Dive Brief:
- Poor employee retention disrupts productivity, raises costs and puts pressure on managers, but almost two-thirds (63%) of employers surveyed reported yearly turnover rates of 10% or higher in 2025, according to a talent benchmark study released Wednesday from insurance firm Gallagher.
- Talent retention is a top HR priority for 57% of employers, per the research. In addition, 39% of employers ranked retention a top operational concern. The report said these priorities reflected “the growing business impact of workforce turnover.”
- At the same time, artificial intelligence use in HR is likely to expand; 73% of employers expect to increase adoption by 2028. Yet the biggest barrier to AI implementation is trust, with 29% of employers citing “concerns about eroding employee trust as a barrier to [AI] adoption.”
Dive Insight:
As employers explore organizational expansion, they face increasingly complex workforce challenges. Some of the biggest issues include “constrained teams, elevated turnover and increasing pressure to adapt to new technologies,” per the report, which studied responses from more than 3,700 U.S. employers.
Sixty-one percent of employers surveyed projected revenue growth by 2027, yet only half said they expected workforce head counts to increase. The study said this gap “highlights growing workforce capacity pressures.”
“The data show that many organizations are navigating a difficult balancing act,” John Tournet, U.S. CEO of Gallagher’s benefits and HR consulting division, said in a statement. “Business leaders are pursuing growth while managing cost pressures, workforce capacity constraints and retention challenges. Organizations that succeed will be the ones that focus on the fundamentals: helping managers lead effectively, creating realistic workloads and ensuring employees understand how their work contributes to organizational goals.”
There’s also a disconnect between employers’ desire to increase retention and their inability to prevent attrition. More than half (57%) of employers said they had conducted employee engagement surveys in 2024 or later but had not yet turned that feedback into meaningful action.
Meanwhile, a disengaged workforce may cause longer lead times when it comes to AI implementation.
The report found that while 71% of employers have either partially or fully operationalized AI at their companies, successful adoption relies on “clear communication, strong governance and practical support for employees and managers.”
Furthermore, although almost three-quarters of the companies that have implemented AI said they have measured some return on investment, employers also said it could take an average of 28 months for the returns on AI to outweigh the costs of adoption.
“As AI becomes more integrated into day-to-day work, organizations are recognizing that technology alone isn’t enough,” Tournet said. “The focus is increasingly shifting from implementation to helping employees and managers use AI with confidence, strengthen decision-making and support more effective ways of working.”
A recent report from Gartner found that HR leaders can be instrumental in helping senior leaders at their companies build employee trust, which is especially critical amid workplace changes such as AI implementation. That study said that a lack of employee trust can exacerbate already tense workplaces and have deleterious effects on engagement and productivity. Meanwhile, strengthening trust can decrease these problems, the report said.