Workers of the world united in 2021 as they quit in their droves. What became a year-defining work trend known as the Great Resignation has upended what it means to be an employer and placed more power in the hands of the employee.
More than 40 million Americans quit their jobs in the last six months of 2021, according to the U.S. Bureau of Labor Statistics, while a Microsoft survey of more than 30,000 global workers showed that 41% of employees considered quitting or changing professions last year.
It’s a global phenomenon that has roots in several countries. A study from HR software company Personio of workers in the UK and Ireland showed 38% of those surveyed planned to quit in the next six months to a year, while similar grievances have been voiced by workers in China. The Chinese ‘tang ping’, or ‘lying flat’, movement protests long working hours with little reward, and goes against the country’s trend known as 996—working 9am to 9pm, six days a week.
With 73% of CEOs anticipating that the work shortage will disrupt their operations over the next year according to a Deloitte survey of 117 executives, it's clear that companies face a unique challenge to the cohesion, productivity, and stability of their teams.
So, what can CEOs learn from the Great Resignation? And how can they turn this threat into an opportunity?
What is driving the Great Resignation?
What distinguishes this mass exodus from previous periods of high resignation rates—which tend to coincide with times of economic prosperity, when workers are confident that they can find a better-paying job—is that people are quitting despite high unemployment rates and labor shortages.
Though moving into a new role often brings with it a salary increase, the Great Resignation is not just about the appeal of a higher salary. Crucially, it’s also about wellbeing. The Personio study showed that over 50% of respondents who were planning to quit wanted to do so because of a reduction in benefits in their current role, a deteriorating work-life balance, or a toxic workplace culture.
Time spent isolated at home and the stress of worrying about your health and that of your loved ones have forced people to rethink about what they want from their work—and what they won’t accept anymore. For many, the Covid pandemic led to the realization that teetering on the edge of burnout was no longer worth it.
A study in the Harvard Business Review showed that resignations were highest in healthcare and tech—two sectors that were put under intense pressure during the pandemic. Resignations increased by 4.5% on the previous year in tech and by 3.6% in healthcare.
The Great Resignation reaches across the blue- and white-collar divide. Underpaid, undervalued, and overworked hospitality or healthcare workers are quitting, but so are consultants and managers facing overwhelming workloads and dwindling advancement opportunities.
In addition to wellbeing, workers are also now putting an emphasis on purpose. Peter Minev, CTO at insurance technology company Clark, argues that candidates now look at a company’s social impact, culture, and values as much as they look at pay, benefits, and holidays.
“Many of my friends from the tech space told me recently that they would never work for certain global incumbents, despite the very large compensation, due to ethical considerations related to the business conduct of these companies,” he says.
Why is the Great Resignation a challenge to businesses?
For CEOs, the impact of the Great Resignation is dire. Losing parts of your workforce means losing key industry knowledge and skills, but also the time and resources needed to hire and retrain new employees.
Having to rebuild a team from the ground up— which may take months to become fully operational—could also reduce productivity and therefore revenue.
“When people who actually ‘do the work’ of the business leave, the value of the business leaves,” explains Dan Cable, professor of organizational behavior at London Business School.
“It’s hard and expensive to find new people to create the value of the business and get them up to speed to actually do the work.”
How can CEOs turn the Great Resignation into an opportunity?
While the Great Resignation is most certainly a challenge to businesses, it’s also an opportunity to learn and innovate.
According to Charmi Patel, associate professor in international human resource management at the University of Reading’s Henley Business School, it may teach HR departments how to better bounce back from external shocks like the pandemic.
“That's what exogenous events do, right? They make you look inward,” she says. “You respond to the external environment by making internal changes to your company’s policies and practices.”
The first change that Charmi points to is the use of avenues other than LinkedIn to find new talent, like employee referral programs or online freelancer groups.
“You're going to find fantastic candidates who don't show up in your database by recruiting innovatively through other channels,” she says.
Talent is also becoming more mobile thanks to the increasing possibility of remote work, which means that applicant pools now extend far beyond a business’s immediate geographic area.
Access to more profiles—and most importantly, better suited profiles—increases the possibility that the person you hire will end up being the right fit for your company.
When it comes to retaining talent, in an article written for Harvard Business Review, Ian Cook, VP of people analytics at people analytics and planning company Visier, prescribes a data-driven approach: determine the scope of the problem in terms, identify the root causes, and create tailored strategies to solve them.
Knowing who is quitting and why will help a CEO understand which interventions are likely to be effective, whether that’s higher compensation, better flexibility, a shorter gap between promotions, increased benefits, or more rewarding training opportunities.
For Charmi, one of the most efficient ways to retain talent is to mandate flexible working, which allows for greater autonomy and enables better work-life balance.
“This is a time for employers to really push the boundaries in terms of what kind of practices they will implement to retain employees, in terms of pay and in terms of flexible working,” she explains. “I don't mean those types of flexible working which are inherently ways to overwork your employee, but truly flexible working that is not disguised as workaholism.”
Eventually, this flexibility may morph into the four-day work week, which Charmi argues may be closer than we think. “If companies can understand that you're not paying employees for the number of hours they're clocked in, but for the tasks that they do, then it shouldn't matter if it takes three, four, or five days,” she says.
For Peter, CTO of Clark, the key to retaining talent is to translate profit into impact. “People don’t wake up in the morning and go to work to increase the revenue or the profit of the company—this is simply not inspiring for them,” he notes. “People are inspired when they know that their work has a deeper meaning.”
Dan from London Business School also argues that an important, albeit less tangible factor in employee retention is to make workers feel valued. “It’s about making sure people can see the impact of what they do,” he says. “Even if it seems small to a CEO, every employee affects someone, and their work matters.”
Recent mass resignations point to workers understanding how much companies need them. They know that if their contribution is invisible, their efforts ignored, and their progress not invested in, quitting is a perfectly viable option.
In turn, this has forced businesses to act. The Great Resignation is an opportunity for CEOs to devise hiring and retention strategies that will help them build a more engaged, efficient, and satisfied workforce.
Perhaps, a better work culture—one that is centered around wellbeing as much as productivity, and purpose as much as profit—will also emerge from this process.
“The Great Resignation is an excellent opportunity for companies to refocus on their mission, values, and impact, and if they do so successfully, to attract top talent which is motivated and inspired by that,” Peter concludes.
Discover a more in depth overview of the trends and leadership challenges facing business leaders in 2022, and find out how you can overcome them with an Executive MBA by downloading BusinessBecause Executive MBA Insights: 10 Leadership Challenges For 2022.
Please Enter the Code Below