The Great Resignation has been one of the most talked about economic stories of 2021. More Americans left their job in April this year than in any other month on record, according to the Bureau of Labor Statistics. Then it was broke again in July, setting a new record. Then again in August. And then again in September. Seems like there’s something happening huh?
But as I read the headlines and dive deeper into the stories about the last 6 months, the more I began to wonder what was actually happening. It’s not like some larger than life character (think Mel Gibson’s role in Braveheart) decided to band everyone together and state that we must go on strike or something of the sort. Or at least, it wasn’t known to me and now I feel left out if I missed the revolution! So, how did this happen? What will it affect? As I dug a little deeper, I think the media has completely missed the mark and instead did and continues to do what media does and tell a shallow side of the story to sell stories on their site to get ad revenue.
Instead of telling this story as a warning to organizations as “You better focus on culture or 20% of your employees will be gone in the next 6 months!” or “Culture can solve the Great Resignation!” I wanted to be upfront with you. While I do believe organizational culture could have helped with these numbers, there is, as often is the case, (much) more to the story. Let’s dive in so you can get a better grip on the situation for your company, as well as tackle a few common thoughts on the cause of this.
First, we need to address the numbers we’re relying on to paint the story of a pandemic-related mass resignation in the grand scheme of things. We don’t have enough data to quite calibrate the scale of the Great Resignation. Did you know the US government has only tracked resignations since 2000? Additionally, quitting was already at record highs in 2019, before Covid-19. So, to say we’re in “The Great” anything based on 20 years of data is….a little brash of us.
In the broader economy, the increase in quits is mostly attributed to low-wage workers switching to better jobs in industries that are raising wages to grab new employees as fast as possible. Another word for this is simply a job hop. Let’s zoom in on one sector: the accommodations and food-services industry. Mostly composed of restaurants and hotels, this sector has seen more quits than any other part of the economy. But it’s not bleeding jobs. In fact, these industries have also created one out of every three net new jobs in 2021. Reasonably, The Great Resignation is mostly a dynamic “free agency” period for low-income workers switching jobs to make more money or find a better values fit, plus a moderate surge of early retirements in a pandemic.
Gen Z has had it the roughest with finding jobs during the pandemic both in the US and globally. Right now, workers aged 15-24 have hit 15 year lows on labor share. These are not just because of the reasons above, but they are also tied to industries that have struggled during the pandemic. This is tied to a lot of those industries thriving on entry-level positions that often don’t come with great standards of living, income, safety, and wellbeing. This generation is set to take up about 27% of the workforce in the next 3-4 years so we need to be mindful of that transition, as this pandemic hit them the hardest. Take it from a Millennial who went through the hiring freeze of 2008 – we need to focus on the future and how we can help this upcoming generation thrive.
The other factor that has skewed the numbers a bit is within the healthcare industry. This industry, understandably so, is one of high exposure/low safety during a pandemic. You combine those two factors, and as we’ve stated before and several popular psychologists have been quoted, safety is our base need. If people don’t feel safe at their workplace, they won’t work there. Period. But even this industry has seen people leave but find other jobs.
Right now, the US has a 4.2% unemployment rate. To give you a frame of reference, from Feb 2001 through Oct 2017, unemployment was higher during that entire period and never reached this low of an unemployment rate. So the old adage I’ve heard from some leaders of “No one wants to work – they are just quitting and going on unemployment” is not founded on data. For the most part, people are working and want to work but again, there’s more to it than meets the eye.
Now, to say that things are completely fine for organizations aren’t true either. I had a chance to speak with a friend of mine that runs a large retail store. His peers have had discussions around a topic that intrigued me. Their collective experience tells that employees are agreeing to one amount of hours, but then show up (or don’t) according to their own schedule, not what was agreed upon. This is something to monitor as remote work continues to be available. Now, people can change an email address and not a lot of consequences to that action would be known, if any at all! For entry level positions, such as retail or the restaurant industry, this is troublesome. However, this is also an opportunity for innovation as the organization that figures out how to properly staff keeping in mind the employee schedule will revolutionize the retail business. Mark my words!
For white-collar workers (non entry level) the great resignation hasn’t affected their numbers much other than more individuals retiring early (again, see SAFETY). That may be because the pandemic has afforded many new perks that were practically unheard of pre-pandemic: the ability to work from home or remotely long-term, cutting out commutes, greater flexibility, being able to spend more time with friends and family. Workers won’t be giving these up easily – and if companies don’t provide them, more people may very well resign more often. Blue-collar workers, who’ve already had to face inequalities that were amplified during the pandemic, might be lured with higher wages – which are already rising the fastest they’ve risen in the US since the Great Recession.
Long-term unemployment though, has had it’s toll on Gen Xers, and really people aged 45+. Leading to believe that orgs favor replacements that are younger. This is shared with career switchers as well as career seekers. Organizations often favor Millennials over any other generation, with age groups of 45+ being often looked at and hired less than half that of millennials. This generation has a wealth of knowledge that if you’re looking to hire, has tremendous potential!
This said, we don’t know what will pan out and whether conditions will improve for everyone equally. If they don’t, this may be another bump in the narrative that this batch of resignations has universally moved a needle. Importantly, workers need to avoid being swept into the hype, and be more thoughtful going forward when discussing the reasons more people are quitting, and what that means for the future of work.
“But how do I do that and make it practical to my org?” you may be asking. Don’t worry, we got you! First, start with where you’re at numbers-wise for resignations. The formula for this is to take the number of separations per year / average total number of employees = turnover rate. Compare that number to your industry and goals. While you’re looking at those, determine the impact of resignations – is one team affected more? One dept? How does that impact workflow for all? Asking these questions and looking at the bigger picture gives you a starting data point.
Next is to figure out why these are happening. Some common causes right now are: Compensation, safety, employee career path, tenure, performance, training, poor management, and overall org culture (see, told you I’d fit it in!). This helps identify blind spots in org and help understand trends in different employee populations.
Finally, and this is a critical point: Do something about it!!!! Now that you’ve identified the root causes of turnover at your organization, you can begin to create highly customized programs aimed at correcting the specific issues that your workplace struggles with most. For example, if you discover that time between promotions correlates strongly with high resignation rates, it may be time to rethink your employee career path. If you find people are leaving quickly after their hired date, you might need to overhaul your employee experience.
In putting all this together, it can be daunting (Don’t worry, we’re here to help!). However, let’s not go off the deep end and just chalk it up to a headline of resignations. Let’s take an honest look at where we’re at, develop a plan, and make an impact. We don’t know how the future will be changed yet, but everything is pointing towards making an exceptional employee experience will be critical. So, what are you going to do about it?