As the labour market is still in a state of recovering from the disruption of the Covid-19 pandemic, employee resignations are rolling in at record rates. More than half (54%) of Generation Z workers and 41% of the entire global workforce are considering quitting their jobs within the year, reveals a recent Microsoft survey of more than 30,000 employees in 31 countries.
Since the beginning of the coronavirus outbreak, many things have changed. Nothing feels the same, from how we approach life to how our workdays are structured. In between all these shifts, an intriguing trend emerged: workers around the globe were quitting or considering leaving their jobs in masses.
To describe this phenomenon, a new term started circulating: The Great Resignation.
Post-pandemic, the Great Resignation is still having a tremendous impact on the world of work, and it's showing no signs of slowing down. As the quit rates continue to soar across industries, the key questions remain: Why are people voluntarily leaving their jobs, and what can employers and managers do to stop this talent drain?
In this article, Templeton's tech recruitment experts reveal the top drivers of employee turnover in the Great Resignation and share their best advice on retaining staff in the post-pandemic era.
But first, let's cover the basics.
What is The Great Resignation?
The 'Great Resignation', also known as the 'Big Quit', is an ongoing economic trend fuelled by the pandemic.
Like other periods of uncertainty and upheaval throughout history (for example, the other "great" period of Depression), the pandemic had far-reaching effects on society, leading even to people resigning from their jobs.
Consecutive quarantines, business shutdowns, and restricted access to goods, services, and jobs, caused a large-scale disruption in the economy and changed the lives of hundreds of millions of people. For many, that was a time of introspection and reflection that led them to renew their focus on what matters most to them and rethink their jobs and their career paths. A great number of employees across sectors came then to the realisation that they weren't happy with their jobs, and the era of the Great Resignation was close.
The term was coined by the organisational psychologist Anthony Klotz, an associate professor of management at Texas A&M University, in May 2021. In a Bloomberg Businessweek article, Klotz predicted that Covid-19 would lead to a mass exodus – or Great Resignation, as he referred to it – of employees from jobs and careers they were no longer interested in pursuing.
And Klotz's prediction turned out to be accurate:
- From April 2021 to April 2022, roughly 47 million U.S. workers left their jobs. (The Bureau of Labor Statistics)
- In France, the number of resignations reached a record peak in 2021, the highest since 2007. (Euronews)
- More than 6.5 million people in the U.K. expect to quit their job next year. (CIPD Good Work Index)
- 41% of the global workforce plans to leave their employer this year. (Microsoft)
Along with the Great Resignation, there has also been a talk about a 'Great Retirement', which suggests that older workers are leaving their jobs at a younger age and at a faster rate. At the same time, the term 'Great Reshuffle' also appeared to describe the phenomenon of people moving around the job market searching for better positions and different careers or just deciding to become self-employed.
But what is really causing these elevated quit rates post-pandemic?
What Drives Employee Turnover?
A recent MIT Sloan Management Review might have some answers to this question.
Based on data from an analysis of 34 million online employee profiles of U.S. workers who left their jobs between April and September 2021, regardless of the reason (quitting, retiring, or being laid off), the study attempted to find why people are walking away from their jobs.
Spoiler Alert: It's not all about the money.
Although much of the media discussion about the Great Resignation has focused on employee dissatisfaction with wages, the report states that compensation "ranks 16th among all topics in terms of predicting employee turnover. This result is consistent with a large body of evidence that pay has only a moderate impact on employee turnover". Instead, workers seem more frustrated by broader issues, such as the company's culture, management's decision-making, and wrong priorities.
The top five indicators of high employee turnover in an organisation, according to the MIT Sloan Management Review, are:
A toxic corporate culture is by far the most significant factor pushing employees out the door during the Great Resignation and ten times more influential than compensation in predicting turnover. According to the analysis, toxic cultures are primarily characterised by failure to promote diversity, equity, and inclusion, disrespect for workers, and unethical behaviours. Hence, it's not surprising that companies with a healthy culture experienced lower-than-average turnover during the first six months of the Big Quit.
Job Insecurity and Reorganization
Whenever a company's prospects look bleak, managers resort to layoffs and reorganisations. But employment instability and restructurings are not only important predictors of how employees rate a company's overall culture – but they also have a great influence on employee turnover.
If the company is struggling, employees are more likely to jump ship in search of more job security and professional opportunities. Moreover, employees who have already experienced layoffs and poor career prospects in the past usually have heavier workloads, which may increase their likelihood of leaving.
High Levels of Innovation
Surprisingly, employees are more likely to exit innovative companies. In fact, the report showed that "the more positively employees talked about innovation at their company, the more likely they were to quit." In particular, the attrition rates of the three most innovative Culture 500 companies – Nvidia, Tesla, and SpaceX – are three standard deviations higher than those in their respective industries.
One explanation is that "innovation typically requires employees to put in longer hours, work at a faster pace, and endure more stress than they would in a slower-moving company." Staying at the edge of innovation might be exciting and satisfying, but it is also difficult to sustain long-term. So, when employees rate their company's innovation positively, they probably complain about work-life balance and unmanageable workload simultaneously.
