Also deemed “The Big Quit”, the term “great resignation” is a trend shaking things up in today’s recruitment, employer branding, and talent acquisition landscapes. Triggered by the current pandemic, it started in the United States as a wave of resignations coming from employees quitting their jobs for various reasons such as accumulated stress, burnout, lack of motivation, and better pay.
Coined by Prof. Anthony Klotz, the Great Resignation “movement” quickly turned into a manifesto; a need to want more from the employer without fearing of being laid off. Following the introduction of the “work-from-home” concept in 2020, the workforce (across all fields, domains, and industries) was split in half: those that believed WFH was possible and productive and those that didn’t.
For the first time ever, companies and leaders – who didn’t believe that WFH was productive – were forced to take a leap of faith and give their employees the benefit of the doubt. Although it proved to be a success in 2020, WFH backfired in 2021. Soon enough many employees realized that there’s more out there for them; that they’re wanted; that they’re no longer afraid to speak up/ask for more; that they don’t want to get back to the office; that they don’t have to put up with peers they don’t agree with; etc.
Simply put, the Great Resignation movement gave them courage. A recent Microsoft study showed that 41% of employees worldwide are currently thinking about leaving their current job. 46% said they’re open to leaving because of the remote opportunities offered by other companies.
Earlier in July, there were over 1 million vacancies available in the UK, an all-time high. In Germany, over one third of the country’s companies reported a lack of competent workers. From a company perspective, the Great Resignation is a double-edged sword. For some, it was an opportunity to do better, reframe their company culture, and find innovative ways to get their engagement back.
Main triggers of The Great Resignation
The Great Resignation started as a workers’ riot in the United States; a revolt fueled by the effects of the pandemic against employers, superiors, and bosses that didn’t care about the wellbeing of their staff. The US Bureau of Labor Statistics reported that in April 2021 over 4 million US employees quit their jobs – the largest spike and the largest number of resignations the US has ever witnessed.
In Europe, a recent study (1,000 employees and 500 HR decision makers in the Netherlands) done by German-based company, Personio, revealed that 46% of workers are planning to quit their jobs in the next 6 to 12 months. The results clearly showed that HR departments must take a step back, reconsider their strategies, and focus more on what matters the most for a company’s success: its people.
Main triggers that led to The Great Resignation:
In Germany, it looks like one of the main triggers was inflation. Driven by price increases in food and energy, German inflation increased to 4.1% in September 2021 (the highest in Germany since 1993). It is one of the highest inflation rate spikes in Europe. People are looking for jobs with higher wages because they feel the need to relocate to bigger homes from where they can work comfortably remotely.
The problem is, when people get paid more, they spend more; thus impacting inflation even more and ultimately causing a wage-price spiral. A survey done earlier in August pointed out that a third of German companies are dealing with a scarcity in skilled workers. To make up for the shortage, Head of the German Federal Employment Agency, Detlef Scheele, said that Germany will have to bring 400,000 experienced workers per year to compensate for the shortfalls in industries such as tech and nursing care.
As a result of Covid-19, Germany reports the highest number of resignations in Europe.
As the European economy gets back on its feet – following vaccinations and putting an end to social restrictions – the demand companies now have for top talent is surging. Earlier in May, UK-based career website Reed.co.uk witnessed the highest number in job posts since 2008. Over 200,000 new roles were posted live, although not enough qualified candidates to fill them. Simon Wingate, managing director for Reed.co.uk, points out that “the surge in opportunities contrasts with the severe slowdown in the jobs market last year, with reports of openings receiving thousands of applicants”.
On top of everything, the pandemic has had several psychological effects on workers. Burnout, stress, and doubt as to what the future holds, many employees have taken a step back to reassess their options. Some have dedicated their time to reflect on their current role and make improvements, whereas others have gained a stronger sense of their worth.
The Great Resignation: Wrath of the employees!
The collapse of work-life balance, followed by a lack of appreciation at work led to a riot that companies didn’t anticipate; a riot against employers that don’t treat their people right throughout the pandemic. From an employee’s perspective, people have always cared about proper work conditions. However, the pandemic gave them the courage to speak up, and ultimately leave.
According to a study done by Personio, over 50% of respondents mentioned that they were planning to quit because of the toxic work culture, a reduction in financial/non-financial benefits, and a deterioration of work-life balance. All the pandemic did was to accelerate the need to explore other options.
It’s been almost 2 years since the pandemic hit. As unemployment rates are decreasing, employees are now examining their relationship with the workplace, not just their jobs. According to a recent trend report done by YPulse, 20% of millennials across Western Europe decided to quit in 2020. The main reason: better financial incentives.
Surprisingly, 19% of millennials chose to quit because their previous job was impacting their mental health. Even though work does come with levels of stress, employee work demands have changed across all industries. For example, service jobs became more hostile, dangerous, and demanding, whereas desk jobs that could be performed from home made people feel overwhelmed by the merger of work and life activities.
Leaving stress aside, many employees saw an opportunity to reevaluate their options – personal and professional – and make a choice: stay unhappy in the same job or make a change and try something different. The same trend report by YPulse asked young millennials what would influence their decision to quit a job. 44% said burnout while 32% pointed out that an unhealthy work-life balance would compel them to look someplace else.
Apart from mental health, millennials would also switch jobs in search of a better challenge and purpose, meaning that the pandemic is forcing the young generation to look for meaning at work; and the good news is that they’re more than willing to quit to have it.
