Introduction
The phenomenon of employee resignation and retention can have both positive and negative impacts on a company’s productivity and competitiveness. In recent times, the United States has witnessed an unprecedented wave of employee resignations known as the “Great Resignation” due to pandemic-related burnout and dissatisfaction. This blog explores the causes, effects, and industries most affected by this trend, while also examining its advantages and disadvantages. Solutions for companies to retain employees and the importance of 21st-century skills are also discussed, as well as the future of work. So, let’s dive in and explore the two sides of the same coin – employee resignation and retention.
What is the Great Resignation?
The high rate of resignations among American workers that began in the spring of 2021, when there was a high demand for labor and a low unemployment rate, even as vaccinations lessened the severity of the COVID-19 pandemic, is referred to as “The Great Resignation“.
The phrase was first used in May 2021 by Anthony Klotz, a professor of business administration at Texas A&M University. He attributed the phenomenon to pent-up demand among workers who put off making early retirement decisions during the pandemic.
Did you know?
In April 2021, 4 million Americans left their jobs, the highest number in 20 years.
Source: US Bureau of Labor Statistics.
Background of Great Resignation
The U.S. resignation rate stayed at most 2.4% of the total monthly workforce between December 2000, when the United States Department of Labor began tracking resignation rates, and February 2021, roughly a year after the COVID-19 pandemic started. High quit rates indicate that employees believe they can land better-paying jobs, which typically coexist with high economic stability and low unemployment rates.
On the other hand, during high unemployment, the pace of resignations and hiring tends to decline. During the pandemic, resignation rates in the U.S. initially exhibited this pattern. A record 13.0 and 9.3 million employees (8.6% and 7.2%) were laid off in March and April 2020, respectively. As a result, the quit rate decreased to a seven-year low of 1.6%. Women, who work disproportionately in the sectors most negatively impacted by the lockdowns, such as the service and childcare sectors, were primarily responsible for the layoffs and resignations. However, despite initially having a high unemployment rate, workers started to leave their jobs in large numbers as the pandemic progressed.
Reasons behind the Great Resignation
The reason behind the Great Resignation cannot be explained in a generalized way. In reality, a variety of factors have influenced this phenomenon. These elements are covered in the following segment:
COVID-19
One of the main causes of the “Great Resignation” was the pandemic. Employees felt safe at work during the pandemic and opted not to quit due to the uncertainty surrounding their financial future. However, during the recovery from the pandemic in 2021, they felt empowered to resign and look for better opportunities. The “Great Resignation” was primarily a result of the COVID-19 pandemic.
Burnout
It is one of the leading causes, with many workers feeling overworked and exhausted due to long hours and high expectations. Many people struggled to balance their personal and professional lives while working from home during the pandemic, which has just come to an end.
By profession, burnout varies. For instance, veterinary technicians and respiratory therapists may go through more trauma than office workers. But fatigue, cynicism, and a sense of inefficiency are regular signs of burnout.
Lack of job satisfaction
This is another factor in the Great Resignation. Many employees have realized that their current positions do not support their goals or values, which has led them to look for new posts. Employees may also feel undervalued or underpaid, prompting them to search for better-paying or more satisfying jobs.
The Lack of Required Organizational Support
Many employees need help to get the support they need from their employers, which results in job dissatisfaction and resignation. For instance, many employees have struggled to find a work-life balance, access quality employee assistance programs, or engage in social networking and virtual interactions.
Employee-driven labor market
The “Great Resignation” was also influenced by the current employee-driven labor market. Employees have a lot of job options thanks to the competitive labor market, which also lowers the cost of leaving. Many workers left because they believed they could find a job with better pay, benefits, flexibility, workplace safety, and management.
Shift in priorities
Finally, the pandemic has caused many people to reevaluate their priorities, with some deciding to put their health and well-being ahead of their careers. This shift has prompted some people to look for new jobs or careers that provide more flexibility, work-life balance, or remote work options. Despite the complexity of the Great Resignation phenomenon overall, it is evident that many people are looking for new opportunities and a better work-life balance.
Did you know?
Burnout is a major factor in the Great Resignation. A survey of 1,000 US workers found that 38% of them felt burned out, and 25% said they were thinking about leaving their jobs because of burnout.
Source: Achievers’ 2021 Engagement and Retention Report
Consequences of the Great Resignation
The following are some possible effects of the Great Resignation:
- Tighter labor market: Increased employee turnover could make the labor market more competitive, especially in sectors where there is already a talent shortage.
- Rising talent competition: As employees leave their current employers, they might be more in demand by other businesses, which would increase competition for top talent and possibly result in higher salaries.
- Cost of turnover: Businesses will have to spend more money on recruiting and training new employees to fill positions left vacant by departing employees.
- Changes in company culture: Company culture adjustments may be necessary in light of the high employee turnover rate in order to attract and keep talent.
- Change in job priorities: The pandemic has led many employees to reassess their goals and expectations for their jobs. Companies may therefore need to adjust to these shifting priorities in order to avoid losing even more workers.
Did you know?
According to a Microsoft survey, 41% of workers worldwide plan to leave their current employer this year.
