New data from our report, Navigating Transformative Times: The State of Canadian HR in 2026, reveals a big gap: the employee retention strategies employers rely on most don't address the real reasons people leave.
This guide walks through what the data actually says, and five practical ways to close the gap, even on a tight budget.
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The real reasons employees leave Canadian organizations
When we surveyed hundreds of Canadian HR professionals for our report, we asked a simple question: What is the primary reason employees leave an organization?
Here’s what they said:
- Compensation/pay: 25.2%
- Lack of growth opportunities: 21.7%
- Work-life balance: 11.3%
- Management: 4.8%
- Company culture: 3.9%
Together, pay and growth account for almost half (46.9%) of all employee departures. That's the single biggest signal in the data about why employees leave Canadian companies.
This finding lines up with what we’re seeing across the country. According to Randstad's Workmonitor report, 32% of Canadians would quit a job that didn't offer career advancement, and nearly a quarter would leave if they didn't have opportunities to upskill.
Another survey from Express Employment Professionals found that the average cost to replace an employee in Canada is over $30,000 annually. Every time someone leaves, that’s a huge cost — financially and time-wise — to hire and then train someone new.
When retention is prioritized as a business strategy, it’s a big investment. But if planned thoughtfully, it’s a worthwhile one.
So how exactly should you plan and execute an effective retention strategy? Let’s take a look at the report data to find out.
What are employers actually doing to retain top talent?
Now that we have an understanding of why employees leave Canadian companies, it’s time to compare the positive side: what is working for retention strategy.
According to our report, here are the retention strategies that are most effective:
- Company culture: 67.8%
- Flexible work schedule: 55.0%
- Health benefits: 42.6%
- Professional development and growth opportunities: 40.0%
- Recognition programs: 28.3%
- Compensation/wages: 0.4%
To understand the full picture of retention strategy in Canadian companies, let’s look at the most effective strategy and the least effective one.
Our report found that 67.8% of respondents named culture as their most effective retention strategy in our survey. And the impact of culture is undeniable — a strong and healthy culture makes daily work smoother, builds trust, and gives employees a reason to be engaged.
But when we analyze the least effective retention strategy, we can see a huge disconnect between what employees want and what employers think is working. Only a handful (0.4%) of employers see compensation or fair wages as a key retention tool.
Compare that to the stat we outlined in the previous section — the main reason employees are leaving an organization: 25.2% cited compensation/pay.
There’s a huge gap here. Employees leave for better compensation and pay, while employers don’t prioritize this as a retention strategy.
Why work culture alone isn’t a retention strategy
When budgets are tight, culture often becomes the lever employers lean on to retain employees. This is a rising trend that we saw in our report findings — here’s what one respondent told us:
“With the economy being weak, I’ve been seeing a trend of employees prioritizing a pleasant working environment to compensate for the wages we are able to offer.”
It’s worth noting that Gen Z employees are not only facing a high cost of living but also a competitive job market. Our report found that younger workers do place a high value on workplace culture, flexibility, and mental well-being. As one respondent puts it:
“Work culture is very important to younger generations, who are much less willing to tolerate toxic environments.”
While a strong company culture can attract younger employees, fair compensation and clear opportunities for development and growth are essential for their retention. Another respondent told us that younger workers tend to have higher turnover because they’re “chasing promotions” — they’re seeking more compensation and opportunities that their current employers aren’t providing.
For the low turnover of Gen Z employees, focus on two things: build a culture they want to stay in, and back it up with transparent pay and clear growth plans. Even the way you talk about these plans matters. Managers who adapt their communication with Gen Z employees tend to retain them longer than those who don't.
Sun Life’s report The Kids Are All Grown Up: Checking in On Gen Z found that Gen Z now makes up nearly 20% of working-age Canadians and, alongside millennials, will form the majority of the workforce by 2030. The same report flagged that this cohort is dealing with disproportionately high mental health and financial pressures, which means culture has to do more than retain them — it has to support them.
For a deeper look at what works in Canadian workplaces, explore our check out Rise's 3 practical tips for hiring and retaining top Gen Z talent.
