What The Research Says About Culture And Turnover

In brief

The question CEOs ask most is whether culture actually affects who stays. The research says yes, more than pay does.
Most people who leave could have been kept, and managers sit at the center of whether they stay.
But managers can only carry a culture that’s been defined. Most haven’t been given one.

When I talk with CEOs about culture, the question underneath the conversation is usually the same: does this actually change whether people stay, or is it a nice-to-have?

It’s a fair question. So here’s what the research says, from sources a CEO would recognize, and what I take from each finding.

1. Toxic culture predicts turnover far better than pay

During the Great Resignation, researchers from MIT Sloan Management Review, CultureX and Revelio Labs analyzed 34 million employee profiles and more than 1.4 million Glassdoor reviews to find out why people were leaving large companies. A toxic corporate culture was by far the strongest predictor of attrition. It was 10.4 times more powerful than compensation in predicting a company’s attrition relative to its industry.

The leading elements of a toxic culture in their analysis were employees feeling disrespected, a lack of inclusion and unethical behavior.

What it means for you: If people are leaving and your answer is to raise pay, you may be solving the smaller problem. It’s the point behind They Didn’t Leave for the Money.

2. Most people who leave could have been kept

Gallup found that 52% of employees who voluntarily left their jobs said their manager or organization could have done something to keep them. And 51% said that in the three months before they left, neither their manager nor any other leader talked with them about how they felt about their job or their future.

Gallup also estimates that replacing an employee costs between one-half and two times that person’s annual salary.

What it means for you: Most departures don’t come out of nowhere. The signs are there, often in the first few weeks, and someone has to be paying attention to how people experience the culture, not just whether they hit their goals.

3. Culture-driven turnover is expensive

In its 2019 report on toxic workplace culture, SHRM found that nearly one in five Americans had left a job because of its culture in the previous five years. It estimated that turnover driven by workplace culture cost U.S. employers as much as $223 billion over that period.

What it means for you: Culture shows up on the income statement, just not on a line labeled “culture.” It shows up as recruiting costs, lost productivity and the time it takes a new hire to get up to speed.

4. Managers carry the culture

In the same SHRM survey, 76% of Americans said their manager sets the culture of their workplace. Gallup’s research on managers points the same way: managers account for at least 70% of the variance in employee engagement across business units.

What it means for you: For most employees, their manager is the culture. That’s why one great manager can hold a team together, and why a company that hasn’t defined its culture ends up with one culture per manager, as I wrote in Your Best Manager Is Your Biggest Risk.

5. But most managers aren’t enforcing the culture

In a 2024 Gartner survey of 625 HR leaders, 57% agreed that managers fail to enforce the culture their organizations want on their teams. Over half said leaders don’t feel accountable for demonstrating it.

What it means for you: I don’t read this as managers not caring. I read it as managers never having been given a clear standard to enforce. It’s hard to hold anyone to a culture that only exists as values on a wall. It’s the same reason so many performance reviews only measure half the job.

What it adds up to

Put the findings together and the picture is consistent. Culture affects whether people stay, more than pay does. Most people who leave could have been kept. Managers are where the culture lives or dies. And most managers haven’t been given a culture they can actually carry.

That last part is the one you can fix. It starts with naming your culture, describing the behaviors it runs on, and building them into how you hire, onboard, develop and review people, so every manager is working from the same standard.

One honest note: these studies come from different years and different populations, and none of them measured my work. They measure the problem. What I do is help companies act on it.

Read next: They Didn’t Leave for the Money

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