Emerging Themes, Leadership Challenges, and What the Research Is Really Saying
Talent retention is no longer treated as a standalone HR programme, but as a driver of business performance and competitive advantage.
People still leave organisations for familiar reasons — pay, purpose, flexibility, and opportunities for growth, but what has changed is the number and intensity of pressures they now experience at the same time.
Rapid advances in AI and work redesign, the challenges of hybrid working, sustained workload pressure, and rising expectations for development and wellbeing all shape how people experience work today.
The good news is that the evidence is clearer than ever: engagement and retention are strongly influenced by leadership behaviours, the quality of the employee experience, and whether people can do meaningful work without being overwhelmed by unnecessary demands and distractions, all factors organisations can actively shape.
Engagement is easily disrupted, and managers play a decisive role.
Gallup’s State of the Global Workplace: 2025 report is blunt: global engagement fell from 23% to 21% in 2024, and the primary driver was a drop in manager engagement (30% to 27%). It also estimates that the global cost in lost productivity from declining engagement has reached over $400 billion.
This matters because managers are the “transmission belt” of culture: strategy becomes lived experience (or not) through them. Gallup also notes that fewer than half of managers (44%) report receiving management training.
Emerging themes shaping retention (and what top talent expects now)
1. AI is reshaping work faster than humans are adapting
Talent is watching how leadership handles AI: whether it’s used to replace their work or simply squeeze more output from fewer heads. Gallup frames this as a defining leadership question: will AI “energise the workforce,” or will it sever the human connections that keep teams thriving?
Microsoft’s Work Trend Index research points to another practical issue: modern knowledge work is highly fragmented. Employees can be interrupted every two minutes during core work hours (an average that can reach 275 “pings” a day). The best people don’t just want “flexibility” they want focus, autonomy, and systems that protect deep work.
The implication for retention: if AI increases speed but leaders don’t redesign the flow of work, people burn out faster, especially your best people who carry the most load.
2. The employee experience is becoming more “personalised”
McKinsey’s HR Monitor 2025 highlights that employee experience is widely seen as core HR work, yet about 36% of employees across Europe and the US are currently not satisfied.
It also signals a broader risk, with dissatisfaction meaningfully higher than the percentage of people who have clear plans to leave, this creates the conditions for “quiet quitting” and silent attrition.
Retention implication: you can’t average your way to a great employee experience. Top talent expects clear growth pathways, credible development, and leaders who remove friction.
3. Hybrid is no longer a “policy”, it’s a trust conversation
Organisations are still wrangling with the flexibility vs. in-person debate. But the retention lever isn’t the number of office days; it’s whether leaders can create clarity, fairness, and psychological safety across different working patterns.
Retention implication: inconsistent flexibility signals low trust. Remember high performers have options!
4. People don’t leave companies; they leave leaders
This is where Zenger Folkman’s work is particularly useful because it connects specific leader behaviours to hard outcomes like intent to quit and discretionary effort.
The Zenger Folkman research on psychological safety using data from 18,000+ employees, found that when leaders scored above average on the behaviours most correlated with dignity and respect:
- Intention to quit dropped from 37% to 20%
- Willingness to give extra effort rose from 23% to 47%
That’s measurable retention impact driven by behaviour.
The 2026 leadership challenges that influence levels of engagement and retention
Challenge 1: Lead through uncertainty without pretending you have all the answers
Top talent doesn’t expect certainty; they expect candour and competence. The old “command-and-control” style suppresses the very signals organisations need in volatile conditions (frontline insight, early warnings, dissent).
What great leaders do: invite hard questions, acknowledge uncertainty, and create conditions where people can speak up early, before problems become crises.
Challenge 2: Turn “psychological safety” into everyday micro-actions
Zenger Folkman identifies eight behaviour areas that most strongly correlate with employees feeling respected (and staying). These include building trust, being open to diverse perspectives, resolving conflict, staying connected, balancing results with people’s needs, and demonstrating adaptability.
What this looks like in practice (weekly):
- Start meetings by asking for risks and challenges first (not last)
- Close projects with an opportunity for reflection and learning
- Celebrate the gains not the gaps
- Name and resolve tensions quickly (unresolved conflict is a retention killer)
- Show trade-offs transparently (“Here’s what we’re prioritising and why”)
Challenge 3: Listen well enough to keep your best people
Two findings of Zenger Folkman research should make every senior team pause:
- Leaders rated in the top 10% for listening had employee engagement at the 76th percentile and overall leadership effectiveness at the 92nd percentile
- Listening effectiveness declined with seniority; top managers had notably lower listening ratings than individual contributors.
In other words, as leaders get more senior, they often get less “reachable.” But top talent stays where they feel heard, valued, and involved.
A simple listening upgrade:
- Replace “Any questions?” with “What are we missing?”
- Respond to pushback with curiosity (“Say more”) before judgement
Challenge 4: Developing leaders at scale (not just “high potentials”)
- Zenger Folkman’s leadership development study argues leadership development has observable impacts on shorter timescales and is linked to outcomes including higher engagement and retention.
Their case examples describe leadership effectiveness improving over multi-year programmes and being associated with stronger engagement and reduced turnover in internal metrics. - Retention implication: top talent will tolerate a tough year. They won’t tolerate stagnation—especially if leaders aren’t improving.
A practical 2026 playbook to engage and retain top talent
- Make the manager role winnable by providing clear expectations, capability development and support, signalling that leadership is a role people can succeed and grow in.
- Redesign work for focus in an AI-and-noise era, signalling that the organisation values judgement, craft and outcomes over constant availability.
- Enable personalised growth without unnecessary complexity, signalling that people can see a credible future for themselves in the organisation.
- Operationalise psychological safety in day-to-day decision-making, signalling that candour, challenge and honesty are genuinely encouraged.
- Build a culture of listening, particularly at senior levels, signalling that employee voice informs decisions and direction.
In summary…retention is the by-product of a high-quality human experience
If you want a single metric: ask whether your best people feel heard, have the opportunity to grow, and feel able to do great work without unnecessary friction. If the answer is yes, engagement will rise and so will retention.
Sources (for further reading)
- Gallup, State of the Global Workplace: 2025 Report Healthy Work Company
- McKinsey, HR Monitor 2025 McKinsey & Company
- Microsoft Work Trend Index (2025 report page & methodology) Microsoft
- Zenger Folkman: Research: What Leaders Do to Create Psychological Safety (Sep 2025) Zenger Folkman
- Zenger Folkman: The Data Behind Leadership Listening Skills and Performance Outcomes (Dec 2025) Zenger Folkman
- Zenger Folkman leadership development study PDF (2025) Zenger Folkman