Failure to Recognize Performance
Employees leave when companies fail to reward their hard work and when they don't feel seen and valued – it's as simple as that. And high performers are the ones most likely to resent a lack of recognition for their results, which means that companies could lose some of their most productive and valuable workers.
Indeed, companies that fail to distinguish between strong performers and slackers when it comes to recognition and rewards have higher rates of attrition. Again, the issue here is not the compensation but rather a recognition (including financial) that is not representative of the effort and results of the employee.
Poor Response to Covid-19
During the pandemic, companies had to make a lot of hard choices regarding their response to Covid-19. The ones that failed to prioritise their employees' health and wellbeing saw higher attrition rates. Specifically, according to the report, employees who mentioned Covid-19 more frequently in their reviews or talked about their company's response to the pandemic in negative terms were more likely to quit.
From the very first signs of the Great Resignation, numerous surveys and studies have tried to identify what might have spiked these massive resignations across industries, and the reasons have been cited far and wide. However, while most of these studies have common attrition themes, the factors influencing retention (and the level of each factor's influence) vary significantly from one report to another.
For instance, a Joblist survey of 800 employees found that more than half of them (52%) had recently left or considered leaving their jobs because they wanted to remain remote or not return to the office. Some other reasons include:
- Landing a better and sometimes more advanced opportunity outside the company (41%)
- Feeling stuck in their current career (35.6%)
- Low morale at the company (27.4%)
- To learn new skills (20.3%)
- Wanting a better culture fit (12.9%)
Other studies cite poor work-life balance, exploitative conditions, changes in life circumstances, lack of purpose, and for some, burnout as reasons for the mass employee departures. At the same time, others support that the Great Resignation is driven by a psychological shift in employees' perspectives of life and work.
According to some workplace experts, the pandemic gave workers a "wake-up call", leading them to take a step back and re-evaluate what they wanted from their lives and jobs. Employees are no longer interested in returning to jobs and industries that have long treated them as dispensable. Instead, they seek opportunities to bring more meaning to their lives, including finding more challenging and rewarding careers. What the business world calls the Great Resignation, workers experience as the era of self-evaluation.
As employees are reassessing their careers and priorities, companies are forced to cope with the impact of the Great Resignation and redefine how to retain talent.
How to Retain Staff During the Great Resignation
Regardless of the motivators, employees are still resigning in droves, and there is no easy fix for tackling the Great Resignation. Workers have reconsidered their worth and demand more from their work, including transparency, flexibility, fairness, and healthy cultures – trying to drive retention through compensation is no longer enough.
Hence, employers need to explore novel approaches and different areas to address unwanted turnover. Here are the best employee retention strategies to halt and even reverse the steady flow of resignations across the workforce:
Listen to your Employees (Before they Leave)
As an employer or manager, you must be used to doing much talking. But, in order to retain existing staff and attract new talent you will have to adopt a listening mindset. This will allow you to offer a personalised approach to working practices based on individual preferences and gain the respect of your staff.
You can start by asking your employees directly about how they are doing, what keeps them motivated to stay in the company, what they have concerns about, and what can be done to improve those feelings. Using this information, you can not only determine where they need support and what will make them more productive, but you can also gain valuable insight into what is impacting employee attrition. Moreover, a listening mindset shows that you care about your employees' needs and about creating a better working environment for them.
So, next time you are developing business plans, consider using what your employees tell you as a compass that guides your decisions and do what you can to address their different needs. Ensure that every employee has a voice and, most importantly, that you act on their feedback – it's more likely that people would want to stay in a job they designed for themselves.
Offer More Flexibility
The workplace of tomorrow will be flexible in terms of where people work, when they work, and how they want to work.
Embrace this flexibility – a minor change that could majorly improve your employee's experiences and retention rates. And because remote working is not an option for all industries or roles, you can offer your employees hybrid working opportunities, flexible working hours, a compressed workweek, or even the ability to work from anywhere instead.
Additionally, consider relaxing your employment qualifications and hiring people who don't precisely fit your ideal candidate profile. You will be amazed how often candidates who don’t have the proper qualifications on paper strive and succeed by learning on the job.
However, be sure to offer a realistic description of what a job requires. Turnover is usually at its highest with new workers, often because the job is different than expected.
Reward Loyalty and Recognise Hard Work
Workplace reward and recognition are often two underappreciated aspects of employee retention. A survey from Great Places to Work, though, found that those who are getting recognised and rewarded for their contributions are more likely to work harder and stay with a company longer.
A culture of rewards and recognition is a significant component of employee engagement and long-term interest in their jobs. But rewarding hard work and loyalty for most people mean much more than just offering a decent salary. Rewards may come in all shapes and sizes, including flexible working options, paid vacation, personalised gifts, vouchers, or monthly bonuses.
Recognition is also important. You can show your gratitude towards your employees with internal awards, public praise at company meetings, promotions, and small celebrations of their accomplishments. All these simple gestures add up and make for a happier, more productive workforce.
