The Great Resignation and the Future of Work
In October of 2021, 4.2 million Americans quit their jobs. Accounting for almost 3% of the entire U.S. workforce, that record-breaking number came on the heels of other record months. Workers are quitting their jobs at the highest rates in history, and while the implications of this Great Resignation could be long-lasting, they will not be evenly felt.
This series has examined each working age generation to understand the major historical events and experiences that shaped them, the unique attitudes and ideas each group carries, and how these factors influenced their response to the Great Resignation phenomenon. What we discovered is that each generation has responded differently to ongoing changes in the workplace. Gen Zers and Millennials are leading the way in resignations while Baby Boomers are staying put, leaving Gen X caught somewhere in the middle. So, why does this all matter?
Several years ago, in a report published by the Korn Ferry Institute, the Centre for Economic and Business Research, a leading British economic consultancy, compared the global financial contribution workers make to the economy with other assets. They found that human capital – people, labor, and knowledge – would be worth nearly $1.2 quadrillion by 2021. In contrast, physical capital—inventory, real estate, and technology—would only be worth an estimated $521 trillion. In short, human talent and intelligence are more than twice as valuable as everything else put together. That is why attracting and retaining talented professionals is so important to businesses.
In our final installment in this series, we are reviewing the major workplace changes impacting employee decisions to resign, what matters most to employees at work, and the steps your organization can take to retain top talent and set your business up for the future.
The Workplace Changes Impacting Resignations
While the effects of the COVID-19 pandemic on workers cannot be understated, the pandemic itself is not the main cause of resignations. Instead, it is persistent, underlying issues that the pandemic brought to the surface which are causing employees to reconsider their current work situation. These include:
1. Changing Models of Work
According to a survey done by the Pew Research Center, about 20% of employees surveyed worked from home all or most of the time pre-pandemic. When COVID-19 arrived, offices closed overnight and the world’s biggest remote work experiment began. For some, like younger workers and parents, the transition was challenging. Yet, ultimately, many employees came to appreciate the opportunities remote work offered. A PwC survey done in early 2021 found that 71% of employees thought remote work had been a success, and the Pew survey noted that more than half of the employed adults who were working from home during the pandemic preferred to continue working remotely. While each generation has a different opinion on what work should look like post-pandemic (in-person, fully remote, or hybrid), those at odd with their employer are likely to look elsewhere for opportunities better suited to their needs.
2. The Importance of Work-Life Balance
Another issue often noted but brought up with new emphasis during the pandemic is work-life balance. Previously, adapting to workplace stressors and improving health and well-being was seen as the responsibility of employees. However, that view has begun to shift, especially among younger generations. Millennials, for example, value work-life balance and, as a result, tend to work less than older generations. They are also the working age group most likely to switch jobs for a better work-life balance. Studies have long shown that increased well-being is positively correlated with increased productivity, and employers who do not recognize that reality could struggle to attract and retain their talent.
3. Shifting workplace cultures
Company culture has always been an important part of employee satisfaction, but the pandemic and the changes it brought have challenged workplace culture in new ways. Elements of work culture that had been successful in offices, such as engaging employees through social events and recognizing hard work with rewards, did not translate well to remote work, and work cultures that were already not working well often got worse. While some generations have long advocated for the flexibility and improved work-life balance remote work allows, they are also motivated by work that has meaning. As more companies switch to hybrid models, it will be important to redefine culture in a way that works in both remote and in-person environments.
At the same time that work culture struggled to address the changes created by the pandemic, social movements across the country led to increased awareness around topics like diversity and inclusion, which many employers had not adequately addressed. As a result of these combined pressures, employees felt more isolated, disengaged, and burnt out, and they have demanded changes to workplace culture and attitudes. Some companies have responded, but those that have not could face increased resignations and impacts on their workforce.
What Matters to Employees
In order to start addressing employees concerns about work, it is necessary to first understand what matters most to employees. According to a 2021 report by McKinsey, most employers cited compensation, work-life balance, and poor physical and emotional health as reasons employees were leaving. However, when employees were asked the same question, their responses were significantly different. Of the 5,774 employees surveyed, 54% did not feel valued by their organization, 52% did not feel valued by their managers, and 51% did not feel a sense of belonging at work.
The report also pointed out that even employees who may be satisfied with their current role could be tempted to quit as their options expand. Of the employees who reported to McKinsey they were not at all likely to quit, 65% reported that a primary reason for staying in their job was that they liked where they lived. With remote work options continuing to expand and more location agnostic positions to choose from, employees might not have to decide between their job and where they live much longer.
How Your Organization Can Avoid the Great Resignation
The Great Resignation is not going away anytime soon, but organizations that make an effort to learn why their employees are leaving and how they can address the deeper issues and concerns of each working age generation will be more successful in the long run. Here are three steps you can take now to attract and retain talented employees for your team.
1. Address the Purpose Gap
Almost two-thirds of U.S.-based employees said that COVID-19 had caused them to reflect on their purpose in life and nearly half said they were reconsidering the kind of work they do, according to an August 2020 survey by McKinsey. Among survey participants, Millennials were three times more likely to say they were reevaluating work. These findings have huge implications for your workforce and your bottom line. McKinsey’s report highlighted the fact that people who live their purpose at work are more productive, healthier, more resilient, and more likely to stay with the company. Unfortunately, almost half of workers below management level do not feel they realize their full potential at work, and this problem has only worsened due to the pandemic. Additionally, 63% of people in the McKinsey survey said they want their employer to provide more opportunities for purpose in their workday.
So where can you begin? Start with your organization’s purpose. Not only is this the one thing you can directly control, it also sets the tone for your entire team. Reflect on the company’s impact on the world. Are senior leaders considering company purpose in their decision-making? Reflecting on the bigger picture as a team can inspire employees to think about their own sense of purpose and how it connects to the bigger picture. Making this a habit in your organization can help employees feel more fulfilled at work and create a better work environment for everyone.
2. Growth and Career Opportunities
As this series has shown, employees from Generation Z through Baby Boomers value opportunities for skills development and career growth. Even among those generations leading the Great Resignation, opportunities for learning provide many employees a compelling reason to stay in their current jobs. That said, employers need to do more to help their employees develop and advance their career. For example, does your company have clearly defined career paths? Are the right people in the right roles? Can you provide more opportunities for learning and development? Employers that can address these questions will be more successful at attracting and retaining great employees.
3. Work Designed for Health
Work is a leading source of stress for Americans. Stressful working conditions are associated with higher rates of absenteeism, tardiness, and desire to quit, issues that all negatively impact companies. But it does not have to be this way. Employers can make changes that give employees more control over when and how they do their work, and they can tame excessive work demands that lead to chronic stress and illness. Employers can also take steps to improve social relationships at work, from fostering supportive connections between employees and their managers and co-workers to recognizing and addressing the challenges facing underrepresented groups. Ultimately, employers who plan and implement a health-based approach to work and invest in employee well-being can improve productivity, reduce workforce turnover, and avoid the Great Resignation.