Workplaces of the Future: Your Guide to the Great Resignation
What is the state of the Great Resignation in 2023? When did it all begin, and what is causing the Great Resignation? And more importantly, what can companies do to combat this phenomenon and retain their people?
The Covid-19 pandemic sparked the Great Resignation of 2021. As a result, the U.S. market faced unprecedented levels of resignation rates. However, what we are experiencing now goes beyond the pandemic's limited turmoil. Instead, the rising quit rates that have been a pattern for the past years are continuing. People are now becoming a company's most valuable asset. So, in the context of the Great Resignation, what can people leaders do to ensure their people stay? Read on to find out!
What is the Great Resignation?
The Great Resignation describes the high rate of resignations in the United States that began in the spring of 2021. There was a high demand for labor and a low unemployment rate, all of which were accelerated by the Covid-19 pandemic.
Anthony Klotz, an organizational psychologist, coined the Great Resignation term in a 2021 Bloomberg article, in which he foresaw a widespread resignation of employees who no longer wished to pursue their jobs.
According to Harvard Business Review, however, the trend of employees quitting their jobs didn't start with the Covid-19 pandemic. Between 2009 and 2019, the average monthly quit rate increased by 0.10 percentage points each year. Though, the pandemic forever changed the relationship between employees and the workplace, accelerating the phenomenon of the Great Resignation.
On top of shutdowns, quarantines, and limited access to goods and services, many retail, hospitality, food services, and transportation companies had to furlough their employees. Alternatively, companies from industries that didn't require in-person interactions switched to remote or hybrid working models.
This period of uncertainty also left room for introspection and reflection. People started to rethink their priorities, and many realized they weren't satisfied with their job, career, or employer.
People leaders who want to overcome this social and economic crisis must first understand what is causing it. So keep reading to find out what is driving the Great Resignation!
Why is the Great Resignation happening?
After spending a significant amount of time working exclusively from home, many people concluded that their work-life balance is more important than the security of a job.
People leave their jobs for many reasons – toxic workplace cultures, high-stress levels, burnout, lack of career advancement, financial reasons, etc. – so it's difficult to pinpoint the exact cause. But one thing is sure: people are looking for a purpose in their employment and are prioritizing their mental health and wellbeing.
A company that values its people will look beyond offering them a standard benefits package. Instead, it will strive to give them a purpose and the means to take care of their mental health. In addition, it will ensure it builds a positive company culture that caters to the needs of all the employees.
Let's see the Great Resignation statistics that will help you understand the phenomenon.
According to a Pew Research Center survey, 63% of people quit their jobs in 2021 for financial reasons. This finding states that money is a top reason for retaining employees. Which only makes sense, given the recent inflation hikes.
Moreover, people today have better insight into the average salary suitable for their skillset and expertise thanks to websites like Glassdoor or salary.com. This transparency has incentivized many to look for a job that pays them better.
Lack of career advancement opportunities
However, studies show that more than a decent salary is needed to keep employees. The same Pew Research Center survey concluded that 63% of people who quit their jobs in 2021 did it because they had no opportunities for advancement, and 57% resigned because they felt disrespected at work.
Lack of flexibility
During the pandemic, remote or hybrid working models became the norm. Statistics show that most people don't want to return to the office post-pandemic.
According to a Microsoft study, 73% of employees want flexible remote work options to stay with their current employer. The same survey found that 46% of people are likely to move because they can work these days remotely.
For most people, flexibility is key. When working from home, employees are in charge of their schedule, can complete their tasks in the best way for them, and have the freedom to live their personal life outside their 9-5 jobs.
The pandemic has given people the time and space to reflect on their personal and working lives, something many have never had the luxury of doing before. During this time, some employees realized they were unsatisfied with their job, felt unsupported by their employers, or wanted to switch careers or start their own businesses.
A LinkedIn poll with more than 25K respondents showed that 74% of people reconsidered their careers during the pandemic. Pew Research Center also found that 69% of people consider job fulfillment as one of the primary reasons for changing jobs.
Stress and burnout
The Covid-19 pandemic added new stressors to our lives. For this reason, people started looking for jobs that didn't put so much pressure on them.
According to APA's 2021 Work and wellbeing survey, 3 in 5 employees indicated adverse effects of job-related stress, including a lack of interest, motivation, or energy (26%), difficulty focusing (21%), and a lack of effort at work (19%).
Additionally, a staggering 44% of people experienced physical fatigue – a 38% increase from 2019 – while 36% claimed cognitive weariness and 32% cited emotional exhaustion. Microsoft also found that 54% feel overworked, while 39% feel exhausted at work. In the context of a hefty workload, it is not surprising that many employees are looking for a new job.
How to retain employees during the Great Resignation
If the Great Resignation has taught people leaders anything, it is to not take their people for granted. Long gone are the days when employees were seen as just replaceable numbers.
These days, employees have the massive advantage of working from anywhere in the world and upscaling their skills with free online courses, while many companies fail to support skilled employees who are at a high risk of quitting their jobs.
To remain competitive in today's busy market, companies need to improve their organizational culture and provide better experiences for their people to combat employee turnover. Read on to find out five strategies people managers can implement to get their company culture into high gear!
