“The Great Resignation,” a term coined by organisational psychologist Anthony Klotz, is more than just a quippy way to explain the changing workforce, but a real threat to economic stability worldwide. Over the past four months, there have been record-highs of individuals quitting their jobs, with 1.2 million vacancies in the UK alone from July to September 2021.
A recent report from Harvard Business Review found the highest resignation rate with mid-career employees, growing 20%+ from 2020 to 2021. While turnover is usually highest with younger professionals, resignations for this demographic fell, most likely due to financial uncertainty and decreased demand for entry-level employees. In addition, the increased demand for mid-career professionals gave this demographic more bargaining power when seeking out new opportunities, as they were seen as less risky than their younger counterparts.
Several other factors relate to the mass exodus of people, most directly linked to the pandemic, such as delayed resignations and increased workloads leading to burnout. Industries that experienced extreme changes in demand saw the highest resignation rates, specifically in healthcare and tech, with 3.6% more healthcare workers quitting their jobs than the previous year and 4.5% for tech professionals.
Time at home also sparked self-discovery for many employees, who used the pandemic as a period to explore new and different career paths. As a result, over a third of UK workers are currently looking for a new job, with another 30% saying they are open to new opportunities. Thus, many employers are vulnerable to losing key players in their organisations.
It’s Not Just an HR Issue
While The Great Resignation may seem like a case-by-case problem that affects businesses and those moving jobs solely, there is a more significant economic threat looming. The HR Software company, Personio, published a report outlining the financial risks associated with increased turnover rates.
The cost of “potential talent exodus” in the next 12 months is estimated to be £16.958 billion. Further, this translates to on average £13,595 per small business and up to £5.8 billion for SMEs alone. These figures don’t consider the increased costs and loss of revenue incurred from the pandemic so far, but the threat of future resignations.
Factors for Increased Turnover
The vulnerability businesses face lies in the disconnect between their perception of company culture and employee satisfaction. This disconnect in understanding leads to policies that HR decision-makers believe solve the problem but only create a more significant gap that often relates to increased turnover. For instance, employees stated that being furloughed accounted for 18% of their reason to leave a job, whereas HR departments only estimated this to be 5%.
These results reflect a broader disconnect between HR professionals and employees, which leaves companies all the more vulnerable. For example, when asked to rate their firm’s career development opportunities, HR individuals often cited scores 2.5x higher than non-HR employees. This misperception in employee satisfaction highlights a broader organisational disconnect that could be a potential factor for increased resignations.
So with increased misinterpretations of employee satisfaction and lower retention rates, how can employers address these trends to spot vulnerabilities within their own business?
Develop a Data-Driven and People-Centric Strategy
While the impacts of the pandemic and increased resignation rates are evident on a broader basis, it is essential to collect data within your team to minimise the impact on your business. Ask yourself why are people leaving, who is most at risk, and what can be done to prevent it.
First, calculate your turnover rate to understand how the pandemic has impacted your team structure.
Separations per year can be split into those who resigned versus were asked to leave to obtain even more specific turnover rates.
Once your turnover rate is established, look at other areas of the business to see what it may have affected, such as time to complete projects, quality of work, and bottom-line revenue. For example, suppose the next quarter’s bottom line shows decreased revenue due to fewer completed projects and fewer people to manage the workload. In that case, a reasonable assumption can be made that increased employee turnover has played a role.
Next, look for root causes that are driving higher retention rates. Review metrics such as compensation, the time between promotions, pay increases, tenure performance, and learning opportunities to determine if these affect retention rates. Employees can also be segmented into categories, such as location and job function, to identify the impact of demographics. Analysing these different areas will help you identify any blind spots that cause individuals to leave their position.
Along with analysing categorical data, speak with individuals to understand their experience and what soft benefits would aid in their increased satisfaction at work. How can you better embody your organisation’s values on a day to day basis? Are there additional incentives you can offer to promote a better work-life balance? What benefits have lost or changed value since the start of the pandemic? Being open to receiving candid feedback will be valuable for both the individual and the business.
After a strategy is developed, be sure to measure and adjust as needed- people are not static, so the plan created to support their success needs to adapt as well.
By focusing internally on your business and its people, you can spot the gaps that may be causing lower retention rates, and in turn, improve both your company morale and bottom line.