How can employers improve retention in today’s job market?

 

• Align salary and benefits with market expectations
• Provide structured career progression pathways
• Invest in upskilling existing talent and AI capability
• Foster a culture of transparency and clarity

Employee retention remains a significant challenge across New Zealand, with the Hays Salary Guide FY26/27 showing that 36% of employees are actively looking for a new role, while many others remain open to moving. This increasingly mobile workforce is further reflected by the fact that 70% of employees have been in their current role for less than four years, highlighting just how fluid the New Zealand labour market has become.

The Hays Salary Guide FY26/27 highlights several key drivers behind employee turnover, but the most consistent theme is a disconnect between what employers think they offer and what employees actually experience. For example, 46% of employers say they offer training, but only 32% of employees agree. Meanwhile, 5% of employers report no support, while 19% of employees say none exist. This gap points to a lack of visibility, communication, and structured development pathways, all of which contribute directly to retention challenges.

In a market shaped by ongoing skills shortages, retaining key talent is no longer a reactive task as employees are increasingly exposed to external opportunities offering stronger pay, clearer progression, and stronger development support. There are multiple points of failure in the retention chain, and organisations need to consider the entire employee experience when developing effective retention strategies.

Career growth is one of the strongest drivers of retention in 2026, with the Hays Salary Guide reporting that 36% of employees are citing a lack of future opportunities as their primary reason for leaving. At the same time, only a small proportion of employees feel that promotions are frequent, clearly articulated, and based on visible performance criteria. This lack of progression creates a significant barrier to retention.

 

Today, employees in New Zealand expect structured career pathways, defined progression milestones and access to professional development. Without this visibility and clarity, even engaged employees are more likely to explore external options.

 

Salary remains a core pillar of all good retention strategies. According to the Hays Salary Guide FY26/27 employees in New Zealand report an average salary increase of 3.3%, but nearly a third of employees are dissatisfied with their current wage. The number one driver for salary growth is to secure a job change, so employers should be paying close attention to wage trends and benchmarks if they want to retain talent.

 

Organisations that fail to keep pace will risk losing talent to more competitive employers, especially in industries that have high turnover and mobility due to growing skill demands. Employee sentiment and job mobility align closely with pay increase levels, so a competitive package can make a big difference.

 

Flexible working has shifted from being an appealing differentiator to a baseline expectation across New Zealand. The data shows that a majority of employees now work in flexible or hybrid environments, and while it may not always be a primary reason for turnover, flexibility is increasingly seen as a minimum requirement.

 

As employees continue to value work-life balance, autonomy and trust-based working models, the organisations who aren’t willing to come to the table on flexibility are falling even further behind. According to the Hays Salary Guide FY26/27, 64% of organisations are keeping flexible work policies as they are, but 16% don’t have any formal policies in place and 7% plan to reduce options to bring their workforce back on-site. While industries have different demands, that willingness to come together for an equitable solution is vital in developing a positive company culture – which goes a long way in retaining key talent.

 

Access to development opportunities is a key retention boon, particularly in a market dominated by skills shortages. In New Zealand, 75% of organisations report skills shortages, especially in technical sectors like engineering, trades and services, and the public sector – but many employers are looking externally to address this, instead of incorporating professional development opportunities into a retention strategy.

 

Retaining existing employees is often more efficient than hiring new talent. To do so, it’s vital that organisations establish a baseline level of training and support, especially in areas like AI. As adopt AI adoption continues to roll out across the country, 51% of employees are reporting a complete lack of AI training or support, compared to only 27% of employers. This gap between offering and reality increases the risk of attrition, particularly among employees looking to future-proof their careers.

 

• Build structured career pathways: Employees are more likely to stay when they can see a future in the organisation. Introduce or refine profession frameworks, align roles with skill development, and set clear milestones for advancement.
   
• Invest in continuous learning and development: Retention improves when employees feel supported to grow. Offer structured training programs, support external learning opportunities, and build capability in high-demand areas like AI and digital.
   
• Improve communication and transparency: Bridging the perception gap is essential. Communicate available opportunities, regularly check in on career goals and expectations, and provide transparency around business direction and growth.
   
• Align benefits with employee priorities: Strategies must reflect evolving expectations. Consider how things like competitive salary and benefits, flexible/hybrid working options, and work-life balance support could feed into your retention strategy.

In 2026, employee retention in New Zealand is shaped by evolving expectations and ongoing skills shortages. The organisations that succeed are developing their retention strategies proactively, prioritising the holistic employee experience by setting clear expectations for growth, investing in development and future skills, and fostering a culture of visibility.

 

Leadership also plays a critical role. Regardless of salary or benefits, poor leadership can accelerate turnover while strong leadership can reinforce confidence and retention even through periods of uncertainty.

 

Ultimately, if your organisation only initiates the retention conversation after talent begins departing, you’re behind the curve. For deeper insights into retention trends, salary benchmarks and workforce expectations in New Zealand, download the Hays Salary Guide FY26/27.