Gallagher Report: Why Turnover is Still #1 Concern in 2025

employee retention

A funny writer recently said that the only thing more on-and-off than recession predictions is Ross and Rachel. And we have similarly wish-washy projections for whether The Great Resignation is still a thing or whether we’ve moved on.

But here’s the real takeaway for 2025: Turnover is still the #1 workforce challenge.

Gallagher’s Workforce Trends Report Says Retention is Still Priority #1

According to Gallagher’s 2024 Workforce Trends Report[i], turnover has not disappeared. In a survey of over 4,000 organizations, the report found:

  • 66% of HR executives still say retention is their biggest workforce challenge.
  • More than 50% of operations executives now list turnover as their primary obstacle—meaning it’s not just an HR issue; it’s a bottom-line business problem.
  • Two-thirds of companies reported turnover levels within or below target ranges, but that doesn’t mean they’re comfortable. Instead, retention concerns are shifting from pure resignation numbers to employee engagement and detachment.

If employees aren’t leaving at the same extreme rate as in 2021-2022, why is retention still such a problem? Because we’re not in the Great Resignation anymore—we’re in The Great Detachment.

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Further reading: The Great Resignation Becomes The Great Detachment in 2025

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The Great Detachment: Why Employees Are Staying but Disengaging

The modern workforce challenge is no longer just about quitting—it’s about disengagement.

  • Gallup’s State of the Global Workforce[ii] reported in 2024 that U.S. employee engagement hit an 11-year low.[iii]
  • Workers who changed jobs in the last three years are significantly less satisfied than those who stayed.
  • Younger employees (Millennials and Gen Z) now make up 51% of the workforce but are job-hopping at an average of just 2.5 years per employer.

And Gallagher confirms that companies are responding in all the wrong ways—primarily by throwing more money at the problem.

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Further reading: From SHRM23 – Is it Pay?

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Right Problem, Wrong Solution: Why Pay Won’t Fix Retention

Gallagher’s report notes that:

“Retention far outranks other HR priorities in 2024—putting total rewards and the employee experience in the spotlight, right alongside heavy investment in base salaries.”

Translation: Companies are still defaulting to pay raises and benefits as their go-to solution for retention.

But here’s a question for Gallagher (and any other HR consultant advocating for compensation-based retention strategies):

Can you show me proof that increasing pay provides a long-term impact on retention?

Because the research doesn’t support it. Higher pay may keep an employee from leaving this month—but it won’t make them more engaged or loyal in the long run.

  • In 2022, private industry worker costs rose 5.1% for wages and 4.8% for benefits—yet turnover concerns did not decrease.
  • The biggest regret among job switchers? Leaving behind co-workers, not pay.
  • The longest-standing research on employee retention—from Gallup, SHRM, and multiple independent studies—confirms that pay alone is not a sustainable engagement strategy.

So what actually does work?

Fixing Retention Starts with Leadership, Not Compensation

HR and business leaders keep making the same mistake:

  1. They conduct engagement and exit surveys.
  2. They identify the top employee concerns.
  3. They appoint an employee committee to create one-size-fits-all solutions.
  4. They roll out generic programs (like Employee of the Month awards, free lunches, or bonus programs).
  5. They re-survey in a year—only to find that engagement and retention haven’t changed.

Gallagher’s 2024 report confirms this pattern. Companies continue to pour resources into salary adjustments, HR tech solutions, and new benefits instead of addressing the root cause of disengagement.

And what is the #1 reason employees stay or leave? Their boss.

  • Gallup reports that 50% of employees who seek new jobs do so because of their manager.
  • HR’s Greatest Challenge, a book summarizing 25 highly respected retention studies, concludes that trust in leadership—not pay—is the top driver of long-term employee retention.

Yet most companies continue to prioritize pay over leadership development.

What Really Works? Personalized Retention Strategies & Leadership Accountability

Instead of surveying employees and creating surface-level perks, organizations need to:

  1. Hold managers accountable for retention goals—not just HR.
  2. Implement Stay Interviews (not just exit interviews) to understand individual employee needs.
  3. Teach leaders how to provide meaningful, individualized recognition.
  4. Invest in leadership training that focuses on trust-building and communication.

Retention isn’t about more pay, more benefits, or more perks. It’s about better leadership, better connection, and better engagement.

Final Takeaway: What Gallagher Got Right (and Wrong) About Retention in 2025

What Gallagher Got Right:

✔ Retention is still workforce priority #1.
✔ Companies must adapt to generational workforce shifts.
✔ Employers must rethink employee experience and emotional wellbeing.

What Gallagher Got Wrong:

✘ Pay is not a long-term retention strategy.
✘ Turnover isn’t just about job openings—it’s about trust, leadership, and engagement.
✘ HR solutions need to be people-driven, not system-driven.

The Bottom Line for HR Directors in 2025

Retention isn’t just about keeping employees—it’s about keeping them engaged.

The Great Resignation may be over, but The Great Detachment is here. HR and business leaders who recognize this shift—and invest in leadership, not just compensation—will be the ones who truly solve their retention challenges in the years ahead.

Need help establishing retention goals based on trust not pay?

Schedule a conversation with me at DFinnegan@C-SuiteAnalytics.com and we’ll discuss the numbers and needs you should have to evaluate your retention goals. We work with companies in every type of industry to cut turnover by 30% and more by building trust and accountabilities.

[i] https://www.ajg.com/2024-us-workforce-trends-report-organizational-wellbeing-report/

[ii] https://www.gallup.com/workplace/349484/state-of-the-global-workplace.aspx

[iii] https://www.gallup.com/workplace/654911/employee-engagement-sinks-year-low.aspx

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