Employee Retention: Why Fixing Pay Won't Necessarily Fix Your Turnover
- clare2635
- Apr 20
- 5 min read
Nearly one in three Australian workers plan to leave their current employer in 2026 (Perkbox/YouGov). In agencies and consultancies specifically, 18% are actively thinking about a move right now, and 10% expect to be gone within two years (Culture Amp, 2025). Most leaders are not surprised by those numbers. What tends to surprise them is where the data points next: excessive workload has overtaken pay as the primary driver of intent to leave, at 26% versus 18% (Perkbox/YouGov, 2026). And yet the most common retention response is still a salary review.
The problem is not that leaders don't know what drives retention. Most do. The problem is execution: treating workload, manager quality, and career growth as leadership responsibilities rather than tasks that belong to HR.
What the 2026 Data on Employee Retention in Professional Services Shows
Cost-of-living pressure is real and showing up in the numbers: 48% of those considering a move say they are not keeping up with rising costs, and only 51% of Australian employees believe their pay is fair for their role (Aon, 2025). Pay matters. But in 2026, it is not the biggest driver of departure in knowledge-work businesses — workload is, at 26% versus 18% for pay (Perkbox/YouGov, 2026).
Smaller practices start from a position of genuine advantage. Businesses under 20 staff average around 11% turnover, well below the national average of 16% (AHRI, 2026), and far below the one in three SMEs now experiencing turnover above 20%. That gap is a real competitive advantage. It is also not automatic. It erodes when workloads and stress increase, which is precisely the moment most businesses are least prepared to respond.
Why turnover compounds
When experienced people leave, their work is redistributed across whoever remains. Leaders spend more time onboarding and covering gaps instead of doing client work. Deadlines stretch. Quality dips. The people absorbing the extra load start wearing out, and some of them leave too. New hires are still months away from working independently, so overall capability stays suppressed even as headcount recovers.
In knowledge work, where output depends on judgment, client continuity, and the ability to work without close supervision, this costs more than recruitment spend. It costs slower delivery, weaker client relationships, and a team that never fully stabilises.
AHRI's research shows a direct correlation between skills gaps and turnover rates: each departure takes institutional knowledge with it, widens the gap, and makes the next departure more probable. 34% of Australian organisations are now reporting turnover at 20% or above (AHRI, 2026). At that level, every resignation is also an accelerant.
How the Businesses Keeping Their People Are Thinking Differently
The businesses with the strongest retention have stopped asking how to keep employees comfortable and started asking something more useful: how do we help our people grow faster here than they could anywhere else?
That question changes what gets prioritised. It does not mean setting aside the workload problem in favour of development programs. It means recognising that the two are connected. Nobody grows well when they are running beyond capacity, and giving someone a career pathway they have no bandwidth to pursue does not help anyone. The businesses making real progress are addressing both.
On workload: monitoring utilisation rates, building recovery time into the calendar after intense project periods, protecting blocks for deep work, and treating capacity conversations as normal leadership behaviour rather than complaints to be managed. On career growth: making pathways visible and specific, including lateral moves and specialist tracks, not just a narrow promotion ladder. Internal mobility programs have produced $1.2 million in documented recruitment savings in Australian organisations that have invested in them (Frontier Software, 2025).
There is also a meaningful split emerging in how businesses are deploying technology. Most using AI right now are doing so to increase output: faster turnaround, higher billings, more from the same headcount. Workload stays the same or gets heavier. The businesses redirecting those productivity gains into lighter workloads rather than higher targets are the ones changing their retention story, because workload is the number one thing the data says people are leaving over.
Where to Start
Manager quality is the single highest-return investment available. It directly influences up to 70% of employee engagement (ScaleSuite, 2026), which means the direct manager has more influence over whether someone stays than the benefits package, the employer brand, or the office. Training managers to run consistent one-on-ones, check capacity regularly, and give feedback that names what someone is learning (not just what they delivered) does more for retention than most other single interventions. The most effective recognition in this kind of work names what someone is growing into. "You handled that client situation in a way I hadn't seen from you six months ago" does more than a gift card, because it signals that growth is being noticed.
Stay interviews surface problems while there is still time to act on them. Rather than waiting for an exit conversation to find out what went wrong, ask current team members three questions: what keeps you here, what might make you consider leaving, and what one change would improve your experience. Then build a personalised response around what you hear, whether that is adjusted scope, a specific development pathway, or different project allocation.
The first 90 days also matter more than most leaders account for. A significant share of early exits happen because people never fully settle in. Structured onboarding with clear milestones, explicit role clarity, and a consistent check-in rhythm helps new hires reach confidence and independence faster, which reduces the likelihood they start looking again before the end of their first year.
Q: Why are professional services employees leaving in 2026?
A: The 2026 data points to excessive workload as the primary driver at 26%, ahead of pay at 18% (Perkbox/YouGov). Cost-of-living pressure and perceived pay inequity are contributing factors, but workload is the one most businesses are not directly addressing.
Q: What is a stay interview and how does it help retention?
A: A stay interview is a structured conversation with a current team member, designed to surface what might eventually push them to leave before they have made that decision. Three questions: what keeps you here, what might make you consider leaving, and what one change would improve your experience. The value is in what follows — a personalised retention plan built around what you hear.
Q: How can small businesses reduce employee turnover without a large HR budget?
A: Smaller practices have a structural advantage here. You can personalise retention for your highest-impact people in ways a large organisation cannot. Manager one-on-ones, stay interviews, visible career pathways, and workload conversations cost time, not money. The constraint is rarely budget. It is treating these as leadership priorities rather than HR tasks.
We've put together a Stay Interview Guide that walks through the process from preparation to follow-through, including the three questions that surface what's actually going on and how to turn what you hear into a personalised retention plan. Download the Stay Interview Guide.
