2021 will go down in history as the year of the ‘Great Resignation’.
Among recruiters, HR professionals and business owners, this expression has become something of a buzzword, describing the apparent mass exodus from the workforce of millions of people around the world.
In a recent poll on CXC’s LinkedIn page, we found that 70% of respondents thought the Great Resignation was a real phenomenon affecting the workplace in 2022.
But in the context of the COVID-19 pandemic, this trend is somewhat surprising: during periods of economic uncertainty, ‘quit rates’ usually go down in line with hire rates — not up.
During the Great Recession of 2007–2009, for example, the quit rate in the US dropped from 2.0% down to 1.3%.
Something different seems to be happening here. By January 2022, the US had seen quit rates above pre-pandemic levels for eight straight months.
In fact, the quit rate, which had never previously surpassed 2.4% since the Department of Labor started measuring it in 2000, hasn’t been below that level since late 2020.
So, what’s going on? Is the Great Resignation a real phenomenon? And if so, what’s driving it? Most importantly, what effects will this have on the workplace of the future?
#1 The Great Resignation: The Facts
The term ‘Great Resignation’ was coined by Anthony Klotz, a Texas A&M professor who predicted in May 2021 that a mass exodus of workers was coming. He had come to this conclusion after noticing four trends that were unique to the pandemic:
- A backlog of ‘quits’ as people who would otherwise have quit their jobs stayed due to uncertainty in the early months of the pandemic
- Widespread evidence of burnout at work, particularly in professions such as healthcare
- A general reevaluation of priorities and values among workers
- The reluctance of many information workers to go back to in-person work
As we’ve seen, Klotz’s prediction was correct: the quit rate began to rise in mid-2021, reaching an all-time high in November, when a record 4.5 million Americans quit their jobs.
Around the same time, a study from Microsoft revealed that 40% of those currently working planned to leave in the next twelve months. And another study by PwC found that 65% of employees were looking for new jobs, and that 88% of executives were experiencing higher turnover than usual in 2021.
The situation was similar in the UK, where over 400,000 workers quit their jobs between July and September 2021 — an increase of 130,000 compared to the same months in 2019.
There were a record 1.2 million job vacancies between October and December 2021, following a sharp decline in the early stages of the pandemic.
#2 Why are people leaving their jobs?
Despite these alarming statistics, it’s important not to get carried away. After all, the Microsoft survey doesn’t actually tell us anything about whether people are leaving their jobs — just that they intend to.
It also doesn’t take into account the number of people who quit their jobs in a normal year: the Job Openings and Labor Turnover Survey (JOLTS) tells us that the percentage of the US workforce who quit their job in 2019 was between 2.3% and 2.4% each month.
40% over the entire year is an increase, but it doesn’t mean that organisations will suddenly lose almost half their workforce.
There are a few different theories that suggest that the so-called ‘Great Resignation’ is a bit more complicated than we might think.
The ‘Great Delay’
One of the predictors of the Great Resignation identified by Anthony Klotz was that many people who would normally have quit their jobs between, say, March 2020 and May 2021, had instead stayed where they were.
This is common in times of high unemployment and economic uncertainty. Within the context of COVID specifically, there were also other factors at play: for example, in many places, new employees wouldn’t be eligible for furlough pay if they had to be temporarily laid off — so staying in the same job was a financially prudent decision.
The number of job adverts posted also fell dramatically in the early stages of the pandemic, meaning people had fewer options, even if they did want to leave.
This means that a large part of the ‘big quit’ — which really began to take hold in May 2021 — may have simply been caused by those who would have left their jobs earlier if the pandemic hadn’t happened.
The ‘Great Reshuffle’
While the numbers suggest that the Great Resignation has continued into 2022, new research suggests something interesting: over half of the Americans who quit their jobs in 2021 did so to switch occupation or field, rather than to leave the workforce entirely.
For many, the COVID-19 pandemic has presented an opportunity to change jobs. It’s telling that the most pronounced quit rates were found in front-line, customer-facing industries, like retail and fast food.
