In South Africa’s competitive landscape, retaining top talent is both a challenge and a necessity. High employee turnover drains resources, affects productivity, and undermines team morale. But what if the best retention strategy isn’t offering higher salaries or counteroffers? What if the key lies in the quality of your leadership?
The Hidden Cost of Turnover
Replacing an employee in South Africa can cost up to 1.5–2 times their annual salary, especially in senior or skilled roles. Local surveys estimate that employee replacements across industries account for billions annually when factoring recruitment, onboarding, and lost productivity.
While turnover costs mount, leadership development investments are modest by comparison. Global research suggests companies investing in leadership programs achieve a $7 return for every $1 spent, largely through improved retention and performance.
Leadership: The Engagement and Retention Lever
Decades of research confirm that managers significantly influence employee engagement. Gallup attributes 70% of engagement variance directly to the quality of leadership. Engaged employees are not only more productive but also significantly less likely to leave.
Trust, psychological safety, and meaningful recognition—fostered by effective leadership—are crucial drivers of retention. In high-trust environments, employees are 2.5 times more likely to stay. In South Africa, dissatisfaction with leadership ranks as a top reason for resignation across industries.
Why People Really Quit
It’s often said that people don’t quit jobs—they quit bosses. Gallup reports that one in two employees globally has left a job to escape a bad manager. Similar patterns emerge in South Africa, with poor leadership frequently cited as a key factor for resigning.
A recent Workopolis study found that 37% of workers who quit list their relationship with their manager as the primary reason. Pay and perks matter—but without leadership that listens, recognizes, and supports, these benefits are often insufficient to keep people engaged.
The Power of Low-Cost Leadership Behaviors
Simple leadership behaviors—like regular feedback, coaching, recognition, and empowerment—drive loyalty and engagement without high costs. Google’s Project Oxygen identifies these behaviors as hallmarks of successful managers.
Leadership expert Liz Wiseman’s “Multiplier” framework emphasizes that leaders who amplify their team’s potential significantly boost output and engagement, reducing the likelihood of turnover.
Leadership Development: The Smarter Investment
Leadership development remains one of the most effective strategies for improving retention. Studies show that development opportunities often outperform pay raises in retaining staff, especially among younger generations. Deloitte found that professional growth ranks among the top three reasons why people stay or leave.
Effective leadership programs—whether through coaching, mentoring, or structured training—strengthen the skills that foster engagement and reduce turnover. These approaches focus on improving key capabilities like communication, emotional intelligence, and coaching.
Counteroffers and Perks: A Short-Term Fix
While counteroffers and perks may temporarily delay resignation, they rarely address the underlying reasons why employees consider leaving. In fact, up to 80% of employees who accept counteroffers still exit within a year.
Real retention happens when companies proactively engage their employees through strong leadership. Tools like stay interviews—where managers check in on what keeps employees motivated—are simple yet powerful ways to improve retention.
What the Experts Say
Marshall Goldsmith reminds leaders that success comes when they shift focus from themselves to empowering others. Brené Brown defines leadership as finding and developing the potential in people. Simon Sinek echoes this by saying leadership is about taking care of those in your charge.
The consensus across thought leaders and research is clear: leadership quality is the linchpin of employee engagement and retention.
Case Studies: Proof that Leadership Development Works
South African firms, including major banks and manufacturers, have implemented leadership training with significant reductions in turnover. Globally, companies like ODW Logistics cut turnover from over 30% to just 14% through manager development programs.
Gallup’s case studies show that leadership-focused engagement strategies consistently reduce turnover and improve performance across sectors.
Conclusion: Invest in Your Leaders
Leadership is not just about managing tasks—it’s about inspiring, supporting, and empowering people. The research is unequivocal: investing in leadership development yields higher returns on retention and performance than reactive measures like counteroffers or perks.
For South African companies facing skills shortages and high recruitment costs, leadership development offers the most sustainable and cost-effective way to keep your best people.
Develop your leaders. Empower your managers. Strengthen your teams. Because better leadership isn’t just good for people—it’s good for business.
Sources:
1. Remchannel (Old Mutual) Salary & Wage Movement Survey – SA Turnover Stats 2022
2. Paula Quinsee, Lionesses of Africa – Cost of Turnover (R24bn) and Reasons for Resignations lionessesofafrica.com
3. Gallup Workplace – Manager Impact on Engagement & Turnover
4. Gallup Workplace – Cost of Replacing Leaders (200% of salary)
5. HR Dive (2023) – ROI of Leadership Development ($7:$1)
6. HR Dive (2023) – Leadership Development Investment by Industry
7. Workopolis Poll via Applauz – Top Reasons People Quit (37% Boss)
8. Deloitte (Boston Business Journal series) – Lack of Development as Turnover Driver; Leadership Dev as Retention www2.deloitte.com
9. LSA Global – Training = 17.7% Wage Increase in Job Satisfaction
10. Eclipse (Recruitment blog) – Counteroffer Failure Rates (80% leave in 6 months)
11. Retently (2024) – Stay Interviews vs Replacement Costs
12. Harvard Business Review – “People leave managers, not companies” (Gallup stat)
13. HBR – 70% of engagement variance due to manager
14. Momentum Consulting (Brené Brown quote) – Leader = develops others’ potential
15. Goodreads (Simon Sinek quote) – “Leadership is about taking care of those in your charge.”
16. AZ Quotes (Marshall Goldsmith) – “Shift focus from self to others.”
17. Readingraphics (Liz Wiseman summary) – Multipliers get 2x output vs. Diminishers
18. Quantum Workplace – Case: ODW Logistics Leadership Dev halved turnover
19. Quantum Workplace – Case: Benesch engagement->low turnover
20. EBNet (René Richter, Remchannel) – SA Turnover 16.6%; need retention strategies