Source: Microsoft’s 2021 Work Trend Index
Most affected industries
The Great Resignation took a toll on many industries, some sectors most impacted by the Great Resignation include but are not limited to
Retail
The pandemic has had a particularly negative impact on this industry, and many workers are now rethinking their career paths. Over 50% of retail employees, according to a recent National Retail Federation survey, are thinking about quitting their jobs.
According to a Bloomberg report, employers like Amazon, Walmart, and Target are having trouble keeping employees on board because of the increased competition for talent and workers’ desire for better pay and benefits.
Technology
According to a recent survey by the employment website Hired, 36% of tech workers are thinking about leaving their current positions. Many of these workers cite burnout, a lack of work-life balance, and a desire for better pay and benefits.
Many tech workers are reconsidering their work-life balance and looking at job opportunities outside of Silicon Valley as a result of the shift to remote work.
Hospitality
Due to the pandemic’s severe effects, many workers are now looking for more secure employment with better pay.
Health Care
Because they have been working so hard on the front lines of the pandemic, many healthcare professionals are now feeling burned out and looking for a better work-life balance.
According to a report by Becker’s Hospital Review, more than 45% of healthcare workers are thinking about quitting their jobs, with many citing burnout and a lack of management support.
Advantages and Disadvantages of the Great Resignation
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Advantages |
Disadvantages |
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Gives workers the chance to pursue their own objectives or better career opportunities. |
Can result in labor shortages and higher costs for businesses, particularly in sectors where there is already a talent shortage. |
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Increases the need for workers, which could result in better pay and benefits. |
Can impede workflow and delay projects, particularly if workers depart without giving enough notice. |
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Forces businesses to review their cultures and make adjustments in order to retain their staff. |
As experienced employees depart, there could be a loss of institutional knowledge and expertise. |
Solutions for companies to retain employees during the Great Resignation
- Provision of pay and benefits: Businesses can entice and hold onto staff by providing competitive wages, insurance plans, and other perks. This covers benefits like health insurance, pension plans, paid time off, and flexible work schedules.
- Prioritize employee well-being: Employers can promote employee well-being by providing resources for mental health, wellness initiatives, and chances for personal and professional advancement.
- Create a welcoming workplace: By encouraging a sense of community and engagement, a welcoming workplace environment can increase employee retention. This can involve fostering a welcoming and inclusive work environment, honoring and rewarding employee success, and encouraging work-life balance, among other things.
- Clear career paths to follow: If employees perceive a clear path for career advancement, they are more likely to stay with a company. To assist employees in developing their skills and advancing their careers, businesses can provide training, mentoring, and development opportunities.
- Improve communication: Regular and open communication can increase employee engagement and trust. Companies can share their values, objectives, and future plans with their employees while also giving them the chance to give feedback and contribute ideas.
Here is an overview of The Blake Mouton Managerial Grid to help you understand the management in a better way. It describes the managerial approach that will work best for both employers and employees.
Importance of 21st-century skills in this regard
In the context of the Great Resignation, 21st-century skills are crucial because they aid employees in adjusting to the changing nature of work and help them acquire the skills needed to succeed in a job market that is rapidly changing. The following are some applications of 21st-century skills:
- Creativity: In today’s job market, especially in fields like technology and marketing, the capacity to think creatively and develop novel solutions is highly valued.
- Communication: Strong verbal and written communication abilities are necessary for successful teamwork and collaboration, especially in remote work environments.
- Critical thinking: To succeed in the workplace of the twenty-first century, workers must be able to critically evaluate and interpret complex information, make wise decisions, and come up with innovative solutions to problems.
- Adaptability: In the context of the Great Resignation, being able to adapt to new circumstances and technologies is essential because workers are likely to face new opportunities and challenges as they switch jobs or industries.
- Digital literacy: As remote work spreads, it’s more crucial than ever to be proficient with video conferencing software, collaboration tools, and cloud-based platforms.
Did you know?
The U.S. quit rate dropped from 2.0% to 1.3% during the Great Recession, while the hire rate dropped from 3.7% to 2.8%.
What’s next for the future of work?
`Future work is anticipated to continue being done remotely, utilize more automation and artificial intelligence, place a greater emphasis on employee wellbeing, diversity, equity, and inclusion, and move in the direction of sustainability.
The need for adaptability, creativity and a dedication to social responsibility in the workplace are reflected in these trends. As a result, businesses may need to change and evolve to meet the demands of this shifting environment, and employees may need to acquire the skills required to succeed in the new workplace.
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Companies that allowed work from home |
Companies that did not allow work from home |
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Amazon |
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Goldman Sachs |
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JPMorgan Chase |
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Microsoft |
Morgan Stanley |
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Apple |
Wells Fargo |
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Salesforce |
BlackRock |
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Uber |
ExxonMobil |
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Lyft |
General Electric |
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Airbnb |
Chevron |
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Zoom |
IBM |
Final thoughts
This occurred for a number of reasons, including burnout, a desire for a better work-life balance, or a reevaluation of one’s career objectives. There were benefits and drawbacks to the trend. Although employees had more negotiating power to secure better pay and working conditions, this made it challenging for employers to attract and keep talent.
Companies tried to improve and make their workplace more flexible in response to the Great Resignation. They were aware that the future of work might involve more technology and working from home. The Great Resignation made clear that times were changing and that businesses needed to adapt as well.