The Great Resignation
The Great Resignation is a thing. But are we now experiencing the Great Rehire? We explore why people are leaving their jobs, how you can stem the flow and how to attract the best of the talent.
After two years of a global pandemic, new priorities and expectations are shaping new behaviors within the workforce and new ways to engage employees.
In 2021, over 47 million workers quit their jobs in the US alone. Today, one in five employees across the world are planning to walk out in the next 12 months according to a survey by PwC.1 Known as the Great Resignation, this professional exodus is transforming the labor market.
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What is the Great Resignation?
Dr Anthony Klotz, an organizational psychologist and associate professor of business at Texas A&M University, coined the phrase ‘The Great Resignation’ during the pandemic.2 He saw it as the inevitable outcome of widespread employee burnout, “pent-up resignations” stalled during the uncertainty of Covid, the desire for a better work-life balance, and a desire to retain the autonomy gained through remote working.
“Who we are as an employee and as a worker is very central to who we are as people,” he said. The hardships of Covid have prompted people to question what gives them purpose and happiness. Reflections, Klotz observed, that will lead to significant “life pivots”.3
These pivots are all too evident in a recent study by the Pew Research Center which reveals that America’s “quit rate” had reached a 20-year high in November last year. However, employee dissatisfaction extends beyond the US. The Great Resignation is impacting labor markets across the world with increased numbers of job leavers in the UK, Spain, Australia, the Netherlands, and France too. Meanwhile, in Germany and Japan, there’s been a consistent increase in the number of employees now open to looking for a new role.
Within Asia Pacific, Singaporean SMEs, in particular, are suffering too. Just over three in five say that more staff are resigning now compared to a year ago and, according to 65%, replacement workers are also proving harder to find.4
Who is driving the Great Resignation?
The highest increase in resignation rates (20%) is among mid-career professionals aged 30 to 45 according to Harvard Business Review – and evidence from the KellyOCG Global Workforce Report 2022 suggests that this is likely to continue with over 70% of executives planning to leave their current employer within the next two years.5
The Great Resignation is also industry driven. Lockdowns forced the pace of digital adoption and automation, placing a premium on employees within the tech sector who have the skills to deliver and, being in demand, they can now play the field.
Second to tech is healthcare, although resignations in this sector tend to be motivated by challenges rather than opportunities. This reflects one of the strongest narratives of the Great Resignation: that of the frontline workers. They make up 80% of the global working population] and are most likely to have experienced increased workloads and burnout, potentially risking their lives for a paycheck.
For some, resignation is a route to professional advancement, for others it’s a necessity. Since March 2020 many women have left the job market completely – at twice the rate of men. 6
When schools and day-care services were closed or canceled during lockdown, they became the stay-at-home parent or dropped out to care for elderly relatives. Consequently, sectors such as hospitality, retail and healthcare, traditionally the domain of female workers, are now feeling the labor shortage acutely.
The Great Resignation and a Great Rehire?
What is driving the Great Resignation?
There are many reasons for these mass resignations, and they range from the personal to the professional, the practical to the aspirational. Let's take a look at some of them.
