships, and culture that high performers carry with them. By doubling down on employee-centric strategies in 2025, companies can not only reduce unwanted turnover – they can also unleash a more motivated, productive, and loyal workforce. In a year where every competitive advantage matters, keeping your best people happy and engaged may be the ultimate differentiator for business success.

Reference List:

• Chief Executive – “Gaining Market Share Surpasses Employee Retention as Top CEO Priority” https://chiefexecutive.net/gaining-market-share-surpasses-employee-retention-as-top-ceo-priority
• Workplace Intelligence & Amazon – “Upskilling Study: Closing the Skills Gap at Work” https://workplaceintelligence.com/upskilling-study
• BambooHR – “Employee Happiness Index Q4 2024” https://www.bamboohr.com/resources/data-at-work/employee-happiness-index/q4-2024-employee-satisfaction-survey
• Mercer – “Workforce Turnover Trends: Where Employees Are Staying or Going” https://www.imercer.com/articleinsights/workforce-turnover-trends
• Gallup – “The State of the Global Workplace & Retention and Attraction Indicator” https://www.gallup.com/467702/indicator-employee-retention-attraction.aspx
• Eagle Hill Consulting – “Employee Retention Index: Q1 2025 Results” https://www.eaglehillconsulting.com/employee-retention-index
• Paycor – “Employee Retention Statistics HR Needs to Know in 2025” https://www.paycor.com/resource-center/articles/employee-retention-statistics