First-Year Employee Turnover Plummets
It seems the 'Great Resignation' has given way to the 'Great Stay.' New research from Employ Inc. found a 49% decrease in turnover among employees in their first year. This indicates a significant shift in the labor market, with new hires staying put longer than in previous years.
The sharp drop in first-year turnover, from 23.7% in 2024 to 12.1% in 2025, is being attributed to more than just effective onboarding. Employ Inc.'s Chief People Officer, Stephanie Manzelli, noted that "external pressures are definitely contributing to this change," pointing to a cooling labor market. This "Great Stay" phenomenon is underpinned by significant economic anxiety. A recent survey found that 80% of workers are worried about a recession, and 49% believe the labor market will actually worsen in 2026. This uncertainty is a powerful incentive for new hires to remain in their roles rather than testing the job market. Consequently, 65% of employees say they do not plan to look for a new job in 2026. For younger talent, the fear of layoffs and a desire for a more stable economy are significant factors in their decision to stay put, with 40% of Millennials and Gen Z citing these concerns. While employers are seeing higher retention, the drivers of employee engagement have shifted dramatically. A study of over 20 million employees revealed that "belonging and feeling valued" have been replaced by "change management effectiveness and confidence in senior leadership" as the new top drivers of engagement. This shift puts a spotlight on leadership and internal growth opportunities. With fewer employees leaving, the primary reason for turnover has become career stagnation. Companies that fail to provide clear paths for advancement and skill development risk losing even the employees who had initially decided to stay. The financial services sector, in particular, has seen a gradual improvement in retention, with voluntary turnover dropping from 16.8% to 15.6% in 2024. However, the tech sector, a key competitor for talent, was the only industry to see a slight increase in voluntary turnover. For talent acquisition leaders, especially in competitive sectors like finance, this means the focus must shift from pure acquisition to robust internal mobility and development programs. The cost of replacing an employee can be three to four times their salary, making investments in career pathing and upskilling a critical retention strategy.
