RESPONDING TO THE GREAT RESIGNATION
Employers are painfully aware that the workforce is changing due to many economic and social factors influenced by the pandemic. The U.S. Bureau of Labor Statistics reported that an average of over 3.95 million workers quit their jobs each month last year, awarding 2021 the notorious record as the year with the highest overall average. How are employers responding effectively, and what’s the best way to address how this impacts your workforce?
All Things Are Not Equal
While both frontline workers and corporate positions have been affected, it has taken the toughest toll on retail, hotels, restaurants, and grocery stores. According to statistics, apparel retailers lost employees at 3 times the rate of companies in consumer goods, food and beverage, and home health care industries. Not surprisingly, resignation rates increased within the healthcare and technology industries. These fields experienced a greater demand in the pandemic, leading to increased workloads, stress, and burnout. Conversely, resignations dropped slightly in sectors like manufacturing and finance.
The statistics show that attrition is not always consistent across an industry. In other words, why does one company lose more employees than another in a similar sector? Compensation has received a lot of the blame, but wage dissatisfaction only ranks 16th among the reasons for employee turnover, according to analysis reported in the MIT Sloan Management Review. In fact, a toxic corporate culture is ten times more influential than compensation in determining a company’s attrition rate within its own industry.
The Power of Culture
Companies with a strong reputation for a positive organizational culture supporting employees’ well-being have fared better than competitors in the same industry. Indications of a toxic company culture include a lack of diversity, equity, and inclusion; workers not feeling valued or respected; and unethical practices. Organizations can address this by eliminating toxic practices while trying to understand and address elements of the culture that are negatively impacting employee engagement or causing people to leave the company entirely.
Another major predictor of employee turnover during this period has been the lack of stability within organizations. Restructuring, concerns of job security, and a lack of upward mobility when a company is struggling can trigger employees to jump ship and look for work elsewhere, especially when remaining employees have increased workloads due to turnover. Providing lateral career opportunities can help retention in lieu of compensation when companies have financial constraints. Generating confidence in the strength of the company through social events and allowing flexibility in remote work arrangements can also help retain employees. Making schedules more predictable for frontline workers has a big influence on reducing turnover. Fixed schedules allow employees to establish routines and plan for time off and childcare arrangements, which can help reduce stress.
Recognize and Reward
Notwithstanding the compensation issue, employees are more likely to leave a company that does not provide recognition for strong performance and overall effort. High-performing employees tend to resent a lack of acknowledgment for their results and investment in the company, causing businesses to lose some of their most productive workers during the Great Resignation. Reviewing the impact of resignations on your business can help you quantify the cost of these losses. Hiring and retraining employees are often expensive repercussions, and quantifying the problem can help company leaders make informed decisions about investing in tools to address it.
For more information about quit rates and trends, please refer to the U.S. Bureau of Labor Statistics website. This article also relied on context from the Harvard Business Review, in addition to analysis and research conducted by MIT Sloan School of Management in conjunction with the Culture 500 project based on job openings and turnover surveys from the U.S. Bureau of Labor.
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