The Great Resignation has been a topic of discourse throughout the years following the COVID-19 pandemic. Yet, several variations have been developed in understanding the phenomenon. For some, it’s a threat to their organization. Others see it as an opportunity, a cautionary tale regarding employee retention, or a warning for companies to improve the office work environment and develop a more effective workplace culture.
While all these perspectives have evident benefits, in the long run, they all fail to represent the phenomenon accurately. In truth, the Great Resignation combines several factors that could impact companies and employees. In this article, we explore this phenomenon, highlighting how much of an impact it has had on the global workforce and how companies can navigate it.
What you should know about the Great Resignation
Employees leave their positions in a company for several reasons. Some professionals look to explore more challenging roles or start a new business, while others retire. But what makes this any different?
Based on statistics from the US Bureau of Labor Statistics, a tremendous number of employees – 4.5 million workers – quit their positions about a year after the pandemic, regardless of the substantial labor demand and low unemployment rate. This large-scale level of resignation led to Anthony Klotz coining the buzzword ‘the Great Resignation’ and attributing the phenomenon to built-up demand from workers who put off their decisions to resign early in the pandemic.
The elevated rate at which US workers resigned from their jobs coincided with the second year of the pandemic. This inevitably made most people consider the pandemic a causal factor for the phenomenon. However, further inspections have shown the pandemic to be more of a correlation.
What is causing the Great Resignation?
The impact of COVID-19 on the healthcare industry has been widely publicized. However, service industries with low location and time independence, such as retail, food and the hospitality industry, suffered massively due to the lockdown. The model of these businesses required customers and employees to be in the same place.
These businesses suffered severely due to their mode of operation, and the effects also cascaded onto workers, their participation, and their wellbeing. To conform to the lockdown restrictions, many of these workers had to retire.
The COVID-19 pandemic was notably challenging for active essential workers, most of whom found themselves overworked without any significant increase in compensation. There was also no hazard compensation, typically expected to accompany workers engaged during the pandemic.
In late 2020 and early 2021, vaccines became widely available, and the employment rate increased to recover from the effects of the pandemic. The abundance of job openings offered professionals more options to choose from. Additionally, the lifestyle alterations and high cost of living introduced by the pandemic meant that many workers were unsatisfied with their current positions and wages.
Across the country, people were also given unemployment and federal compensation, which gave professionals the financial freedom to search better for jobs that met their requirements rather than settle for inadequate positions. These factors contributed to low unemployment and high labor demand, creating an environment that fostered a high resignation rate. Other factors attributed to the Great Resignation include the following:
- Employers demanded a switch back to on-site work after allowing remote jobs in 2020.
- Mistreatment by employers and customers pushed workers to explore available positions.
- Some workers could not comply with COVID-19 regulations set by their organizations.
How the Great Resignation has affected the global workforce
The Great Resignation is about people quitting their jobs. However, their actions afterwards have also changed from the norm. According to a Pew Research Center analysis, many more Americans aged 55 and older are quitting compared to the resignation rate pre-pandemic. Consecutively, there is a significant increase in new businesses, with most professionals opting to start their businesses rather than seek new employment.
In light of this development, companies struggle to attract and retain employees, with the US Labor Department’s JOLTS report highlighting a record-high 11.5 million job openings. As with demand and supply, the high demand for professionals in different industries has given them greater power to negotiate their needs better, most of which range from better pay to improvements in the organization’s car parking and work environment.
The Great Resignation has also been predicted to affect the present workforce and the future of work, the most significant being remote/hybrid work. Most professionals are unenthusiastic about returning to the office, with most stating their preference to work from home. Hence, across various industries, employers are exploring remote or hybrid working options as a way to retain workers.
Future trends following the Great Resignation
The impact of this phenomenon on the global workforce is predicted to continue for some time. For organizations to survive and thrive in such an environment, there is a need to adapt and take necessary actions in recruiting and retaining workers. As such, we are certain to witness specific trends across various industries.
Upskilling is not a new concept. It involves the process of teaching employees additional skills through various mediums. Organizations would look to retain the best talents by providing their employees with upskilling opportunities, such as training in MBA careers, to help them lead the future in work.
Returnship programs are similar to internship programs intended to help professionals who have taken time away from the labor force and career development return to the workforce in paid positions. The high demand for professionals would inevitably result in organizations offering returnship programs to help reorient employees who have been out of the job market for an extended period.
Very few strategies improve retention rates as the opportunity for career advancement. In time, organizations would look to promote professionals from within their workforce instead of looking for new talent. This shows a company’s commitment to developing qualified professionals and maintaining a thriving working environment.
According to a survey on organizational performance during the pandemic, about 50% of the top-performing companies prioritized reward packages for their best-performing employees. Aside from performance, this strategy also improved employees’ job satisfaction. This will become prevalent across more organizations to increase happiness, workplace culture, performance and retention rates.