The Human Factor Behind Employee Retention: Why Job Embeddedness Beats Perks
Issue 227, August 28, 2025
We’ve been solving the wrong problem.
Organizations are spending billions on yoga studios, free meals, and basketball courts while their best talent walks out the door anyway. U.S. median job tenure sits at just four years. For employees aged 25-34, it’s a mere 2.7 years. According to Axios, small businesses face the highest churn rates and must pay an estimated 20% of an average salary to replace a lost worker, adding up to an estimated $1 trillion annually in collective employee turnover costs.
Yet we keep doubling down on perks while ignoring basic psychology. Here’s what we’ve discovered: Retention isn’t about where you work or what amenities you get—it’s about psychological embeddedness in the organizational ecosystem.
The Psychology We’ve Been Missing
The Silicon Valley perk arms race convinced everyone that employee loyalty could be bought with amenities. But the stats tell a different story. The Bureau of Labor Statistics reveals nuanced patterns: Median tenure for workers aged 55-64 was over nine years in early 2024, compared to about 2.7 years for those aged 25-34. This isn’t simply about generational preferences—it reflects deeper psychological embedding that develops over time.
Job tenure also varies significantly by sector: Public-sector workers tend to have longer median tenures (around 6.8 years) than those in the private sector (around 3.7 years), while manufacturing and healthcare historically show higher median tenures and management positions also show longer tenures, according to the Bureau.
When we examined why some employees stay through massive organizational changes while others leave at the first sign of uncertainty, we found that psychological factors predict retention with remarkable accuracy. This isn’t about the money. It’s not about flexible schedules, free snacks and all the other perks. It’s about something called job embeddedness—the web of connections, alignments, and investments that make leaving feel like tearing apart a finely woven fabric rather than just changing jobs.
According to Axios, job embeddedness was introduced in the early 2000s “as a better way to predict employee turnover by researchers looking to improve older prediction models that were focused primarily on job satisfaction, organization commitment, and individual employees’ perceptions of job alternatives.” The concept measures “a person’s ties to the organization that employs them” through psychological and social forces that transcend traditional retention approaches.
The Three Pillars of Psychological Embeddedness
Our experiences with transformation-focused organizations confirm what Axios reports: Job embeddedness operates on three core dimensions that most leaders completely overlook. These components work together to create psychological anchoring that predicts change and transformation success, coupled with employee retention.
Links: The Network Effect on Decision-Making
Axios describes links as “the number of connections of both formal and informal that a person has within their work organization.” The research shows that “many links equal a deeper level of embeddedness, making the idea of quitting more ambivalent.” This isn’t about office friendships; it’s about professional interdependence that creates genuine integration.
- The Human Factor and Links
We’re wired to desire community. We enjoy working with others, and our shared positive and negative experiences deepen bonds, professional alignment, and even grow into personal relationships. When employees have many meaningful connections in the workplace, leaving means severing the social bonds they have built—something our human brains resist instinctively.
Fit: When Values Align with Identity
According to industry research, when organizational values align with personal and professional identity, something wonderful can happen. Employees measure their compatibility or comfort level with the organization and its environment and assess how their work and commitment to the organization enhance their career goals. As Axios reports, When an employee is a good fit, they are highly embedded and less likely to leave. When there’s authentic alignment, work becomes an extension of identity rather than just a transaction.
- The Human Factor and Fit
We gravitate toward environments where we can be authentic and appreciated. When organizational culture genuinely aligns with personal values, resistance to change decreases and transformation success increases. The challenge, of course, is helping an employee with transitions as the organization grows, changes and transforms so that they too grow, change, and transform.
Sacrifice: The Cost of Walking Away
Sacrifice is defined as a perceived cost financially and psychologically that may result from leaving a job, including the loss of job stability, advancement opportunities, or eligibility for a perk of some kind. We see the cost of walking away as less influential with Generation Z, as they seek opportunities that will help them grow early in their careers. Commitment to an organization is lower if values and identity are not a good match. The costs of walking away, especially influencing older demographics, extend beyond golden handcuffs. Costs encompass the psychological cost of abandoning career momentum, learning opportunities, and professional relationships that took years to build.
