Why Organisations Have a Retention Problem They Cannot Pay Their Way Out Of

As leaders across the world, we have faced sustained disruption, uncertainty, and pressure over recent years, and for many organisations the road ahead still feels challenging. There is constant discussion about rebuilding and recovery, yet the underlying realities within our workplaces remain unresolved.

It is true that much of today’s talent is being drawn to opportunities elsewhere, whether across borders, industries, or working models. However, it is also true that leaders have a significant strategic opportunity to focus on the management teams already in place and to invest in motivating, developing, and engaging them more effectively. The good news is that this does not require a dramatic increase in salary budgets, but rather a shift in mindset, leadership behaviour, and workplace culture.

The Size of the Problem

Globally, businesses are losing an estimated one trillion dollars in productivity each year, according to Gallup’s State of the Global Workplace Report 2023, largely due to staff disengagement and low levels of empathy in the workplace. Nearly 80 percent of employees worldwide report feeling disengaged, despite repeated attempts by organisations to solve the issue through financial incentives alone. While the scale of loss varies by market, the impact on organisational performance, innovation, and growth is significant everywhere.

The True Cost of Turnover

Employee turnover presents a serious challenge for organisations of all sizes. Beyond direct financial cost, high turnover erodes institutional knowledge, disrupts momentum, and removes experienced contributors, innovative thinkers, and strong problem solvers. It also places strain on customer relationships, damages loyalty, and undermines employee engagement and morale. Over time, this weakens workplace culture and reduces the organisation’s ability to perform consistently.

Understanding the Reality Employees Face

Today’s workforce navigates a complex mix of social, economic, personal, and health related pressures that directly affect how people show up at work. Leaders must therefore reassess how their organisations support employees beyond compensation alone. Retention strategies that fail to recognise the full reality of people’s lives will continue to fall short, regardless of salary increases.

Empathetic leadership plays a critical role here. Leaders who listen, understand context, and engage with employee realities are better positioned to motivate, retain, and develop their teams. Listening and Listening-Led Leadership enable leaders to identify issues early, respond with relevance, and build trust that supports long-term engagement.

The Return on Holistic Benefits

Research consistently shows that benefits designed around wellbeing, financial stability, and work life integration deliver strong returns. Studies by the Boston Consulting Group found that organisations offering childcare benefits to employees achieved returns of up to 425 percent of cost, regardless of industry or company size. McKinsey research also shows that strong health insurance coverage correlates with higher performance, lower absenteeism, and improved productivity.

Perhaps most strikingly, data indicates that more than half of employee departures could have been prevented through better management practices or improved organisational policies. Simply put, people often leave leaders and cultures, not roles or pay packets.

While increasing salaries may address short-term dissatisfaction, retaining loyal and motivated employees over time requires more than financial solutions. Organisations that invest in employee retention strategies grounded in empathy, listening, and meaningful engagement create stronger alignment between values and performance. Without this shift, competitors will continue to attract talent long before compensation structures can be revised.

Check out other article: Parenting Across Borders: How Empathy and Listening Sustain Connection To Children Study Abroad

About Mimi Nicklin:

Mimi Nicklin is a bestselling author and the founder of Empathy Everywhere. As the world’s leading voice on Listening-Led Leadership, she has reached over 4M+ people by reframing empathy as a neuro-driven "hard skill" for the AI era. On a mission to reconnect one million professionals by 2028, Mimi works with global organizations to turn human connection into a measurable competitive advantage.

Connect: Email to Mimi | www.empathyeverywhere.co