These types of roles are often associated with unpredictable scheduling, poor pay rates and challenging working conditions.
People leaving these roles typically do so to seek opportunities that come with more flexibility, higher pay, and a better work-life balance.
The ‘Great Reevaluation’
There’s also some evidence that the pandemic has caused many workers to reassess their priorities — and quit jobs that don’t line up with them.
The 2022 Microsoft Work Trend Index, published in March 2022, talks about the ‘employee worth it equation’: what employees want from work and what they’re willing to give in return. According to the study, this equation has fundamentally changed, and there’s no going back.
For example, 47% of employees are now more likely to put their family and personal life before work than they were before the pandemic. And 53% say they’re more likely to prioritise their health and wellbeing over their job.
Priorities have changed, and employers who want to remain competitive will have to adjust their policies and processes to reflect this.
#3 The Great Resignation’s effects on the workplace
So, while it’s more complicated than it initially appears, the Great Resignation does seem to be a real phenomenon — with real effects on the workplace. Here are some of the major changes this ‘Big Quit’ has brought about:
A Lack of Skilled Workers For Certain Roles
Many companies are struggling to make quality hires in 2022. This is particularly pronounced in certain industries — like tech, for example.
A recent Gartner survey found that 64% of businesses thought the talent shortage was the most significant barrier to the implementation of emerging technologies. There are also marked labour shortages in industries such as aviation, construction and healthcare.
Companies that want to remain competitive will have to bring their offerings in line with the priorities of today’s jobseekers.
A New Gender Gap
Some studies have shown that mothers of school-age children were more likely to leave their jobs during the pandemic than their male partners.
In fact, according to the US Census Bureau, there were 1.4 million fewer mothers actively engaged in the US labour force from September to October 2020 than in the same months in 2019.
And as sporadic closures of schools and childcare centres continue into 2022, many mothers are still feeling the same pressures to leave the workforce and take care of their children instead.
To combat this worrying trend, businesses should ask their employees who are parents (especially female ones) what accommodations would help to keep them in work — benefits like flexibility in terms of working hours and location can go a long way.
A shift in priorities for employees and employers
As we’ve covered, employees’ priorities have changed. For many people, factors like flexibility, work-life balance and the ability to spend time with family are now more important than before the pandemic — and perhaps even more important than compensation and traditional benefits.
Employers, too, need to reassess the way they think about employees and the value they bring.
In 2022, productivity can’t (necessarily) be measured by the number of hours someone spends at their desk — and the best employers recognise this.
More and more companies are adopting radical policies like the four-day work week, and seeing impressive results in terms of retention and talent attraction — one company saw a 500% increase in applications on adopting the policy.
Measuring output instead of hours worked will become the norm for forward-thinking companies in 2022 and beyond.
#4 Is the Great Resignation here to stay?
Anthony Klotz, the Texas A&M professor who first predicted the Great Resignation, foresees that quit rates will remain high for several years — for two reasons.
First, attrition is contagious: when an employee sees more and more of their colleagues quit and go on to better opportunities, they’re more likely to do the same.
And second, the shift in working styles that employees are already introducing to try and attract and retain talent will also cause some employees to leave.
Today’s employees are looking for solutions that fit their situation, skills, and preferences — so any policy change could mean companies will lose a few employees, even as they gain new ones.
However, this doesn’t have to be a bad thing. In fact, it points towards a future where the majority of employees are in roles that are better suited to them and their circumstances — which could lead to a decrease in attrition in the long run.
#5 Hiring Top Talent Amid the Great Resignation
At CXC, we help organisation hire, engage, classify and pay workers for businesses across the globe.
Our talent solutions such as Direct Sourcing, RPO for contingent and MSP can help your business fill talent gaps that you are trying to fill.
If you are struggling with talent sourcing and engagement get in touch with out solutions team and we will be happy to work with you on a solution that best fits your organisations needs.
