The annual Workplace America report has revealed the key drivers that help employers retain their employees.

The 12th annual Workplace America report has been released by TalentKeepers. The report observes employee engagement and retention trends, and it is now the longest continuously running study of engagement and retention in the U.S.

Over 880 organizations participated for the 2016 report, with 27% employing over 5,000 and 30% with 1,000-5,000 employees.

Employee engagement is gaining respect as a key strategy for many organizations. For four years running, over 80% of U.S. employers rank employee engagement as a strategic priority. And even though the number of organizations rating themselves as very effective in engaging employees nearly doubled from 14% in 2015 to 26% in 2016, this is a surprisingly large gap given the consequences of poor engagement.

Another dramatic increase was “Morale and Culture” as the top thing impacted by poor engagement and turnover among employees. This number grew from 50% in 2014 to 72% in 2016 beating out things like productivity and team performance, by a large margin. “This reflects a growing awareness of the significant impact poor engagement can have on an organization’s performance. In fact, three of the top issues linked to poor engagement were directly related to bottom-line performance,” said Christopher Mulligan, TalentKeepers CEO.

In a troubling trend, employee engagement budgets across America have fallen for the third straight year. In 2014, 71% of all employees had some level of funding but it is now down to 61% in 2016. “What we also see is best-in-class organizations all dedicate some of the highest percentages of their labor and operations budgets to engagement strategies,” shared Craig Taylor, a vice president at TalentKeepers and the report’s lead author.

From 2011 to 2016 unmanaged attrition has been fueled by “Job and Career” issues; however, also notable is ‘Leadership’ steadily growing for the past four years as a stimulus for turnover. This emerging trend should motivate us to refocus efforts on making leaders the primary reason people stay.

“In 2015 Millennials became the largest cohort in America workforce and 40% of organizations are acknowledging that by providing formal training for leaders on how to manage them,” said Craig Taylor. “This is incredible growth in just two years up from 25% in 2014.”