Enable a Positive Work-Life Balance
During the pandemic, people came to the realisation that they work to live rather than live to work. For most employees now, maintaining a healthy work-life balance is non-negotiable.
However, the benefits of promoting a positive work-life balance extend far beyond just keeping your staff happy by answering their demands. Overworked employees are prone to burnout, which puts them at risk of becoming disengaged with their job and searching for new opportunities elsewhere. Work-life balance prevents burnout, improves productivity, and increases job satisfaction – all essential elements of an effective employee retention strategy.
To engage the workforce and remain competitive:
- Create an environment where employees feel connected to the organization and have a positive work experience that is part of a rich, fulfilling life.
- Listen to your staff and try proactively identifying and preventing burnout risk factors, such as excessive workload and workplace stress.
- Encourage your employees to set boundaries on their working hours and take their vacation time.
- Don't expect your employees to be accessible outside of standard business hours so that they can separate work from their personal lives.
- Integrate flexible work hours and remote work options that allow employees to adjust their schedules to meet their personal priorities and obligations.
Provide Opportunities for Professional Growth
People want to work for companies that invest in their professional and personal growth. It makes them feel appreciated and engaged – hence, they are more likely to stick with your organisation.
To ensure that your company is an interesting and desirable workplace, provide your employees with opportunities to learn new skills, grow beyond their day-to-day work and move forward in their careers. It has been demonstrated that both lateral and upward internal mobility increase employee retention.
Here are some simple steps to support your employees' professional growth:
- Provide access to eLearning portals.
- Give your staff time to attend training seminars and conferences (either virtually or in-person) and invite them to attend industry workshops and events to enhance their knowledge.
- Develop a robust internal training programme and implement Personal Development Plans (PDPs) that are regularly updated by both the employee and their manager.
- Offer lateral career opportunities – they are 12 times more predictive of employee retention than promotions.
- Give high-performing staff more responsibilities, a chance to lead a new project or opportunities to try something new.
Investing in your people and supporting their learning and development will benefit the business too. A more skilled workforce delivers organisational value by offering new abilities and competencies that help the company evolve.
Take Care of Your Employees
Positive mental health and general wellbeing are vital to a productive and engaged employee. Therefore, if you want to retain top talent, it is essential to ensure their mental, physical, and financial health.
There are many ways to support your employees' overall wellbeing by addressing each of the above three pillars:
- Mental Wellbeing
Implementing a mental health scheme is the best way to support employees dealing with stress, anxiety, and depression. Additionally, you can provide access to counselling services to help them deal with work burnout. Making the office a nicer place to work and encouraging your staff to take breaks from daily tasks and holidays so they can decompress can also contribute to your employees' overall wellbeing.
- Physical Wellbeing
Apart from offering private healthcare plans for all your staff, promoting a healthier lifestyle in your workplace is also essential. For example, you can encourage your employees to increase the amount of their physical activity by offering discounted gym memberships, cycle-to-work schemes, or even free healthy snacks for all.
- Financial Wellbeing
Better compensation, more benefits or bonuses may be the most obvious but definitely not your only options when it comes to your employees' financial wellness. Money-saving schemes (like cycle-to-work schemes), employee discounts and vouchers can also help them cut down on everyday expenses, from grocery shopping to travel cards.
Ensuring your employees' wellbeing is looked after across all three areas leads to a happier workforce – and happy employees are more likely to stick around for longer.
Foster a Culture of Diversity and Inclusion
A positive company culture occurs when employees feel engaged with their work, as well as supported, safe and heard in their workplace. Equity, diversity, and inclusion are all values that nourish such a workplace culture, and staff are more likely to stay in an organisation that caters for their needs.
Therefore, having a healthy level of diversity, equity and inclusion is a goal every workplace should strive to achieve. As employers adopt DE&I goals, employees of all backgrounds will feel more comfortable going to work each morning, knowing they will not experience discrimination or disrespectful behaviours. Conversely, a poor workplace culture (for example, one that tolerates gossip, harassment, or favouritism) can prompt people to look for a new role elsewhere.
Diversity, equity, and inclusion can also be a crucial component of attracting top talent. Candidates value a diversified workforce that includes people of different ethnicities, genders, and racial and educational backgrounds. According to a study by Jobvite, 49% of job seekers ask about diversity and inclusion initiatives within a company before deciding whether they want to be a member of their team or not.
Are You Up for the Challenge?
The Great Resignation will continue to be a major challenge for organisations across all sectors in 2022. But there is still good news for employers: By investing your time and resources in the right places, you can not only increase retention rates but also take advantage of a large talent pool of people looking for new challenges.
There are thousands of exceptional candidates on the market today who have the power to transform your business, and our tech recruitment specialists are up for the challenge of finding the best tech talent for your team.
Templeton holds a 26-year track record of recruiting thousands of I.T. professionals around the globe and a vast database filled with potential candidates that suit your needs. Find out more about our multi-award-winning recruitment services.
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