The Great Resignation has continued to dominate headlines and stun business leaders as employee turnover reaches new highs.
Where did the Great Resignation come from?
The term was coined by Anthony Klotz, an organizational psychologist and professor at Texas A&M University, during an interview with Bloomberg in May 2021. Turnover is reaching new highs and it’s causing business owners to be stunned by the lasting progression of this phenomenon.
As a result, other terms have popped up to describe what’s happening in the workforce, like “The Great Reimagination”, “The Great Reset” and “The Great Realization”. All of these narratives describe how people are re-examining the role of work in daily life. It’s about workers taking control of their work-life and their personal life; a sense of worker empowerment that will continue this year.
How are employees feeling?
Studies have shown that flexibility is a top priority for employees. A whopping 76% of US Catalyst-CNBC survey participants say they want their company to make work permanently flexible in terms of schedule and/or location.
But that desire is met with friction with a significant number of employees reporting that their employer thinks they are more innovative (72%) and work harder (75%) in the office or on-site. If employers believe that workers perform better on-site, it’s hard to see those leaders being willing to adopt more flexible working conditions.
While a lot of focus has been given to the impact of the pandemic on working women, the US Catalyst-CNBC survey found that employed men are far more likely than employed women to say they are considering quitting their job. The reasons that were given? Because their company (50% vs. 30%) or manager (44% vs. 29%) has not cared about their concerns during the pandemic.
It’s no surprise that parents have taken the brunt of the challenges during the pandemic. In the survey, working parents are much more likely than non-parents to say they are considering leaving their job as a result of their company (54% vs. 29%) or manager (51% vs. 25%) has not cared about their concerns during the pandemic.
The mass, voluntary exodus from the workforce will continue if companies and managers don’t demonstrate more empathy and understanding for employees’ concerns as well as for their life/work needs.
Who is resigning most often?
According to an analysis by Ian Cook and his team, the employees resigning most often are mid-career employees.
Turnover is typically highest among younger employees. During the pandemic, financial uncertainty combined with the demand for entry-level workers caused resignations among younger employees to decrease. Financial uncertainty also decreased the rate of resignations among those in the 60-70-year-old age group.
So, who’s a mid-career employee? It’s those employees who are between 30-45 years old. They have had the greatest increase in resignation rates – more than 20% between 2020 and 2021.
The industries seeing the hardest hit in terms of volume of resignations are tech and health care. Ian Cook and his team found “that resignation rates were higher among employees who worked in fields that had experienced extreme increases in demand due to the pandemic, likely leading to increased workloads and burnout.”
What does the Great Resignation mean for the workplace?
The most sought-after benefit during the pandemic has been the freedom to work from anywhere. Hitting so much popularity that people value flexibility as much as a 10% pay raise, according to new research from the WFH Research Project.
Where we’ve been used to dictating how workers will work, what their schedules will be and the benefits of their jobs, that will need to evolve to attract skilled workers. The biggest losers of this evolution are the managers and leaders who would rather blame external factors, like the pandemic, unemployment benefits or even the government.
The biggest victors will be the managers and leaders asking smart questions, like “How can we be more flexible? What would it look like to give people more power over their schedules?”. Those leaders will see the biggest wins by taking steps to build a flexible working culture that leads to better work-life balance and better mental health for all employees.
It’s time to change the mentality of fitting our personal lives around work. Work will evolve to fit around our personal lives, and we’ll be happier and healthier for it.
How can leaders assess their employees’ potential for leaving?
The solution to the problems being faced in the workplace can be found in employee experience software to help manage this data in real-time. There are so many great tools, like the employee experience software created by Experience.com, to help leaders assess how employees are doing.
With tools that can compare data points from leaders and employees in real-time, it can get easier to assess if employees actually are more innovative or productive in the office or at home. Managers can check in with employees at more regular intervals, document how employees are feeling, and catch dissatisfaction before it results in massive workplace disruption.
Employers must take a data-driven approach to improve employee retention and overall workplace culture and performance. Leveraging data can help managers see how many people are quitting AND why they’re leaving, so they have a clear picture of what can be done to prevent it.
Data collected through employee experience management software will help to quantify the problem, clearly identify the root cause of the problem, and develop tailored retention programs.
To help you better understand what metrics to track, below you’ll find a few formulas that will help you to get clarity around exactly where your retention problem is coming from:
How to calculate retention rate
The retention rate of your workplace can be calculated with a simple formula:
Number of Separations per Year ÷ Average Total Number of Employees = Turnover Rate
Calculating Voluntary Turnover Rate
To determine the voluntary termination rate of your workplace, you have to find out the number of individuals that have left the business of their own volition over the past 12 months.
Once you have that figured out, you need to determine the number of people that have joined the business over the same past twelve months.
Number of employees who left of their own accord ÷ Average Total of Employees over the past year = Voluntary Turnover Rate
Calculating Involuntary Turnover Rate
To find the involuntary termination rate of your workplace, you have to find out the number of individuals that have left the business for involuntary reasons over the past 12 months.
Once you have that figured out, determine the average number of employees the business employed during the same period of time.
Number of employees involuntarily ÷ Average Total of Employees over the past year = Involuntary Turnover Rate
Determine the Total Impact of Resignations
Once you have those three key metrics calculated, determine the financial impact of resignations on key business metrics.
When employees leave an organization, remaining teams often find themselves without key skillsets or resources, negatively impacting everything from the quality of work and time-to-completion to bottom-line revenue. It’s very important to track how increased turnover correlates with changes in other relevant metrics in order to get a full picture of the costs of resignations.
Examining metrics like compensation, the time between promotions, size of pay increases, tenure, performance, and training opportunities can help to identify trends and blind spots within the business.
Employees can also be segmented into categories, such as function and location to better understand how retention rates and experiences in the workplace differ across employee demographic groups.
Undertaking a thorough data analysis will help leaders identify the likelihood of resignation as well as the ability to retain employees with targeted interventions through tailored retention programs.
Data-driven employee retention programs are necessary for business sustainability
When you can quantify the retention problem, leaders can get the internal buy-in that is necessary to address the problem. All while making informed decisions around what kind of retention programs would be most effective to solve the problem the business is facing.
Greater visibility into how serious a business’ turnover problem really is, and the root causes that drive it, will help empower leaders and managers to attract top talent, reduce turnover costs, and ultimately build a more engaged and effective workforce.