But a great office culture alone isn't always enough to keep employees. Despite an employer's best efforts, you might find that they will leave for better pay or clear advancement opportunities elsewhere.
So what can you do to fix your retention challenges?
How can you reduce turnover in Canada in 2026, even on a tight budget?
As HR leaders plan their retention strategies, there’s a focus on looking at how technology can help. We asked our survey respondents what they see as the top trend shaping HR in the next 3-5 years. One respondent offered a perspective that gets to the heart of the issue:
“I am really hoping [the top trend will be] retention over recruitment, and that we can use technology for more administrative tasks. Ultimately, we want to reduce the workload and help create work-life balance.”
This is the shift that smart, forward-thinking Canadian organizations are making. They are using HR technology to free up budget and bandwidth, then reinvesting that capacity into the things that actually keep people fairer compensation, clearer growth paths, and meaningful development.
Take our report results for example: 34.1% of our survey respondents reported that their HR teams spend 3 to 5 workdays each month doing payroll by hand, losing almost a full workweek of productivity. By switching to an all-in-one HR and payroll system, teams can save that time and allocate the savings to pay reviews, mentoring, or professional development.
And with Rise's Fully Managed Payroll, a Canadian payroll expert takes care of every pay run, CRA payments, and year-end reports, so your HR team can focus on the important work that helps keep employees.
You don't need to double salaries overnight. But you do need to acknowledge that compensation and retention are tightly linked, and build your retention strategy around that reality. Here's what that looks like in practice, whether you're a national enterprise or looking for employee retention strategies for small business teams with lean HR bandwidth.
Make compensation transparent
The workplace space has evolved a lot from what it was decades ago. Today, compensation is not just a number on the job offer. Employees want to know how it is decided and what they can aim for. And, transparency plays a major role here. When you publish clear salary bands on the job advertisements, clear appraisal and raise rules in the employee manual, it helps everyone understand the process. So, even if giving big raises isn’t possible, being transparent builds trust and helps retain employees.
Create visible growth paths
Growth opportunities at work aren't only about promotions. They can also look like taking on new projects, upskilling, or getting a mentor’s support. What matters is making these opportunities clear and accessible for your employees. When employees see a path forward, they're far more likely to stay. A formal professional development plan is one way to make that path explicit.
Use performance reviews to connect the dots
Connect performance reviews of employees to their compensation outcomes and career growth plans. When reviews feel disconnected from compensation and career development goals, they become mere formality instead of a retention tool. With Rise People’s performance management tools, you can bring everything together and make these conversations count.
Automate admin to free up resources
Every hour your HR team spends on manual payroll, paper-based onboarding, or disconnected spreadsheets is an hour not spent on strategic work that helps reduce employee turnover. Consolidating your HR, payroll, and benefits into a single people management platform can free up the time and budget to invest where it matters most.
Rise Health, for example, integrates group benefits directly into the same platform as payroll and HR, which removes a lot of the manual reconciliation work that usually falls to HR teams.
Benchmark against your industry
According to Mercer’s 2025 Canadian Turnover Survey, the national voluntary turnover rate in Canada averages about 10-12%. This number varies a lot depending on the sector. In retail and wholesale, employee turnover can be over 20%, while lower-turnover sectors like chemicals sit closer to 6–7%. Knowing your industry benchmark helps you set realistic goals and make a case for leadership to invest in retention.
How Rise can help you create an engaging employee experience
Canadian employers aren’t struggling with retention because they don’t care — they’re struggling because their strategies don’t reflect reality. The biggest drivers of turnover, compensation and career growth are often missing from retention plans.
Fixing this doesn’t require bigger budgets. It requires a shift in focus: less time on admin, more investment in pay equity and career development, and greater transparency with employees.
Rise People helps your team spend less time on admin work and more time focusing on people. With built-in performance reviews,goal-setting, and check-in features, Rise turns quarterly surveys into actionable insights managers can use every week. Book a demo and see our all-in-one HR, payroll, and benefits platform in action.
For the full data behind these findings, download your copy of the Navigating Transformative Times report.
