Boost your retention rates: The importance of investing in employee development

Here's the paradox facing employers in 2026: employees are staying, but that doesn't mean they want to be there.

Employee retention outlook improved significantly in 2025, with workers more likely to stay with their current employers than they were a year ago. But dig deeper and the picture gets more complicated: 51% of employees are actively seeking new opportunities. Many are staying because they see fewer viable options in the job market, not because they're engaged or loyal.

When employees stay out of caution rather than commitment, you're sitting on a retention time bomb. The moment the job market opens up or a better opportunity appears, they're gone.

The real challenge in 2026 is building retention that's based on engagement, not just fear of the unknown. And one of the most effective ways to do that is by investing in employee development.

Why employee retention still matters

Retaining employees saves money and improves job satisfaction, productivity and overall organizational performance. High turnover rates hurt company culture and performance because new employees need time to adapt and learn.

The costs are real. The average cost per hire is around $4,700, with some estimates showing replacement costs can reach several times the position's salary. For executive roles, that number jumps to $28,000 or more.

The financial impact goes beyond hiring costs. Companies with high retention rates see a 22% increase in overall profitability. Organizations with strong retention practices also report significant improvements in customer satisfaction.

But here's what's harder to measure: the knowledge that walks out the door when people leave, the disruption to team dynamics and the productivity loss while new hires get up to speed. Research shows it may take up to two years for a new employee to reach the productivity level of an existing employee.

The retention landscape in 2026

The current retention environment is full of contradictions. On one hand, workers are staying put. On the other hand, they're not happy about it.

In fact, 42% of employees who voluntarily left say their manager or organization could have done something to prevent them from leaving. Even more telling: nearly half report that neither a manager nor company leadership discussed their job satisfaction, performance or future with them in the three months before leaving.

The voluntary turnover rate has stabilized after years of increases, but it remains significant. Many employees quit within their first six months. Research shows that 70% of new employees decide whether a job is the right fit within their first month, with nearly a third making that decision within the first week. Companies have an average of 44 days to convince new hires to stay.

The message is clear: managers need to be in regular conversation with their reports about performance, goals and job satisfaction. Waiting until someone has one foot out the door is too late.

What's actually driving retention in 2026

Competitive salaries and benefits matter. But they're table stakes now, not differentiators.

Here's what employees actually want:

• Work/life balance tops the list: The majority of employees say work/life balance and personal wellbeing are the most important factors when looking for a new job. Most believe better work/life balance would significantly reduce their likelihood of leaving.
• Career development is critical: 93% of employees are more likely to stay with an organization that invests in their career development. Companies that promote career development have 67% confidence in their ability to retain qualified employees, compared to just 50% for companies that don't prioritize development.
• Feeling valued makes the difference: Employees who feel valued are significantly less likely to look for a new job. Regular recognition improves loyalty and affects whether employees stay.
• Culture is a deciding factor: More than half of employees say workplace culture determines whether they stay with their employer. High-engagement workplaces see meaningful reductions in turnover.
• Manager support matters more than you think: Employees who feel supported by their manager report significantly higher engagement levels. Your managers are the front line of your retention strategy.
• Flexibility is non-negotiable for many: The majority of remote employees cite flexibility as a key reason they stay with their company. Flexible work arrangements can meaningfully increase retention.

Generational differences in retention

Not all employees want the same things. Different generations have distinct retention drivers that require different approaches.

Gen Z and Millennials prioritize learning and development opportunities more than any other generation. They also show higher rates of anxiety and job dissatisfaction, with the majority planning to switch jobs within the next year. These younger workers hit peak burnout at age 25—17 years earlier than the average American.

Gen X workers, meanwhile, show different patterns. They're currently the demographic most likely to leave despite the overall trend toward staying. They value stability and clear career paths, but they're less patient with unclear advancement opportunities.

Millennials emerged in 2025 as the workforce segment most likely to stay, showing significant gains in retention outlook. But this doesn't mean they're disengaged from development. They still expect investment in their growth.

The takeaway: You need to understand what drives each generation and tailor your approach accordingly.

How employee development boosts retention

Employee development refers to improving an employee's skills, knowledge and abilities. But it's more than making people better at their current jobs. Investing in employee development shows employees that their employers are investing in their growth.

When employees feel invested in, they're more likely to remain engaged and loyal. Employee development provides opportunities to enhance skills in preparation for new roles, which can lead to promotions and internal hiring—both of which boost retention.

The data backs this up. Organizations that offer upskilling opportunities retain significantly more employees. Mentorship programs also boost retention rates substantially. And companies with strong career development programs have 67% confidence in their ability to retain qualified employees, compared to just 50% for those without—a meaningful difference in retention capability.

Employee development programs also help attract top talent and strengthen your reputation as an employer. In a market where employees have choices, being known as a company that invests in people's growth gives you an edge.

Using live learning to support retention

An effective learning program can significantly support retention across an organization. The most successful programs are customized to meet unique organizational needs—upskilling and reskilling across topics like wellness, people management, communication skills, innovation and inclusion.

Not all learning programs work for retention. Programs that support retention align with your company's values and your employees' desires.

If collaboration is one of your core values, find a learning approach that allows employees to learn together rather than alone. If work/life balance is a priority for your employees, look for programs that respect their time and fit into their schedules. If you want to build manager capability, focus on practical skills they can use immediately.

The key is understanding what you want and finding a solution that meets your needs today and can evolve as your company and workforce evolve. The way we work keeps changing and your learning programs need to keep up.

How to know if your learning program is boosting retention

If retention is your core objective, measure the impact of your learning program on retention.

Here are ways to evaluate how your learning program is boosting retention:

1. Benchmark your retention before implementing the new learning program.

Compare your retention data 3 months, 6 months and 12 months after implementing the program to your pre-program benchmark. How much has it improved? Pay special attention to early retention (first 90 days and first 6 months), since that's when most departures happen.

2. Collect feedback from participants and non-participants.

Measure job satisfaction across both groups and compare. This helps you understand if the learning program is actually making a difference in how people feel about working there.

3. Conduct exit interviews when people leave.

Ask specifically why they're leaving. If you notice a reduction in comments related to topics your learning program addresses (lack of development, unclear career path, poor management), the program is working.

4. Compare the cost of the learning program against the cost of hiring due to turnover.

How much are you saving? This is your ROI. With the average cost per hire at $4,700 and rising, even preventing a few departures can justify the investment.

5. Track engagement alongside retention.

Remember the paradox: people staying doesn't mean they're engaged. Make sure you're measuring both retention rates and engagement scores to understand the full picture.

Employees stay when they see a future

Competitive salaries and benefits are important. But employees also want to feel valued and see room to grow.

Investing in employee development shows people you're committed to their success, not just their current productivity. Learning programs customized to your corporate objectives and employee needs can boost retention by making employees feel good about their work and confident about their future.

In 2026, the organizations that win at retention understand that keeping people is about more than making it hard for them to leave. It's about making them want to stay.

Build the skills that make people want to stay

We designed Electives to make it easier to deliver high-quality learning that builds real capability.

Our live learning approach brings people together to develop practical skills they can use immediately. We handle the planning, curation and measurement so you can focus on building the capability your organization needs.

Discover how Electives can help you create development programs that actually improve retention.

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