Key takeaways
- Employee engagement directly impacts retention rates and delivers measurable financial returns through reduced turnover costs and improved productivity
- Workers in Australia increasingly value wellbeing benefits, with 36 per cent willing to trade a 10 per cent salary increase for better support
- Flexible work arrangements and holistic benefits programs can generate positive ROI by reducing absenteeism, presenteeism and turnover
- Poor workplace culture costs organisations up to 25 additional working days of lost productivity annually per disengaged employee
- Supporting employee mental health is an employer obligation under psychosocial safety laws and can generate significant workplace wellbeing ROI
Employee retention delivers measurable ROI: when organisations improve engagement through benefits such as wellbeing support, mental health resources and flexible work, they can help reduce turnover costs, lift productivity and strengthen retention. For HR leaders, organisational leaders and employers in Australia, retention is more than a metric. It's a signal of how committed, supported and engaged people feel at work, and of the strength of a company's culture.
Retaining talent is one of the primary operational priorities on the leadership agenda. Turnover remains a significant challenge for Australian organisations, with 13 per cent of workers currently considering leaving their jobs and 21 per cent uncertain about staying, according to the Q1 2026 TELUS Mental Health Index (MHI).
For organisations struggling to retain staff, the financial impact is substantial. According to research into the impact of benefits on employee retention, turnover costs are typically equal one to two times an employee's annual salary when accounting for recruitment, training and lost productivity. Yet many Australian employers don't have the data to calculate the true cost of turnover or the ROI of their retention investments.
For employers that need to reduce attrition, protect productivity and make defensible investment decisions, understanding which benefits improve engagement is now both a commercial and compliance issue. Here’s a more detailed look at what’s driving this changeover in the workforce, and what companies can do to help keep their talent and keep them happy.
Employee turnover costs companies in more ways than one
When employees leave, it's a loss on multiple levels. First, it suggests another organisation had the resources and resolve to make them a better offer, which may not bode well for future recruitment efforts.
Second, the loss of an employee leaves a hole in the team that their co-workers might have to fill before a replacement can be found, which can detract from their own job satisfaction and impact their work-life balance.
And third, as turnover takes a toll on the morale of the team members left behind, they may also start to evaluate other employment options available to them.
But the most immediately noticeable and measurable costs are monetary. According to the Integrated Benefits Institute, 61 per cent of employers report problems retaining staff. In Australia, this translates into significant financial exposure: poor workplace culture alone costs organisations an estimated 25 additional working days of lost productivity per disengaged employee annually (Q1 2026).
However, by investing in employee retention strategies, employers can achieve a positive return on investment (ROI). Research by PwC shows that employers who invest in comprehensive wellbeing support can recoup AU $3 for every AU $1 spent through improved productivity and reduced claims. This cost-benefit analysis demonstrates why calculating the ROI of employee benefits has become essential for HR leaders in Australia.
When you understand your organisation's unique turnover costs and then model the impact of retention investments, the business case for supporting employee wellbeing and engagement becomes clear.
Keeping your talent happy means keeping your talent
Employee retention clearly depends on how much employees feel valued and supported at work. Mental health and wellbeing are identified as the most important areas for support, and for good reason. According to the 2025 TELUS Mental Health Barometer for Australia, 36 per cent of employees would prefer better support for their wellbeing over a 10 per cent pay raise. This preference signals a shift in how workers in Australia evaluate retention decisions.
Moreover, supporting mental health is also a legal obligation. Under Australian workplace psychosocial safety laws, employers have a duty to protect both physical and psychological wellbeing. Research from the Q1 2026 MHI shows that workers rating their employer's support for mental wellbeing as excellent recover approximately 30 working days annually in productivity compared to those reporting poor support, who lose 58 days per year. This 28-day gap represents significant financial impact and demonstrates the ROI that mental health and wellbeing programs can have.
Employers are taking note of this opportunity. In recent surveys, the majority of Australian employers report plans to invest more in mental health support, stress management and resilience training. Such benefits can help empower employees to connect with medical professionals to address their mental health concerns. And with a growing focus on personal wellbeing outside of work, it's vital for organisations to provide easy-to-access services that facilitate this balance.