Money remains the biggest motivator when it comes to retaining employees, according to PwC, and with more vacancies than people seeking work – workers still hold the cards. More than a third of respondents to PwC’s survey plan to ask for a raise in the coming year.7, 8
There’s also been a shift away from lower-wage industries such as hospitality and leisure, a movement described as The Great Upgrade by Bharat Ramamurti, Deputy Director of the National Economic Council in the US. In many sectors, where more money is an option, hiring rates are exceeding quit rates.9
Second only to low wages, a lack of opportunities for advancement was a main cause of resignations in the US in 2021.10
“People are much more likely to invest emotionally (to engage) in the company when they feel like the company is invested in them,” Ali Knapp, President of the learning management systems company Wisetail told Forbes. “Creating and communicating growth opportunities is so obtainable, yet most companies don’t have the basic platform or tools in place to do this, which leaves employees in the dark about what’s next for them and how to get there.” 11
A lack of flexibility
Given the opportunity to cut out the commute, spend more time with family and balance caretaking responsibilities while they earn, many employees are loath to give it up. In the US, 54% of professionals currently working from home said they’d look for a new job if their employer required them to return to the office.12
Remote working also makes space for the pursuit of professional goals. Research by job site Indeed research revealed that 92% of survey respondents believe that life’s too short to stay in a job they’re not passionate about and many said that remote working made them feel less constrained.13
Managers are also faced with the need to accommodate in-person spaces too: a hybrid working model is preferred by 83% of workers according to Accenture research. LinkedIn data now shows that one in seven jobs have a remote or hybrid component.14 In March 2020, it was one in 67. 15
But this offers little reward or motivation for frontline workers, many of whom have felt the unfairness of having to go into work while their desk-based colleagues could operate remotely or were furloughed.
Not feeling valued
Covid stress-tested employer people skills – and significant numbers were found lacking. A Stanford University study revealed that companies with poor-quality working environments were more likely to compound the damage with fewer pay increases for frontline workers and a greater tendency to reduce rather than support their workforce.16
Now many retail and service employees are taking lower-paid jobs elsewhere with organizations offering more benefits, opportunities and emotional intelligence.
“We ask people would they take a pay cut to work for a company that aligns with their values,” says Alison Omens, Chief Strategy Officer of JUST Capital who provided much of the data for the Stanford study “and across the board, people say yes.” 17
Stress and burnout
Post pandemic, burnout is at an all-time high according to the American Psychological Association, with increased workloads and extended working weeks, creating a dangerous work-life imbalance.18 As reported by the World Health Organization, long hours are killing thousands of people a year through stroke and heart disease.19
For some workers, stress levels pre-date Covid. Indeed research suggests that 53% of millennials were already burnt out in March 2020, and they remain the most affected age group.20
Reasons for burnout vary between demographics, with Gen Z, Gen X and Baby Boomers citing financial worries as the main cause. For millennials, it’s a lack of free time. For frontline workers in particular, it’s the lack of paid time off, while 27% of all workers find it impossible to unplug at the end of the working day. 21
A lack of meaningful and interesting work
“When people start to stagnate, they start to get bored, and they start looking elsewhere,” says Amy Zimmerman, Chief People Officer of Relay Payments 21.
Workers are now looking for more meaningful roles that engage and challenge them. According to LinkedIn, 94% of employees would stay with a company longer if it showed commitment to helping them learn.
Recruitment software company Lever suggests that with “the proliferation of freelance work, continuing education and potential for advancement”, employees are setting their sights higher and expecting more from their employers.
The Great Resignation and the future of work
With jobs to fill and skills gaps in many industries, out of necessity the Great Resignation is becoming the Great Rehiring. In fact, based on a survey by recruitment software company Greenhouse, more than eight out of ten executives believe that taking on new recruits is a top priority for CEOs.
To remain competitive, employers must understand what’s putting prospective candidates off and preventing those they employ from sticking around. What does the data tell them about their turnover rate? Who is leaving – and why? This may mean looking at pay, workplace culture, company values, training and development programs, D&I strategy, working conditions, hours and holidays, and the quality and effectiveness of management – from frontline managers 22 to the C-Suite.
Understanding what makes their organization less attractive to employees is then an invitation to change more than the recruitment strategy. It’s new intelligence that must also be woven into the culture, policies and working practices at all levels of the business, with buy-in from the ground up and the top down. Employers must enter an ongoing dialogue with their employees, genuinely want to listen and respond to their needs, and be prepared to invest in their futures.
As Daniel Chait, CEO and Co-founder of Greenhouse, observes, “It’s a candidate’s world right now.”
This calls for evolution – and the organizations that evolve to meet their people where they are right now will be the ones that win.
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