Talent retention has become the leading HR priority for 59% of organizations, according to Gallagher’s 2025 US Workforce Trends Report, as nearly two-thirds of employers grappled with turnover rates of 10% or higher in 2024.
The report, based on survey data from 4,035 U.S. organizations collected between January and March 2025, shows that 65% of employers experienced double-digit turnover rates last year, with 47% reporting rates of 15% or more. For 28% of those employers, the turnover exceeded expectations.
Retention now ranks as the second-highest operational priority at 42%, trailing only revenue growth at 51% but ahead of cost management at 39%, according to the company.
Employee engagement strategies gain traction
Just over half of employers (58%) have developed strategies to improve employee engagement, the report found. Large employers with 1,000 or more full-time equivalents are significantly more likely to have such strategies in place (73%) compared to small employers with fewer than 100 FTEs (45%).
However, only 61% of employers agree their workforce is highly engaged, with 33% remaining neutral and 6% disagreeing, according to the survey results.
The top drivers of engagement have shifted from confidence in senior leadership to factors emphasizing individual growth, the report states. Career growth pathways now rank first for engagement, followed by opportunities for self-improvement and confidence in ability to succeed in one’s role.
“Employee listening is essential, and the way surveys are perceived really depends on what happens after the data is collected,” said Chris Dustin, managing director of people and workplace experiences at Gallagher. “If employees notice meaningful changes and see that their feedback is being used positively, that’s way more effective than just doing monthly surveys.”
Stress and burnout concerns persist
Two-thirds of employers (67%) report concern about the impact of stress and burnout on their organizations, according to the survey. The figure represents a slight decline from 2024 levels but remains elevated.
To address these concerns, 32% of employers offer stress management, resiliency or meditation programs, while 28% provide time off specifically for mental health or burnout. However, only 24% offer mental health training for managers, leaders or HR staff.
The report found that 45% of employers believe their managers are well-equipped to refer employees to mental health support services. That figure rises to 52% among large employers but drops to 37% among small employers.
Flexible work arrangements evolve
Forty percent of employers have implemented hybrid work models, while 19% offer complete flexibility regarding work location, the survey found. Only 11% require full-time office attendance.
Among employers that implemented mandatory return-to-office policies, 43% encountered resistance from employees, 19% experienced a decline in employee morale or engagement, and 14% saw increased turnover or attrition, according to the report.
“Right now, with all the new tech coming out, especially AI, organizations are really trying to figure out if they should be helping their employees learn new skills or completely retrain them,” said Tamarah Saif, national managing director of people development and insights at Gallagher. “On the flip side, employees are also wondering what all this means for their jobs and what the future of work is going to look like.”
Inclusion and diversity initiatives remain prevalent
Three-quarters of employers (74%) are implementing inclusion and diversity initiatives, with 43% stating the key purpose is to align with core organizational values, the report found. Large employers (84%) are more likely to deploy such initiatives than small employers (67%).
The most common approach involves integrating inclusion and diversity into recruitment policies (78%), followed by communications efforts (58%) and talent analytics and engagement practices (43%).
However, employers face several challenges in implementing these initiatives. The top obstacles include lack of internal staff to support program efforts (37%), insufficient funding or resources (33%), and lack of interest and engagement from employees (31%). An equal 31% cited the absence of robust data and reporting to quantify impact.
More than half of employers (56%) assign primary responsibility for inclusion and diversity oversight to HR departments, according to the survey.
The report notes that 32% of employers have integrated inclusion and diversity policies into career and succession planning, a practice more common among large employers (40%) than small ones (27%).
Survey methodology
The survey drew responses from organizations across multiple sectors. Healthcare led participation with 705 organizations, followed by manufacturing (515), financial institutions (324), and public entities (281).
By size, 41% were lower midsize employers with 100 to 499 FTEs, 28% were small employers with under 100 FTEs, 19% were large employers with 1,000 or more FTEs, and 12% were upper midsize employers with 500 to 999 FTEs.
Geographically, 35% of participating organizations were based in the North Central region, 20% in the South Central, 18% in the Northeast, 16% in the West, and 11% in the Southeast.
The ownership structure split showed 60% for-profit organizations and 40% nonprofit entities.
