How can employers improve retention in today’s job market?

 

• Provide clear career progression and development pathways
• Align salary, benefits and flexibility with market expectations
• Invest in learning, upskilling and AI capability
• Strengthen communication and employee engagement

Employee retention is an ongoing challenge across Australia, with the Hays Salary Guide FY26/27 reporting over a third of employees actively seeking a new role. This increasingly mobile workforce is reflected by the fact that the vast majority of employees have been in their role for less than four years and serves to reinforce just how fluid the landscape has become. In a market defined by ongoing skills shortages and change, developing robust retention strategies to hold onto key talent is critical for business stability and growth.

 

The Hays Salary Guide FY26/27 highlights several key factors driving turnover across Australia, but the overarching throughline is a lack of understanding for what employees value most. While many employers believe they are offering sufficient opportunities in the way of training, development and growth, significantly fewer employees agree.

 

There’s also a direct impact from the pervasive skill shortages in Australia right now, with external opportunities often offering greater benefits to employees that are seeking new challenges, recognition and skills development. This is even more noticeable in companies where there aren’t clear career pathways available, and limited visibility of development opportunities.

 

The crux of the issue is that there are multiple points of failure in the retention chain. The entire employee experience factors in, from minimised visibility for growth and long-term prospects through to a lack of flexibility and trust.

 

Hays Salary Guide FY26/27 reports that the number one reason employees gave for wanting to leave was a lack of future opportunities. Approximately 36% of employees cited lack of growth as their chief reason to seek other opportunities, with 29% attributing that to why they changed jobs in the past twelve months.

 

Additionally, only 1 in 10 employees say that promotions in their organisation are frequent and based on clear performance criteria, indicating a roadblock in securing forward momentum. With career growth now solidly a primary retention driver in Australia, employees are increasingly expecting clear development pathways, access to structured upskilling, and defined progression opportunities. Without this visibility and clarity, even satisfied employees are more likely to explore external options.

 

Salary remains at the forefront of the retention conversation, now forming a baseline expectation for employees. The Hays Salary Guide FY26/27 shows that many employees have experienced flat or below-expectation salary growth, prompting them to reassess their current roles.

 

On average, those surveyed expect an increase of 3.8% over the next 12 months, but the reality is that many will not achieve this kind of growth. Salary satisfaction should be a core focus for employers as they devise their retention strategies, as organisations that fail to keep pace with market benchmarks will risk losing talent to more competitive employers. According to the data, only 42% of respondents were satisfied with their salary, 29% were neutral, and an additional 29% reported varying degrees of dissatisfaction. This is a real problem for retention, as the number one driver of salary growth is securing a job change.

 

While it once sat firmly as a carrot worth dangling, flexibility is now a standard expectation across workforces in Australia. It’s still very important, with 70% of employees rating flexible working as very or extremely important in deciding to stay with or join an organisation, but with 66% of hirers offering it as standard, it is now widespread enough to be regarded as a hygiene factor.

 

Employees are increasingly prioritising work-life balance and autonomy, leading to an uptick in hybrid working models. Employers that offer limited flexibility may struggle to retain talent in a competitive market, and although flexibility rarely shows up as the primary reason people leave or join, it is the threshold cost for being in the conversation at all.

 

With more than 80% of organisations reporting ongoing skills shortages, access to development opportunities is playing a key role in retention. According to the Hays Salary Guide FY26/27, 42% of organisations are upskilling employees in their current position to address these skill shortages, but 33% are focusing on hiring new talent and a concerning 15% say they are not formally addressing gaps at all.

 

With the majority of organisations struggling to find qualified talent, retaining existing employees is often more efficient than hiring new ones. To do so, organisations need to develop and cultivate the baseline capabilities of their team, especially in growing areas like AI. Many employees (60%) are already using AI tools across Australian workplaces, but with only 22% of employees saying they have received some level of support to adopt AI technologies, this gap between usage and capability increases the risk of attrition, particularly among employees looking to future-proof their careers.

 

• Build structured career pathways: Employees are more likely to stay when they can see a future in the organisation. Introduce or refine profession frameworks, align roles with skill development, and set clear milestones for advancement.
   
• Invest in continuous learning and development: Retention improves when employees feel supported to grow. Offer structured training programs, support external learning opportunities, and build capability in high-demand areas like AI and digital.
   
• Improve communication and transparency: Bridging the perception gap is essential. Communicate available opportunities, regularly check in on career goals and expectations, and provide transparency around business direction and growth.
   
• Align benefits with employee priorities: Strategies must reflect evolving expectations. Consider how things like competitive salary and benefits, flexible/hybrid working options, and work-life balance support could feed into your retention strategy.

In 2026, employee retention in Australia is shaped by evolving expectations and ongoing skills shortages. The organisations that succeed are proactively prioritising the holistic employee experience when developing retention strategies – setting clear expectations for growth, investing in development and future skills, and fostering a culture of visibility when it comes to career pathways.

 

And leaders, don’t underestimate your own impact. Strong leadership can offset pressure from external opportunities, while poor leadership can accelerate turnover. If your organisation still approaches retention with a reactive mindset, you’re neglecting to develop a strategic advantage in a competitive talent market.

 

For deeper insights into retention trends, salary benchmarks and workforce expectations in Australia, download the Hays Salary Guide FY26/27.