Seven in ten companies in Singapore are struggling with employee retention, according to a new survey by the Singapore National Employers Federation conducted across more than 600 organisations spanning manufacturing, financial services, healthcare and technology. The finding represents a sharp increase from 54% who cited retention as a major challenge in a similar survey conducted two years earlier.

The survey found that involuntary turnover — employees leaving who employers wished to retain — had increased across all industries, with technology and financial services recording the highest attrition rates. The median cost of replacing a departing employee was estimated at 1.5 to 2 times their annual salary when recruitment, onboarding and productivity loss costs were factored in.

Root causes

When asked to identify the primary drivers of unwanted turnover, HR leaders cited a mix of push and pull factors:

• Compensation gaps (cited by 62%) — Employees leaving for higher salaries, particularly in tech and finance roles where external salary benchmarks had moved faster than internal salary bands.
• Limited career progression (58%) — Insufficient internal mobility and a perception among employees that advancement required changing employers.
• Managerial relationships (44%) — Poor direct manager relationships remained a persistent driver of voluntary departure.
• Work-life balance (41%) — Particularly among younger employees, inflexible work arrangements were increasingly cited as a reason for departure.

What the best-performing companies are doing differently

Companies in the top quartile for retention had several practices in common. They conducted exit interviews consistently and acted on the findings. They invested in structured career conversations at least twice a year, not just at annual review time. They paid at the 60th percentile or above for critical roles. And their leaders modelled the flexibility and respect for employee time that they publicly espoused.

One HR director at a leading Singapore bank described implementing a “stay interview” programme — proactive conversations with high performers asking what would make them stay, rather than waiting for them to leave before asking why they did. “The return on that simple conversation is extraordinary,” she said.

The cost of inaction

With Singapore’s resident unemployment rate near historic lows and skilled talent in short supply, the cost of doing nothing is high. The survey estimated that Singapore companies collectively spent over S$4 billion annually on replacement hiring — a figure that could be substantially reduced through better retention practices.