- The Human Factor and Sacrifice
Loss aversion, our brain’s tendency to weigh potential losses more heavily than equivalent gains, makes embedded employees reluctant to trade psychological security for uncertainty. Our base is to always maintain predictability, which leads to comfort (less fear, less anxiety, etc.)
How Embeddedness Matters for Transformation Success
The shift to remote work has fundamentally altered workplace community dynamics. As widely reported, remote work has fractured the employee community, defined new management skills for a distributed workforce, and required new tools to build teams and collaboration. The news continues to cover post-pandemic employee depression, mental health issues, and isolation, creating new challenges for building psychological embeddedness. We see an opportunity to overcome psychological dynamics and challenges and seek out new ways of defining work, community and collaboration.
An insight many overlook is that the psychological factors that create job embeddedness are identical to those that drive change and transformation success. We’ve observed this pattern across clients and industries. Organizations with high job embeddedness don’t just retain talent better—they adapt faster, implement changes more successfully, and maintain momentum through uncertainty. Why? Because embedded employees have a psychological investment in organizational outcomes, they see the match between their own values and identity with the organization, and they see how their efforts contribute to the organization’s outcomes and support how they grow.
Consider the connection in the context of research from thereistalent.com and CodeSubmit.io: “Companies that allow remote work experience 25% lower turnover than those that do not, with hybrid and fully remote workers less likely to leave their jobs than fully in-office workers.” This suggests that embeddedness isn’t tied to physical presence—it’s about psychological connection and trust.
The Embeddedness Quotient
Organizations under change or transformative initiatives (however small in scope and impact) have to deal with dynamics that can repress organizational performance. Organizations with a low embeddedness quotient often experience the following consequences:
- Change feels like an unwelcome mandate forced on employees
- Resistance to change stems from protecting individual interests
- Knowledge walks out with departing talent
- Each transformation restarts from zero without wide-scale support
- Employee surveys show low trust in leadership
In contrast, organizations with a high embeddedness quotient have improved chances of change and transformation success because the culture provides an infrastructure built on the positive human factor. Highly embeddedness organizations ensure the following:
- Change feels like something employees are creating together
- Engagement comes from collective problem-solving
- Institutional knowledge compounds over time
- Each change builds on previous learning
- Psychological safety enables honest feedback
A Framework for Building Embeddedness
Based on our transformation work, here’s a guide on how to systematically build psychological embeddedness:
Build Links, Not Just Teams
Most organizations operate in divisions, departments, and hierarchies. Embeddedness organizations create connective architecture. Cross-functional project teams, mentoring programs, and collaborative problem-solving aren’t nice-to-haves—they’re psychological infrastructure necessities.
Practical Application: For every major initiative, require representatives from at least three different functions to participate in the process. This isn’t about adding 10 more meetings to the calendar, creating busy work or a device to gather input—it’s about relationship building that creates retention.
Hire for Cultural Fit, then Train for Skills
Stop hiring for purely technical capabilities. Start assessing potential hires for psychological compatibility with your transformation journey and cultural evolution. Skills can be taught; values alignment and change adaptability are harder to develop.
Practical Application: In interviews, spend 50% of the time exploring what energizes candidates about change and uncertainty, not just what they can do. Better psychological fit predicts both retention and transformation success.
Create Investment, Not Incentives
Research confirms that developing professional ties to the organization strengthens embeddedness through continuous learning, training courses, mentoring, and exposure to top-level leaders. The goal is to make leaving psychologically costly by operating from the perspective of what employees would lose by leaving. This, of course, harkens back to consideration of valuable and meaningful perks, including stock options, bonuses, vested programs and other financial incentives, and should also focus on psychological ownership of meaningful outcomes.
Practical Application: Give high performers ownership of transformation outcomes, not just processes. Psychological ownership creates emotional investment in organizational success.
