With the U.S. economy reopening and the unemployment rate continuing to drop, companies are feeling the impact as the demand for workers begins to outpace the available pool of applicants. However, there seems to be another business risk on the horizon that economists are calling the “The Great Resignation”. Basically, it is a new theory that a wave of people who already have or will soon be quitting their jobs.
What does this mean for your business? Let’s take a look at what is happening and what the opportunities are in this trend.
During the last year, our “normal” lives were dramatically upended with stay-at-home orders and an immediate shift in many cases to “virtual” workplaces. With more time spent at home and fewer outside distractions, individuals have had the opportunity to re-evaluate their priorities. Consequently, many people developed a new perspective on work-life balance, their families, their job or the loss of a job.
People who were happy with their occupation prior to the pandemic, may not feel the same way anymore. They may prefer to work remotely, even if their company shifts back to a traditional workplace. Some individuals may feel disconnected from the company or have lost their desire to do their current job. After making it through a challenging year, individuals across multiple industries may likely be considering a career change.
Anthony Klotz, associate professor of management from Texas A&M University, coined the “Great Resignation” phrase in an interview with Bloomberg News and further explained the phenomenon in a recent article. Klotz explains that the uncertainty caused by the pandemic led many people to “stay put” and hold onto their jobs. He points to turnover data from the U.S. Bureau of Labor Statistics Job Openings and Labor Turnover Survey which shows close to 6 million fewer resignations in 2020 than in 2019, suggesting a pent-up demand for change.
Many employees who would likely have considered leaving their jobs in 2020 stayed because of economic uncertainty. As companies reduced headcount and remaining employees had to take on extra workload, frustration and burn out often set in. While many companies are now trying to add staff to help with the workload, it may take longer than expected to fill positions due to the low unemployment rate and tight labor market.
Furthermore, employees who have been working from home may not want to go back in the office. After re-evaluating their priorities, some may decide they are not happy in their current job and want to change occupations. One early indicator Klotz points to is the US BLS resignation rate in March which was 2.4 percent, the highest quit rate recorded for March in 20 years.
It is important to be prepared as 2021 is likely to be a year of continued workplace transitions. According to several surveys, 26% to 40% of people want to change jobs this year. Although it can be disappointing and disruptive when a valued employee resigns, it is also an opportunity for positive changes.
First, it is important to find out why the employee is leaving. Maybe there are some changes you could make to improve morale and reduce the chances of other employees leaving. You may want to find out if there is a way to retain the employee. If not, congratulate the employee on their new opportunity and work with them on a smooth transition.
Remember, this will be the last impression the employee has of your company. It is important to handle the transition in a positive and professional way. A former employee could become a future reference for you. They could end up working for a client or possibly come back to work for your company in the future.
An employee resignation is also an opportunity to reexamine how your workplace is organized and how work is handled. Perhaps there is a better way to handle the workload or it may be a great opportunity to promote another employee to the open position. Remember there has never been a better time to make sure your employees feel valued, appreciated and supported.
It is important to understand the current hiring environment and develop a plan. Determine the essential skills for the position and the personality traits that would best align with your company culture.
Take the time to understand the competitive hiring landscape. Research which companies are posting jobs with similar skills and benchmark the wages they are offering. Spend the time to thoroughly screen candidates and make sure they are the right fit for your company culture.
If you don’t have the time or resources to be successful in hiring, utilize a recruiting and staffing professional. We are here for you and can bring a fresh perspective on how to help you build a great organization.
Contact us today. We would love to hear from you!