Employers entering the second half of 2026 face a retention environment that looks stable on the surface but is softening underneath, according to Eagle Hill Consulting’s second-quarter Retention Index. The index, built from a monthly IPSOS omnibus survey of at least 1,200 employed U.S. adults per quarter, fell 1.3 points to 104.2, its lowest reading in a year. The decline was driven almost entirely by one component: the compensation indicator dropped 5.6 points, even as employees’ confidence in their organizations and their assessment of workplace culture kept climbing for a fourth straight quarter, a slow-burning improvement that echoes the gradual, uneven progress this outlet has tracked in workplace culture through 2026.
The generational split is where the real risk sits. Millennials posted a 6.1-point drop, the only generation to decline across confidence, compensation, and culture simultaneously, and the only one reporting rising confidence in outside job options at the same time. Gen Z slipped modestly; Gen X and Baby Boomers actually improved. With job openings still at 7.6 million even as June hiring cooled, Eagle Hill CEO Melissa Jezior said employees “are questioning whether their compensation and long-term growth opportunities are keeping pace with the market.”
That combination, rising cultural goodwill paired with falling pay confidence, is a different retention problem than the one HR teams spent the last two years solving. Culture and engagement programs will not fix an attrition risk that is specifically about compensation credibility, and a blanket raise misses that the risk is concentrated in one generation. HR and total-rewards teams should be pulling retention data by generation now, rather than waiting for exit interviews to confirm what the second-quarter index is already showing: the employees most likely to leave are also the ones who say they like where they work.
Source: Eagle Hill Consulting