Create a positive company culture
To win the game of keeping your people longer, you should examine your workplace culture.
A toxic work environment is ten times more significant than remuneration in predicting turnover. Failing to support diversity, equity, and inclusion, workers feeling disrespected, and unethical behavior are the main factors causing toxic workplaces.
Moreover, toxic company culture is associated with high-stress levels, burnout, and mental health issues, all of which are decisive factors in people's decision to quit their job.
On the other hand, a positive company culture that supports and cares for its employees can significantly impact employee retention.
While developing and fostering a thriving company culture isn't easy, there are undoubtedly areas where actual change is possible.
👉 If you want to improve your company culture, we put together a comprehensive eBook that provides practical advice and tools to diagnose and improve your workplace culture.
Promote flexibility and autonomy
Flexible working hours, whether in the office or from home, are essential for maintaining a happy workforce.
As we previously discussed, companies that fail to accommodate a flexible work environment and give their people autonomy to do their jobs can have trouble keeping their employees longer.
Now more than ever, people want to decide on which terms they do their jobs – whether this means working from home or doing their tasks when they're most productive.
According to studies, companies that gave up micromanaging in favor of autonomy and self-governance saw increased employee productivity. You can anticipate an improvement in motivation, wellbeing, and job satisfaction.
Take a chance – allow your people autonomy over their projects, and reassure them that you have faith in their ability to finish their work efficiently and on schedule.
Provide opportunities for career development
Employees are more inclined to stay with their current employer when engaged and have the chance to advance their careers. One of the easiest ways to achieve this is to facilitate your people learning and development opportunities.
Wondering why? Specialized employees are in high demand, and they are aware of it.
Also, specialized training is one of the main components that empower employees. In return, empowered employees are more inclined to refer people to their company, which can greatly help combat the Great Resignation.
Provide your people with specialized training, tuition reimbursement, or a budget for obtaining certifications or participating in courses. You can then tie those learning and development activities to their objectives and ultimately facilitate opportunities for career advancement and higher wages.
Enhance team collaboration
Employees who feel they are part of a team that functions and collaborates well are likelier to stick around. Team collaboration is about achieving common objectives and carrying out shared work.
Especially in the context of remote or hybrid settings, fostering a sense of community is crucial for boosting morale and creating a better employee experience.
Team-building exercises are a fantastic way to raise spirits and improve connections between coworkers. Finding and promoting shared interests among team members is an excellent place to start, especially for those from different generations who would otherwise find it challenging to get along.
This can enhance conflict resolution, creativity, and other interpersonal skills by opening up new communication channels and empathetic responses.
If your workforce is distributed across geographies, consider giving them access to a virtual space that facilitates interaction & feedback, encourages recognition, and instills a sense of purpose. A software solution like Mirro is an excellent option to engage your people regardless of where they choose to work.
Prioritize your people's wellbeing
As previously mentioned, people's wellbeing is a critical factor in the decision to stay or leave one's job. Employees' wellbeing isn't merely a benefit of a great job; it's becoming a crucial element of the modern workplace culture.
According to Gallup's State of the Global Workplace 2022 Report, employees who are engaged but dissatisfied with their jobs are 61% more likely to develop persistent burnout. Burnout is closely related to toxic workplace practices, which are linked to the intention to leave and ultimately lead to attrition.
Therefore, a positive workplace culture that values its employees and puts their wellbeing first has more chances of retaining top talent.
Each team member faces a different reality; thus, as a leader, you must understand that each employee requires individualized approaches to reach their objectives and keep a positive work-life balance.
What to expect of the Great Resignation in 2023?
In 2023, many specialists predict that it will be a challenging year financially for both companies and employees. However, the Great Resignation will continue to shake up workplaces around the world, so leaders have to be prepared with all the strategies and practices to keep their people.
In times of potential recession, people don't usually look for other jobs because they prefer the stability. But according to experts, the number of people quitting their jobs in 2023 will remain at levels comparable to those of the previous two years.
According to research by Indeed, 92% of employees who had changed jobs at least twice since the pandemic felt that life was too short to continue doing a job they didn't enjoy. Many people who experienced Covid-19 are currently dealing with an existential crisis that is more important than a short-term economic crisis. In this context, despite the recession looming, people defy the need for stability and keep looking for satisfying jobs.
As an executive, you must act NOW before losing the talent you already invested so much in. Equip yourself with the latest retention strategies and rely on a trusted partner like Mirro to help you implement all these techniques. Our performance management platform helps companies build transparent and thriving workplace cultures that foster employee wellbeing and improve talent retention.
People leaders must change their focus to company culture
In 2023, people managers must focus on creating a better employee experience and strengthening their company culture. A consequence of the Great Resignation is that it gave people the impulse to search for jobs that make them happier, more satisfied, and more motivated.
Understanding which of these variables are causing resignation will be beneficial for executives in all sectors and industries. Companies that provide flexibility, show their dedication to enhancing their employees' long-term career prospects, boost team collaboration, and prioritize wellbeing are more likely to keep their people longer.
Which strategies will you adopt to ensure you retain your people? Let us know by tagging us on a Linkedin post, and we'll happily join the discussion!