4 common challenges that negatively affect employee retention

1. A toxic work environment

HR leaders might not be aware that a particular team is experiencing a toxic work environment, but the employees who suffer from the toxicity will typically be the first to leave.

Several factors can cause a toxic environment, including bullying or sexual harassment, a colleague consistently stealing credit for work and employees being told to do more work because of a teammate's poor performance.

CHROs need to prioritize removing toxicity. Policy alone will not rectify the situation. The HR representative who works most closely with a particular team must observe team behavior, and if needed, correct it immediately through training or discipline.

2. Lack of opportunities for advancement

Employees who quit often report they did so because they felt "stuck." Some workers hope to upskill but find that their company does not offer the right opportunities. At some organizations, top-performing employees are not promoted because they are too valuable in their current positions, which can cause the worker to become frustrated and seek another job.

CHROs should implement structured career paths for every employee category in their organization so new hires understand the criteria and timeline for advancement. Tenure, rather than work performance, being the dominant reason for promotion can lead to employee frustration if a longer-tenured but underperforming worker is promoted, so removing tenure as the main consideration for promotion should be codified in policy.

Convincing managers to give up their best employees is trickier, but one way to address it is for HR to implement a succession plan, which will help ensure that an employee's replacement is equally competent. Another strategy is to reward managers who advocate for their staff's professional development. HR staff can brainstorm ways to reward these leaders.

3. Below-market compensation

If employees discover that their compensation -- either salary or benefits -- is below market rates, they will likely seek opportunities elsewhere.

CHROs should lead efforts to establish annual salary benchmarks, either by participating in compensation surveys or by tracking their competitors' compensation. If meeting or exceeding the market rate is not an option, HR leadership should work on improving the company culture. Employees might decide to stay with a company that offers lower compensation if it provides professional development and positive engagement.

4. Lack of employee engagement

Many organizations are currently struggling with low employee engagement. In 2025, employee engagement -- a metric that measures workers' attachment to their company -- decreased to its lowest level since 2020, according to Gallup's "State of the Global Workplace" report. Employees are engaged when they feel they are part of their organization's mission and understand how their role contributes to the mission's success.

Creating a company culture that promotes employee engagement will help improve employee retention. Doing so can also benefit the company's financial health, as improved employee engagement can increase productivity and reduce recruiting costs by lowering employee turnover.

Companies should hold live events, such as town halls, that include ongoing communication about company goals. The live format will encourage interactive engagement. HR should also tell managers to encourage candid feedback from their teams.

Obstacles to employee retention are not insurmountable. CHROs should be proactive by establishing a culture in which employees feel valued, implementing policies that promote professional growth, and, if possible, ensuring salaries are at market rates. Carrying out these initiatives can help stem the loss of valued employees.

Lynda Spiegel is a freelance writer and former global HR executive for financial services, telecommunications and SaaS companies.