From 2008 to 2009, America saw its largest economic recession since the Great Depression. The housing market crashed, millions of people lost their jobs, and numerous other financial crises rolled through the U.S.
It seems the country may be moving toward another financial crisis. But this time, instead of a job shortage, we’ve got a labor shortage. Experts are calling this labor shortage the Great Resignation. To better understand the Great Resignation, we need to dive a little deeper into what it is, why it’s happening, and what employers can do to retain talent.
What is the Great Resignation?
The Great Resignation refers to the huge amounts of workers voluntarily leaving their jobs in 2021, leaving American businesses struggling in a massive labor shortage.
At the beginning of the Covid-19 pandemic in 2020, employees faced massive layoffs because many companies couldn’t function under pandemic restrictions. Between April and September, more than 24 million Americans quit their jobs.
The question many are wondering is “why?”.
Who and What Are Causing the Great Resignation?
There are several theories on who and what motivated this shift. Ian Cooke, human resource company Visier’s Vice President of People Analytics, put together a team to analyze over 9 million employee records from over 4,000 companies to find some answers.
The team discovered two trends:
- Resignation rates are highest amongst employees in the middle of their careers. With a 20% increase from 2020 to 2021, employees in the 30 to 45 range experienced the highest jump in turnover. Employees in the 25-30 range and 45+ also had slightly higher turnover rates in 2021 compared to the previous year. Oddly, turnover rates fell for the 20-25 and 75+ age ranges. Cooke and his team suppose a few reasons for this:
-
- First, it’s possible the employers felt less confident in training new hires with less experience, leading to a hiring surge for mid-career employees. The demand for mid-career employees would give them an advantage in navigating other career opportunities.
- Second, mid-career employees may have stayed transitioning jobs during the uncertainty of Covid, so now we’re seeing a wave of pent-up turnover.
- Third, with the widespread pressures of the pandemic, in some cases, workers may have simply been fed up with increased workloads, layoff fears, and other stressors.
- Healthcare and tech industries are experiencing the most turnover. Resignations in healthcare and tech increased by 3.6% and 4.5%, respectively. While those two industries had a much higher turnover, the researchers generally found that any industry that received high increases in demand. The hospitality industry is also of note as it lost over 740,000 workers in April alone. This likely led to overwork and burnout.
How Covid has Changed the Value of Work
While Cooke and his team put their finger on some more specific trends, they’re certainly hinting at some larger themes across working America.
The pandemic made people rethink how, when, and where they want to work. The flexibility that most workers enjoyed in remote-work environments has now become a requirement for future jobs. Working from home saved them time and money.
Others have made family or leisure more of a priority. Staying home with the kids, having free time for home DIY projects, or staycations shifted the value system—it gave workers the chance to reevaluate what’s important and seek more purpose in their work and life.
Suffice to say, employees across all age ranges, industries, and regions are placing a greater value on their time and energy, and how those play into their overall lifestyle.
How Can Businesses Retain Employees?
First and foremost, it’s helpful to quantify why and in what areas a business is having trouble retaining talent. The numbers are one of the few cut-and-dry ways to reveal the true impact of resignation trends.
Business leaders should first investigate their retention rate, which is the number of separations per year divided by the average total number of employees. Other key metrics include quantifying the quality of work, any changes in time-to-completion, and the business’s revenue. Turnover rates likely affected those other metrics, but it’s important to know how.
Next, businesses can examine what factors may be driving turnover rates. Is it compensation, promotion timelines, on-the-job training opportunities, or benefits? Separating these metrics by demographics, department, and job function can help determine which metrics are most relevant. Then, businesses will be aware of which groups are more likely to resign and if there are ways to intervene with intentional workplace changes.
Dr. Isabell Welp at the Technical University of Munich notes that clarity of roles, tasks, structure, and expectations—while important in the in-person environment—are critical to virtual work. If done well, those items can increase workers’ satisfaction and efficiency, leading to lower turnover.
A group of managing directors and partners at Boston Consulting Group compiled a list of six measures that business can take to mitigate the risks of high turnover, including incentivizing loyalty to the business, providing career growth opportunities, providing purpose for employees, fostering positive work culture, and supporting a flexible work environment.
We’ve seen a dramatic shift in worker sentiment over the past year, leading to the Great Resignation. Employees expect more out of their work. Employers that go above and beyond for employees will reap the benefits of happy and loyal employees for years to come.
For more info on the latest business trends, follow our blog our check out our podcast (audio or Youtube).
0 Comments