The Embeddedness-First Advantage
Changing organizational dynamics to high embeddedness becomes both a retention strategy and a transformation management strategy. It may be taxing to flip a traditional strategy and planning paradigm on its head, but it is necessary when seeking successful outcomes. When planning your next transformation initiative, reverse the traditional sequence from Strategy → Process → Technology → People to an embeddedness approach of People → Relationships → Shared Purpose → Implementation. Start by identifying your most embedded employees; they should become role models for your transformation network. Their existing relationships and psychological investment make them natural change agents, and their influence spreads through the very connections that keep them embedded.
We also want to caution about resistance. We have noticed that resistance rarely comes from the most embedded employees. They have too much psychological investment to sabotage organizational success. They are the most likely to find how they fit in and how they can provide value to change and transformation strategies and plans.
Resistance often comes from employees who feel disconnected, undervalued, or excluded from the organization’s future vision. Their commitment is low, they view their time and work as a way to generate a paycheck, and they feel little, if any purpose or connection.
The real cost of getting this wrong is high. Organizations that focus on perks while ignoring psychological embeddedness face the possibility of compound losses. They spend heavily on retention tactics that don’t work while their transformation initiatives struggle due to a lack of buy-in from psychologically disconnected employees. We’ve seen this pattern repeatedly: Low-embeddedness organizations cycle through expensive transformation consultants, implement new technologies that don’t stick, and wonder why their culture resists change. Meanwhile, their best talent—the people who could lead a successful transformation—leave for organizations where they feel more embedded.
The Human Factor Advantage
Job embeddedness isn’t just about keeping people, it’s about creating the psychological conditions where change and transformation thrive. Embeddedness creates conditions that help navigate an ever-changing dynamic marketplace and society. When employees are deeply connected to organizational success, they don’t just resist leaving; they actively contribute to positive change.
As we’ve written many, many times before, technology is an enabler, not a silver bullet. The same principle applies to retention. Perks are enablers. The real solution lies in understanding the human factors that make people want to stay and grow with your organization. The organizations that master embeddedness don’t just retain talent longer—they transform more successfully, adapt more quickly, and build cultures that attract the kind of employees who drive sustainable growth.
Next time leadership considers installing that basketball court, ask instead: Are we building psychological connections, creating high embeddedness (stickiness), or just improving amenities? The answer will determine not just who stays, but how successfully your organization navigates its next change or transformational path.
What stories are shaping your organization’s biggest decisions right now? We’d love to hear your insights. Share your experiences with us on our Substack or join the conversation on our LinkedIn. For more insights on navigating transformation in today’s complex business environment, explore our archive of “Ideas and Innovations” newsletters or pick up a copy of The Truth About Transformation.
The Truth About Transformation: Why Most Change Initiatives Fail (And How Yours Can Succeed)
Why do 70% of organizational transformations fail?
The brutal truth: It’s not about strategy, technology, or resources. Organizations fail because they fundamentally misunderstand what drives change—the human factor.
While leaders obsess over digital tools, process improvements, and operational efficiency, they’re missing the most critical element: the psychological, behavioral, and cultural dynamics that actually determine whether transformation takes hold or crashes and burns.
The 2040 Framework reveals what really works:
- Why your workforce unconsciously sabotages change (and how to prevent it)
- The hidden biases that derail even the best-laid transformation plans
- How to build psychological safety that accelerates rather than impedes progress
- The difference between performative change and transformative change that sticks
This isn’t theory—it’s a battle-tested playbook. We’ve compiled real-world insights from organizations of all sizes, revealing the elements that comprise genuine change. Through provocative case studies, you’ll see exactly how transformations derail—and more importantly, how to ensure yours doesn’t.
What makes this different: While most change management books focus on process and tools, The Truth About Transformation tackles the messy, complex, utterly human reality of organizational change. You’ll discover why honoring, respecting, and acknowledging the human factor isn’t just nice—it’s the difference between transformation and expensive reorganization.
Perfect for: CEOs, change leaders, consultants, and anyone tired of watching transformation initiatives fizzle out despite massive investment.
Now available in paperback—because real transformation requires real understanding.
Ready to stop failing at change? Your organization’s future depends on getting this right.
