Higher wages, toxic workplaces shaping employee attraction, retention in 2026: experts

Summary

This article reports on findings from a Conference Board of Canada survey presented during a recent webinar, focusing on the key drivers of employee attraction and retention heading into 2026. The central argument is that while compensation remains the dominant reason employees leave or consider leaving their jobs, toxic workplaces and poor leadership represent a substantial and strategically significant secondary driver. Key findings include: approximately 80 per cent of departing employees cited higher pay, 58 per cent cited better benefits, and nearly half attributed their departure to poor leadership or toxic environments. Additionally, 83 per cent of employees identified good leadership as important to job satisfaction. On the compensation side, average pay increases of 3.4 per cent in 2025 and 3.2 per cent projected for 2026 slightly outpace inflation. The article also highlights that one-third of organisations prioritise benefits as a strategic attraction and retention tool, and 39 per cent are increasing investment in benefits communication. The implication drawn is that leadership quality and effective benefits communication are as strategically important as wage levels in shaping workforce stability.

Strengths and limitations

Strengths: The article draws on primary survey data from the Conference Board of Canada, a credible and established research institution, lending reasonable methodological credibility. The findings are internally consistent and the inclusion of both exit drivers and 'considering leaving' motivations adds analytical nuance. Limitations: Sample size, methodology, and survey design are not disclosed in the article, making it impossible to fully assess the robustness of the data. The article is based on a webinar summary rather than a full published report, which limits peer-reviewed scrutiny. The findings are Canada-specific and may not generalise to other labour markets. The framing is largely descriptive rather than causal — correlations between poor leadership and attrition are noted but not rigorously tested. The article does not address industry-sector variation, organisational size, or demographic breakdowns, which could significantly alter interpretation.

What this implies

The data points to a dual-track retention challenge for organisations: wage competitiveness addresses the dominant exit driver, but leadership culture represents a distinct and compounding risk that wage adjustments alone do not resolve. The emphasis on benefits communication over benefits expansion suggests organisations are recognising efficiency gains in optimising existing offerings rather than expanding them. As pay increases moderate toward inflation parity, non-compensation factors such as leadership quality and workplace culture may carry greater relative weight in employee retention decisions heading into 2026.

Key points

• Approximately 80 per cent of employees who changed jobs cited higher pay as the primary driver, while nearly half also cited poor leadership or toxic work environments as a reason for leaving.
• 83 per cent of employees report that good leadership is important to job satisfaction, linking leadership quality directly to engagement, productivity, and retention risk.
• Average employer pay increases of 3.4 per cent (2025) and 3.2 per cent (2026) slightly outpace inflation, but benefits communication is emerging as a critical gap — with 39 per cent of organisations increasing focus in this area.

What to take away

• Organisations treating benefits as a strategic retention tool are also identifying communication gaps as a priority — strong benefits programmes have limited impact when employees do not fully understand what is available to them.
• Poor leadership and toxic workplace culture are not only exit drivers but also engagement and productivity risks among employees who are merely considering leaving, suggesting early intervention in leadership quality has measurable workforce stability implications.