Retaining your top talent should be a primary objective for organizations. There is a common discussion within Executive search in Toronto about whether it’s better to focus on retention or replacement right now. There is certainly a time and place for both.
Considering 51% of employees are actively seeking new job opportunities, it’s essential to ensure you keep your best people in-house.
Below, we talk about why retention is better than replacing employees in 2026.
Why is retention a better investment than replacing employees in 2026?
Retention is a smarter business strategy than replacing employees. It makes sense from a financial, cultural, and competitive perspective. Costs are increasing, expert knowledge is difficult to replace, and maintaining strong performance is essential.
Here’s why employers should double down on retention this year:
1. The cost to replace employees keeps rising
Hiring isn’t just about posting a job anymore. Recruitment marketing, AI screening tools, background checks, longer time-to-hire, onboarding, and training add up fast.
In many roles, replacing an employee now costs 50% to 200% of their annual salary. This makes retention a more cost-effective option. The cost to offer training, upskilling and professional development is much lower.
2. Institutional knowledge is harder to replace
Employees carry more than skills when they leave. They hold context, relationships, and operational memory. In a fast-moving, tech-enabled workplace, losing that knowledge slows teams down and increases risk, especially when systems and processes are more complex than ever.
3. You can’t afford the productivity loss
New hires rarely hit full productivity immediately. Ramp-up periods have become longer because of specialized tools, hybrid workflows, and evolving compliance requirements. Retaining experienced employees keeps the momentum going.
4. The labour market still favours skilled workers
Even as hiring cools in some sectors, top talent still has options. Employees value flexibility, growth, and transparency. People will leave employers that don’t offer them these values.
5. Engagement and culture drive performance
Using replacement as the main driver for change can do damage. High turnover damages morale and trust. Teams with strong retention tend to collaborate better, innovate faster, and deliver more consistent results. In contrast, constant churn creates instability that directly impacts performance and customer experience.
Employers need to take a strategic approach to replacing employees
Replacing employees should not stop. There will always be instances where it’s the best move. How your organization approaches replacement needs to be strategic:
- Focus on retention first: Start by focusing on retention – your current people are your biggest asset. Use recruitment strategically to fill key gaps, and if you do need to replace employees, IQ PARTNERS can support you with high-impact, targeted hiring.
- Consider internal mobility: Look for candidates internally before hiring from outside the organization. Upskilling current employees for new roles reduces onboarding costs and increases employee motivation.
- Hire for fit: If you must hire, focus on cultural fit, not just skills, to ensure long-term retention.
A final word on prioritizing employee retention in 2026
In 2026, replacing employees isn’t just expensive. It can be disruptive. Organizations that invest in keeping their people will outperform those that constantly try to replace them. Retention protects institutional knowledge, reduces costs, strengthens culture, and delivers more predictable performance. For that reason, we suggest you focus on retention this year.
More insights from our executive search team
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