JUL 5 Imagine if 25% of your workforce quit tomorrow. Labor statistics and numerous surveys point to one thing — a significant portion of employees are ready to give notice. Dubbed the Great Resignation, this wave of departures is sweeping across virtually every industry. > There were more than 9 million open positions as of […]
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JUL 5 Imagine if 25% of your workforce quit tomorrow. Labor statistics and numerous surveys point to one thing — a significant portion of employees are ready to give notice. Dubbed the Great Resignation, this wave of departures is sweeping across virtually every industry. > There were more than 9 million open positions as of April, which puts the job opening rate around 6.2% (Bureau of Labor Statistics). > 2.7% of workers quit their jobs in April (Bureau of Labor Statistics). > Industries with the highest quit rates include retail, leisure, transportation and professional and business services (Peterson Institute for International Economics). > More than 40% “of the global workforce is likely to consider leaving their current employer within the next year” (Microsoft’s 2021 Work Trend Index). “Historically, there is always pent-up labor demand after a major disruptive event. But when there is an oversupply of jobs, employees have more choices,” said Stephen Courtright, a Henry B. Tippie Professor of Management and Entrepreneurship and Director of Executive Education at the University of Iowa. “When there are greater opportunities, workers have less uncertainty about leaving their current employer. It boils down to risk tolerance. But it’s critical to acknowledge that both economic and psychological forces influence their decision making.” Employees have always left a company for personal factors, such as pursuing a degree, moving, switching careers, family planning or becoming an entrepreneur. But the pandemic has created a unique confluence of conditions that has never been seen before. While not all turnover is disruptive, argued Mr. Courtright, it matters when and where it hurts your organization. This is a moment to see which factors are within your company’s control. Work-Life Balance Many people are still feeling the lingering effects of 2020. The uncertainty, sweeping changes and disruptions to home and professional lives have created a breaking point for those with traditional employment. “The pandemic has caused record levels of burnout. Remote work has been the greatest opportunity for some but tremendously exhausting for others. Everyone’s had more video meetings, more group chats and more email. From survey data, we consistently see that employees have been working longer hours this past year. This blurring of boundaries between tradition work and home lives has taken a toll,” Mr. Courtright said. For example, Melody* recently switched to a remote nonprofit position from a traditional corporate employer. Her previous company didn’t embrace work from home (WFH) until several months into the pandemic. It then added mandatory overtime, increased workloads and required 10-hour days. “I took over a $5 per hour pay cut to save my sanity and health,” she explained. “I had honestly forgotten what it was like to enjoy a day at work. To work on one thing at a time instead of six. To laugh with coworkers. To know that I did something to make a difference.” Burnout has also been on the rise for managers of teams that pivoted to remote during the pandemic, noted Mr. Courtright. The swift change didn’t allow time for additional training, subjecting many supervisors to a steep learning curve as they adapted to an unfamiliar management style. Remote vs. on-site Remote work disrupted every company with knowledge workers, and for many employees, there is no going back. That’s not a figurative statement — it’s literal. Especially for organizations that resisted WFH previously, their workforce can now point to a year of proof that remote work is not only possible, but often more productive. “It’s a misstep to require everyone to go 100% back to the office,” Mr. Courtright cautioned. “There’s a real price to pay if you disregard what employees want. Many have put a definitive value on the freedom and flexibility of working from home.” However, the remote trend was well rooted before 2020. Numerous surveys have shown that it’s a strong preference among the Millennial generation, and many tech companies are founded as purely distributed teams. WFH is swiftly moving from a trend to an expectation. “Resist the temptation to default to total uniformity,” recommended Mr. Courtright. “We’re seeing employers take a much more individualized approach to remote work. They are looking at its feasibility, not only job by job but person by person.” Growth Talent loss is a major concern right now, but don’t focus solely on your executive pipeline. Many of your best workers don’t have senior positions or are on the leadership track. “Our jobs relate to our identity. People derive significant meaning and happiness from their work. They want cool and interesting projects and opportunities to grow,” stressed Mr. Courtright. “It’s incumbent on employers to focus on what it looks like for their employees to advance, especially if development and promotions took a backseat during the pandemic.” Benefits Companies often go lean in times of distress. But if your organization suspended raises, bonuses or matching contributions this past year, brace for the fallout. With a greater supply of jobs than applicants, employees have leverage to demand better compensation. Annie* had been pursuing a career in bar and restaurant management until the pandemic. After deciding she needed to pull back from a public-facing job, she switched from an events coordinator position to medical billing. The entry-level position provides training and consistent pay. “I have had a lot of time to reflect on what I want and deserve from an employer. We should be able to expect living wages, reasonable hours and work/life balance. I want a position that has stable pay, benefits and schedules,” she said. “While I might one day return to an industry I still love, I just can’t go back the same way.” Reputation Employees judge their company during a crisis, assuming they saw its true mettle. Did the business display grace under pressure or did survival mode mow down emotional intelligence? Your reputation is important currency, especially in a market that favors employees. “One of the biggest reasons for turnaround is a shock that reduces trust in the organization,” Mr. Courtright explained. “The pandemic shone a light on how organizations handled this great change. Not every company had a flattering response.” CBJ * Names obscured for privacy NEWSMAKERS UPDATE Millions quit as the Great Resignation rages “I quit” is a phrase that has surged since late last spring. That’s when the country first heard about “The Great Resignation,” when millions of Americans took time during the COVID-19 pandemic to re-evaluate their jobs and work-life balance. According to a September Deloitte survey, the most top-of-mind issue for CEO’s over the next 12 months is the labor and skills shortage. Stephen Courtright, professor of management and entrepreneurship in the Tippie College of Business at the University of Iowa, doesn’t see The Great Resignation changing anytime soon. “What I’m telling organizations at this point is for the next 12 months, you have to plan for this labor dynamic,” Mr. Courtright said. “Is the labor market going to be what it is a year from now? I don’t know. Will it be like this forever? I doubt it.” Mr. Courtright says the trend is a perfect storm of economic, organizational and psychological factors. Employees have more options, dissatisfaction with their current job, and big shocks that make people reconsider their careers. He points out labor markets regularly experience these kinds of fluctuations. But he says his research suggests “to keep your most talented employees during this turbulent market is to have bosses who are engaging their employees. Part of it is investing in training and development.” The CEO’s from the Deloitte survey say to retain and attract talent, they are also increasing flexibility around work location. — Becky Lutgen Gardner