A 2025 Best Places to Work in Australia study found that organisations excelling in areas like wellbeing, recognition and empowerment achieved an average engagement score of 85 per cent, outperforming both national and global benchmarks. Without a concerted effort on the part of employers to retain their workforce, people may start to look elsewhere.
A healthier lifestyle takes center stage for the workforce
Work-life balance is increasingly important to workers in Australia. Flexible work arrangements are foundational to this: 46 per cent of workers say their organisation excels in flexible work options, while 31 per cent report this as an area for improvement (January 2025). That’s especially relevant in remote and hybrid work settings, where clear communication and recognition can help sustain culture, employee productivity and retention.
While salary is still critical, and pay continues to be a key factor for employers who wish to remain competitive, non-monetary actions are a big focus for organisations looking to attract and retain talent. At most companies, these include broader emphasis on diversity, equity and inclusion, an improvement of the employee experience, and employee wellness programs that support wellbeing.
A modernised benefits strategy can build a stronger employee value proposition (EVP) that can help retain the talent. Research shows that 57 per cent of high-performing employees feel stuck at work, and attrition rates are up 14 per cent from last year in Australia. A modern, personalised approach to employee benefits can help solve this problem.
Benefits matter almost as much as salary
Australian employees clearly prioritise wellbeing benefits in retention decisions. Beyond the emotional benefit of feeling cared for, there's a quantifiable financial story: according to research by Mercer, companies that foster a “culture of health” experience employee turnover rates 11 percentage points lower than those that don’t.
For HR leaders building a business case for retention investments, the cost-benefit analysis is compelling. Access to mental wellbeing services can help positively impact job satisfaction and reduce absenteeism by providing timely support. This is why employee benefits have evolved from a nice-to-have perk to a strategic retention and financial asset.
Recognition programs should also be part of that mix because employees who receive regular recognition are more likely to stay. Research by Gallup has shown that well-recognised employees are 45 per cent less likely to have turned over two years later.
When employees know that they're cared for, they're more likely to be happy and secure in their jobs and have more reasons to stay.
Calculating your employee retention ROI
Building a strong business case for employee engagement and retention investments starts with understanding your costs. Begin by calculating your current turnover rate and the direct costs of each departure: recruitment fees, training time and lost productivity during the transition period.
Next, identify the productivity gains from improved retention. If reducing turnover by five per cent saves your organisation $500,000 in direct costs, what's the additional gain from preventing absenteeism and presenteeism? Research shows that supporting employee wellbeing generates measurable returns—that translates to thousands of recovered productive hours annually.
Finally, use industry benchmarks to model your expected ROI. As mentioned, employers investing in comprehensive wellbeing support can expect to recoup on their investment. Use this benchmark to help forecast your organisation's potential returns based on your current workforce size, turnover profile and benefit investment.
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Learn moreFrequently asked questions
What is the real financial impact of employee turnover?
The financial impact of employee benefits extends directly to turnover costs. On average, losing a single employee costs one to two times their annual salary when accounting for recruitment, training and lost productivity. Calculating your organisation's specific turnover costs is essential for building a business case around retention investments.
How do I calculate the ROI of employee benefits and retention programs?
Start by identifying your current turnover rate and cost per departure. Then calculate the productivity gains from improved retention: if you reduce turnover by five per cent, what's the cost savings in recruitment and training? Next, quantify wellbeing program outcomes: if 10 per cent more of your workforce reduces absenteeism by even one day annually, calculate that saved output. Research shows organisations investing in comprehensive wellbeing support recover AUD 3 for every AUD 1 spent. Using this benchmark, you can model your expected ROI based on your organisation's size and turnover profile.
What's the connection between workplace wellbeing and employee retention?
Beyond productivity, access to wellbeing services improves job satisfaction directly: 36 per cent of Australian employees report they'd prefer better wellbeing support over a 10 per cent salary increase. This preference explains why retention investments in mental health and wellbeing programs can deliver outsized returns.
How do I ensure my retention strategy complies with Australian workplace laws?
Under Australian workplace psychosocial safety laws, employers must actively protect psychological wellbeing. This includes providing mental health resources, fostering psychological safety where employees feel safe raising concerns, and maintaining inclusive workplace cultures. Beyond compliance, organisations exceeding minimum standards by offering comprehensive EAP services, stress management training and tailored wellbeing support see measurable engagement and retention improvements.
