Last November 4.5 million American workers voluntarily quit their job according to the Bureau of Labor Statistics. That accounts for approximately 3% of all U.S. workers and is an all-time high in resignation rates. Amidst the Covid-19 pandemic, the U.S. has experienced an unprecedented trend in labor that has been coined the Great Resignation.
Organizations across all industries are struggling to combat high turnover and the effects it has on their workforce and bottom line. It’s important for business leaders to understand these trends and identify their possible origins so they can take steps to mitigate the effects of the Great Resignation on their business.
Why are people leaving?
There are countless reasons why someone might put in their two weeks but the Great Resignation appears to be focused predominately around a few key pandemic trends.
Over the last few months, national hiring rates have been consistently higher than quitting rates which means that workers are seeing and hearing about new opportunities that may be more enticing than their current situation. That means they are not only more likely to ambitiously seek an increase in salary or benefits but they are also less likely to put up with unhealthy working conditions, a bad work-life balance, or poor management.
Remote work opportunities have also shifted how people evaluate compensation and benefits. Outside of the wariness of contracting Covid, many Americans value the flexible lifestyle of fully or partially remote work as a major driver when considering a new job. Some of the most common reasons include:
- Caring for young children or home-bound family members.
- Managing physical and mental health with more control over sleep, exercise, diet, lighting, seating, etc.
- Living closer to family and friends instead of moving for a new job.
- Improving productivity without office distractions.
- Reducing stress without the commute and the social pressures of navigating workplace personalities.
Perhaps most unique to the pandemic has been a cultural identity crisis in Americans who have begun evaluating their routine and thinking critically about what is important to them in their lives and careers. Regardless of the conclusions they draw, it is apparent by looking at the sectors most affected by job vacancies – retail, food service, and accommodation – that career satisfaction, work-life balance, and a feeling of importance either to a company or community are more important to workers than ever.
The Cost of High Turnover
As humans, we likely empathize with many of the reasons why employees are making these changes but as business leaders, these sudden, voluntary resignations are not only costly but infectious.
The cost of replacing an individual employee can conservatively range anywhere between one-half to two times the employee’s annual salary. (source: gallup) Consider that not only will your company be covering for or missing out on the work that the employee is no longer doing, but there are also the costs of recruiting, hiring, and training someone to fill that position.
More than that, businesses are looking at one of the most favorable job markets for workers in modern history with average wages jumping over 4.2% in 2021 – more than any other time in the last 20 years – (source: apnews) as job seekers know that companies are willing to pay out to fill the over 10 million positions that are currently unfilled.
Of course, there are many more problems high turnover can inflict other than just the hard costs. Losing prominent consumer-facing positions such as sales, support, or professional services can result in lapses in communication between your company and your clients, partners, and customers. Depending on the nature of their departure, your brand image itself can even be damaged as word of mouth spreads about the reasons your employee left.
And then there is the morale problem. Losing your best people means losing the winners, innovators, problem solvers, and workhorses of your business. These are not just the warriors that drive success in the bottom line, they are also the ones that leaders and new hires alike go to for assistance, feedback, and advice. When one of your best and brightest leaves for greener pastures, it is not uncommon to see aftershocks in the coming months as those they worked closest with are forced to deal with the new gap.
Tips for Increasing Retention
The honest truth is that you can’t completely eliminate turnover. It’s a reality of doing business but that doesn’t mean there is nothing you can do to reduce how often you have to deal with an unexpected resignation letter.
It’s a worker’s market and Americans know it. It’s not enough for recruiters to SAY that workers are valued, respected, and safe. The responsibility is on the company and its leaders to SHOW employees that they are a priority through the compensation, benefits, communication, resources, and technology that they provide.
At the end of the day, the reason people work is to pay the bills. Obviously, workers will respond to increased compensation. But you can’t reasonably go around constantly increasing everyone’s pay, and even if you could, you’d still likely see some people leave. Here are three of the most common improvements that have proven to reduce turnover for companies:
1. Increase Flexibility
As we examined earlier, employees strongly value autonomy and flexibility in their work. Remote work has been shown to not only increase employee satisfaction and retention, but 77% of those who work from home at least a few times per month, reported increased productivity. (source: SHRM) While not all positions can facilitate remote environments, consider how you can offer employees more autonomy and flexibility when it comes to their schedules, workspaces, breaks, perks, and more.
2. Implement Automation Solutions
Think of the everyday responsibilities that your team has to do that are particularly boring and time-consuming. These are the kind of tasks that cause employees to question their employment with your company. No one wants to spend half their day thanklessly filing documents or manually transferring data from paper into a spreadsheet or form.
Employees value the ability to perform impactful work that makes use of their education and experience, which is why tedious manual tasks can often drive them to seek new employment. That’s where digital solutions come into play. Software like document management, automatic data capture, and workflow automation can be a massive help to employee retention by streamlining the dull but necessary tasks, freeing up time to work on more impactful projects.
3. Make Time for Professional Development
At nearly every level of employment, workers want to know that their time isn’t being wasted or taken for granted. They often have thoughts, questions, or concerns about how their role is affecting their resume and their ability to advance.
One of the absolute best things your organization can do is train managers to have frequent, proactive discussions with employees about their career path and to sponsor opportunities for professional development in the form of webinars, tutorials, and continuing education units. Even if you can’t offer them the same level of compensation as a competitor, an employee may be willing to stick with your company longer if they see you consistently investing in their growth.
A Silver Lining
As an employer, it can be difficult to read something like this and be faced with all the areas your company can improve. However, there is also a benefit to the Great Resignation that savvy companies are already taking advantage of.
Although the job market currently favors job seekers, there are more individuals looking for jobs than ever before. If you are hiring for remote or even partially-remote positions your hiring pool is expanded even further as you attract candidates from other locales. And it's not just college grads who are looking. The ambitious, hardworking difference-makers out there are more empowered than ever to make a change and bring their talent to a competitor. If you are willing to put in the work to build an employee-friendly infrastructure, your company could be the one to attract the best and brightest, instead of losing them.
Where to Start
Examine the strengths and weaknesses of your company from an employee’s perspective and then host some internal dialogue about ways that the strengths can be highlighted and the weaknesses can be remedied. The job market will likely equalize in the coming years, but your ability to attract and preserve talent during this crucible will dictate the success of your company for much longer.
While we can’t help you with everything, DocuPhase is a leader in business automation technology that can help you accelerate your tedious manual tasks and empower your remote employees. If you are ready to be a driver of innovation for your organization, set up a meeting with one of our automation experts or download our guide to Starting Your Digital Transformation.