People and Culture Strategy
Every people and culture strategy built this year is competing against the same number: US employers could lose between $1.3 trillion and $5.1 trillion to attrition in 2026 alone. Most of that spend goes toward compensation adjustments and benefits redesigns. Most of the actual cause sits somewhere else entirely, and that mismatch is why so many culture budgets underperform their own business case.
The Strategy Gap: Engagement, Not Pay
Gallup’s most recent State of the Global Workplace research puts global employee engagement at just 21%, a gap the firm estimates costs the global economy $438 billion in lost productivity annually. That’s not a compensation problem. Exit interview data backs this up directly: engagement and cultural factors, feeling connected to the mission, working with competent leadership, experiencing genuine belonging, drive more than a third of all voluntary departures. Pay and benefits, the factor most leadership teams reach for first, explain roughly 11%.
For a people and culture strategy owner building next year’s budget case, that’s the number to lead with. The C-suite isn’t underinvesting in people. It’s frequently investing in the wrong lever.
Culture as a Performance Lever, Not a Perception Lever
Where this gets strategically interesting is the performance data, not just the retention data. Gartner’s 2026 CHRO research identifies what it calls culture atrophy, the gap between the culture an organization says it has and the one employees actually experience day to day, as a direct drag on execution. Organizations that successfully embed their desired culture into employees’ daily work, rather than treating it as a values statement, see up to a 34% increase in employee performance.
That reframes the entire conversation a people and culture strategy needs to have with the CFO. This isn’t a retention line item. It’s a performance lever with a measurable multiplier, and it belongs in the same planning conversation as any other operational investment.
The Skill Underneath the Strategy
A people and culture strategy succeeds or fails based on whether managers, not just HR, can execute it day to day. That comes down to three specific behaviors that scale from individual manager to org-wide practice:
- Acknowledgment — treating an employee’s stated experience as real information, not a complaint to manage around.
- Curiosity — building structured ways to ask before assuming, in one-on-ones, in performance reviews, in restructuring conversations.
- Demonstration — following through visibly enough that employees can see the strategy operating, not just hear it announced.
This is the piece most culture strategies skip. Leadership sets the values. Nobody trains the managers who are supposed to enact them, which is exactly where culture atrophy sets in.
Where This Shows Up Hardest: The Difficult Conversations
A people and culture strategy is tested most severely during layoffs, restructurings, and performance-driven exits, not during the good quarters. The instinct in those moments is to soften the message or delay it, and both erode trust faster than the hard news itself.
The stronger frame: a difficult conversation, delivered with acknowledgment, curiosity, and demonstration, is a productive confrontation, not conflict to avoid. It’s what allows a hard message to land as respect rather than abandonment, and it’s one of the clearest places where a trained management team outperforms an untrained one, measurably, in how the organization is perceived by the employees who stay.
Building a People and Culture Strategy the CFO Will Actually Fund
Three moves make the difference between a culture initiative that survives budget season and one that doesn’t:
- Anchor it to a calendared business moment — promotions, reviews, restructuring, onboarding, not an abstract “culture of the future” initiative with no fixed timeline.
- Make the behaviors trainable and measurable — acknowledgment, curiosity, and demonstration can be assessed before and after training, unlike “be more empathetic,” which can’t.
- Tie it to a performance metric the C-suite already tracks — engagement scores, manager effectiveness ratings, retention by tenure band, not a standalone culture survey nobody else reads.
Empathable builds people and culture strategy programs around exactly this model: real workplace moments, trainable behaviors, and outcomes the C-suite can put next to the rest of the budget. If your current strategy is still leading with compensation and hoping culture follows, it’s worth a conversation about what the data says should come first. Book time with Empathable to see how a behavior-based people and culture strategy gets built.