The Great Resignation
In the early part of 2021, the culmination of the Covid pandemic and other economic forces resulted in a staggering number of “quits” globally. Quits being defined as workers voluntarily leaving their jobs. The rates continued to increase into the summer and the trend was given the moniker “The Great Resignation”. While perhaps delayed in Australia due to the extended lockdowns, there are nevertheless an oversized proportion of employees looking to switch jobs.
It’s likely every business leader felt the impact of the Great Resignation to varying degrees, but to put it into perspective, imagine a 100-person organisation losing three employees in a single month and that trend continuing over the course of several months. The result is a compounding strain on HR, existing employees and managers.
While unabated to date, there are signs this trend won’t continue indefinitely. The U.S. Labor Department reported as recently as November 5 that payrolls in October jumped by 531,000. However, The Great Resignation is most definitely real and not set to stop in its tracks any time soon.
So what are the reasons behind this mass wave of resignations? In April, a study by JP Morgan suggested that as much as one third of the workforce was relying on a financial cushion rather than accepting positions. Savings built up during the pandemic, both from government benefits and reduced personal spending, have played a key role in making the refusal possible. Workers up and down the income ladder have more leverage. They are using it to demand not just higher pay but also flexible hours. Which is resulting in more generous benefits and better working conditions.
Currently many states have eliminated relief during the summer and fall of this year so these savings may start to dwindle. The same study indicated 20% of the drop in employment was due to those eligible for retirement. The pandemic triggered a self-assessment that many decided, perhaps earlier than planned, that it was a good time to move out of the workforce. The rest of the quits were related to COVID fears and childcare constraints. Childcare costs have increased and in some cases working a low wage job and paying for daycare doesn’t pencil out.
Thanks to this environment of pandemic-relief checks, a rent moratorium and student-loan forgiveness, everybody, particularly if they are young and have a low income, has more freedom to quit jobs they hate and hop to something else. What the economy is now experiencing is not a labor shortage so much as it is a shortage of workers who are willing to accept the terms employers are used to offering them.
With the mass exodus of employees from one organisation to another or simply not returning to the workforce, incredible stress is being added to their former co-workers and managers.
“It’s become a vicious cycle of sorts,” says Johnny Taylor, CEO of the Society for Human Resource Management quoted in USA Today.
The employees remaining are reconsidering their options, according to the SHRM. Fifty-three percent have wondered whether there are better job opportunities out there; 55% have questioned whether they’re earning enough; 28% are feeling lonely and isolated, and 42% have thought about leaving their job more often than they did before their co-workers left.
Demand for Workplace Flexibility
The pandemic has also shifted attitudes toward work. Since early last year, many workers have been forced to reconsider the boundaries between boss and worker, family time and work time, home and office. By eliminating the office as a physical presence in many (but not all!) families’ lives, the pandemic may have downgraded work as the centerpiece of their identity. Sixty-one percent now favor a schedule where working from home two to three days a week would be the norm. The so-called hybrid model.
According to a study conducted by Citrix, 88% of knowledge workers say that when searching for a new position, they will look for one that offers complete flexibility in their hours and location. Also 83% predict that in response to the global skilled talent shortage, companies will leverage flexible work models to reach out to suitable candidates no matter where they live — yet, only 66% of HR directors feel the same. In short, to attract employees back, flexibility has to be a key attribute of any enterprise whether employers like it or not.
In the next blog in this series, we’ll address how workforce visualisation can help address the new challenges brought about by both the Great Resignation and the preference for a hybrid workplace. In the meantime, why not start your preparation for the new normal by downloading a free trial of OrgChart Now, your automated org chart visualisation tool for HR planning.
