First-Year Failures: Why New Hires Leave and What Leaders Can Do About It
According to PwC’s Saratoga 2025 Annual HR & Workforce Benchmarking Report, the first-year turnover rate rose from 26.7% to 30.7% a nearly 15% increase year over year. Let that sink in. Nearly one in three new hires are leaving their jobs within the first 12 months.
This is more than a human resources statistic it’s a red flag for leadership. As someone who coaches leaders on preventing burnout and building resilient, people-first cultures, this number speaks volumes. It signals a failure in leadership alignment, onboarding quality, and cultural transparency the very foundations of a healthy workplace.
Here’s what’s really going on behind these numbers and more importantly, what your organization can do to reverse the trend.
The High Cost of a Misfire
When a new hire leaves within a year, the true cost isn’t just financial. Yes, studies estimate that replacing an employee can cost between 30% to 150% of their annual salary depending on the role (source: SHRM). But the damage doesn’t stop at your budget.
You’re also looking at:
Lost productivity and team disruption
Frustrated managers forced to rehire and retrain
Decreased morale among peers who see a revolving door
Diluted culture, as repeated exits erode trust in leadership
The PwC report points out that first-year turnover is often linked to mismatches in job fit, cultural misalignment, or inadequate onboarding. In other words it's not the employee failing. It's the organization failing to set them up for success.
Transparent Hiring: The First Step Toward Retention
Retention starts long before an offer is signed. It begins with honest, transparent conversations during hiring.
If you're selling a fantasy during interviews think unlimited growth, flexible work, a "collaborative culture" and delivering a micromanaged, top-heavy, chaotic environment, you’re guaranteeing disappointment. Misaligned expectations are a recipe for early exits.
Leaders must train hiring managers to accurately represent the role, the team, and the company culture. Share the challenges, not just the perks. Give candidates a preview of the actual working environment and yes, even let them speak to future peers.
A helpful guide for framing these conversations lives in my post on How Transparent Leadership Boosts Trust and Performance. When candidates know exactly what they’re signing up for, trust builds early and it sticks.
Burnout-Proof Onboarding: The Hidden Culture Builder
Onboarding isn’t a checklist. It’s the cultural handshake between your organization and a new team member. Yet most companies still treat it as an afterthought or worse, a compliance-heavy PowerPoint marathon.
To reduce early exits, your onboarding must:
Introduce your values in action not just on a slide
Establish psychological safety through mentorship and support
Create a clear path for growth, feedback, and inclusion
Reduce overwhelm by pacing expectations and giving space to learn
In my book Burnout Proof, I share a strategy I call The First 90 Blueprint, a roadmap for leaders to integrate, support, and energize new hires without overwhelming them.
When onboarding is intentional, it becomes a trust accelerator, a culture amplifier, and a retention engine.
Employee Listening: The Overlooked Retention Tool
The PwC Saratoga report recommends employee listening tools as a way to diagnose the root causes of early exits. This is essential, but it’s often skipped or siloed.
If your new hires aren’t being asked how things are going and, more importantly, don’t believe their feedback will change anything, you’re missing a major opportunity.
Tools like pulse surveys, onboarding check-ins at 30/60/90 days, and stay interviews can give you real-time insight into:
What’s working
Where expectations don’t match reality
Whether managers are supporting new hires adequately
Signs of disengagement or stress
More importantly, this data must lead to visible action. Listening without follow-through is worse than not listening at all.
For deeper insights, check out WorkTango’s guide on modern employee listening. It’s a strong external resource that pairs well with a culture-first onboarding mindset.
Leadership’s Call to Action: Culture First, Not Cost First
Too many leaders still view onboarding as a cost center and turnover as an HR problem. It’s time to flip that script.
If your new hires are leaving within a year, it’s not a hiring problem. It’s a leadership problem. It’s a reflection of:
How you communicate
How you support
How you build culture or neglect it
A workplace culture designed with clarity, care, and psychological safety will naturally retain talent because people stay where they feel seen, heard, and supported.
Fixing This Starts with One Hire
You don’t have to overhaul your entire onboarding program overnight. Start with one hire. One process. One open conversation. One onboarding journey that prioritizes humanity over bureaucracy.
Because when you invest in that first year, you build a foundation that benefits the next five.