The impact of the Great Resignation across industries
In one way or another, all major industries were impacted by the Great Resignation manifesto. However, retail, healthcare, tech, manufacturing, and construction were some of the most affected. Earlier in October, Deloitte partnered with Fortune to do a study on 117 CEOs in several Fortune 1000 companies. It looks like 73% of CEOs believe that the lack of supply in qualified workers will greatly disrupt business in the following year. 57% believe that their main challenge will be to attract top talent, with 35% already planning to add more benefits to increase retention.
In construction – where did all the manpower go?
Frank Heuts, general manager for HR at Komatsu, an international manufacturing company, talks about a lack of manpower in construction. Although, in Belgium, people are returning to work gradually, there seems to be a decreased interest in applying for positions such as machine operators, painters, assembly fitters, design engineers, ICT, and system engineers. According to Heuts, “It is an overall trend that the war for talent has started. In the past you had five candidates for every vacancy. Now we are seeing five vacancies for every candidate.”
Recruiting challenges are intensifying in the construction and manufacturing industries across Europe. In a recent study done by The Bank of France, almost 50% of French construction companies are having difficulties recruiting qualified staff. Germany’s IFO Institute reported that 33.5% of companies cannot find qualified workers, whereas in the UK, the British Chambers of Commerce mentioned that 82% of construction firms are dealing with recruitment concerns as of Q2 of 2021.
In tech – all eyes on customized work experiences
Although not fully in bloom just yet, The Great Resignation in tech has been mainly influenced by the work-from-home (WFH) trend. Increasingly more European startups are struggling to hire and retain local/national top talent as established companies overseas are crossing borders, creating an even bigger gap between supply and demand.
In the war for talent, European companies are at a disadvantage – the low wages offered compared to what US companies are offering. Index Ventures, in collaboration with Advanced HR, released a report that points out that salaries in the US for senior tech employees are almost double compared to Europe: $185,000 vs. $95,000.
In simple terms, the pandemic has merely accentuated challenges companies already had. A massive $91.3 billion in VC funding for Europe’s tech companies – up 89% compared to 2020 – puts pressure on startups because they must recruit to scale. Reshma Sohoni argues that a smart strategy for winning the battle for talent is to offer stock options to employees and thus have a chance at competing with Silicon Valley’s tech giants.
And yet, amid the pandemic, not all tech employees care about financial benefits. Some of them are reconsidering their options for reasons already mentioned, such as burnout, accumulated stress, and the pressure of working in a company where their values are not respected. Microsoft’s 2021 Work Trends Index relieved that a talent exodus en-masse is under way. More than 40% of employees are thinking about making a career change. And since tech specialists can now afford to choose and be picky, companies that refuse to deliver customized work experiences to their people will have the most to lose.
In retail – employees want stability
It’s no secret that the retail industry has one of the highest turnover rates. This means that the need to recruit and hire people is more acute than ever, especially now that stores are opening again due an increase in vaccination rates around the world. However, the Great Resignation trend has greatly impacted retail. Following 1.5 years of layoffs, technical leaves – whether paid or not – and store closures, employees are no longer motivated to come back full-time.
Many are looking for new jobs in companies that can offer both stability and flexibility in terms of work schedule. Keeping workers engaged, trained, and properly equipped so that they can stay focused on providing a good customer experience is a challenge retail companies must tackle to hire qualified workers. The key to bringing them back is to become an employer of choice and offer perks aligned with their needs and wants; whether those perks are financial or non-financial.
In healthcare – burnout, the main reason for quitting
In healthcare, one of the main reasons physicians and nurses decided to call it quits was burnout. According to a recent study, 1 in 5 healthcare workers – nearly 21% – have thought about quitting due to the accumulated stress triggered by the pandemic.
Jackson Physician Search, in collaboration with MGMA, released a whitepaper recommending organizations to better tackle clinician burnout. Tony Stajduhar, president of Jackson Physician Search, says in a recent PR that, “Successful business decisions begin by recognizing threats and opportunities, and the pandemic exposed many for healthcare organizations, so we’ve seen a rapid and sustained increase in the number of physicians actively looking for new jobs”.
A sensible way of ending the Great Resignation movement is to improve physician experience at work. Almost 46% of surveyed physicians mentioned that this measure could prevent them from leaving. Many have cited numerous reasons for their decision to quit, including lack of collaboration and communication with administrators and managers.
The Great Resignation – an opportunity to help companies better define their company culture
From a business perspective, The Great Resignation should serve as a wake up call for organizations worldwide. On the one hand, it’s a supply and demand issue in many industries; on the other hand, it’s an opportunity for companies to reassess priorities when hiring and retaining top talent. Replacing an employee costs an organization an average of 122% of that employee’s yearly wage. In Europe, The Great Resignation is still in its infancy, which means that if companies don’t adapt their hiring practices now, adapting them later will be too late.
What HR leaders and talent acquisition experts should do in response to The Great Resignation:
- Focus on the three Bs of employee experience: Believe (search for meaning), Become (focus on learning and growth) and Belong (all eyes on fostering positive relationships with peers at work)
- Consider rehiring employees that resigned: Stay in touch with people that left, and work your way to regain their trust. A lot can happen in 1.5 years, so it doesn’t hurt to reconnect.
- Reassess your organizational culture: Be honest and answer the big question – why did your employees leave in the first place? After you’ve done that, work your way to making improvements and become more transparent.
- Reevaluate your company’s perks: Whether it’s WFH possibilities, better financial incentives, or more learning opportunities, it’s always a good idea to check to see if the perks offered are on par with what your employees really want.
- Customize the work experience: Last but not least, use The Great Resignation movement to customize the work experience offered to your people. Make it unique – just like your EVP, and you should have a rock-solid EVP – so that you can also retain top talent, not just hire the best and risk losing them after 3 months.