Blog>Organizational Change>Understanding the Great Resignation

Understanding the Great Resignation

When the pandemic first hit stateside, the job market was characterized by mass firings and layoffs as businesses across the country were forced to shut down and downsize. Back then, being able to keep your job was largely considered a blessing, with unemployment numbers rising to new heights. And yet, barely a year later, the tables have drastically turned.

In April 2021, the number of Americans who quit their job in a single month reached the highest number recorded. That number has continued to climb, with the latest report declaring that September saw an all-time high of 4.4 million quits. In stark contrast to before, jobs are now desperately chasing workers as people leave in favor of higher pay, better conditions, or even a new direction entirely.

The Great Resignation

Coined by psychologist and professor Anthony Klotz, “The Great Resignation” is a phenomenon that has seemingly affected employees of all kinds, from minimum wage workers to CEOs. As the trend continues, though, more information is being revealed about who is most likely to call it quits. So far, studies have found that:

  • “Many front-line and low-wage workers are leaving at rates higher than historical norms” (Mercer).
  • The leisure and hospitality industry, “where office workers are few, working remotely seldom an option and wages low,” has seen the biggest increase in quit rates compared to other sectors (Bloomberg).
  • Mid-career employees, or those between 30 and 45 years old, have had the “greatest increase in resignation rates, with an average increase of more than 20% between 2020 and 2021” compared to other age groups (Harvard Business Review).
  • “More than half of Gen Z plan to pursue a new job within the next year—more than any other generation” (Fortune).

Considering how diverse these findings are, it’s not surprising that most economists agree there are multiple factors at play. While some people have chalked it up to early retirement, the reality is that the “quits” rate doesn’t include resignations by retirement. Ultimately, there’s no one single explanation for why so many are quitting. The phenomenon is layered and organizations wishing to combat this labor challenge need to understand each angle. Let’s break down what’s behind the Great Resignation.

Causes of the Great Resignation: Why is everyone quitting?

Because the big concern around workers quitting is that there are not enough people to fill jobs, a large part of the conversation around the Great Resignation has been focused on that gap.

For example, it’s been pointed out that many people have quit and refused to go back to work because of pandemic-induced challenges such as COVID-related health concerns or a lack of confidence in childcare options. Others were able to delay returning to work because of the financial cushion they grew through stimulus checks and unemployment benefits.

Ultimately, there’s no one single explanation for why so many are quitting.

But while these circumstances are certainly behind some workers’ refusal to reenter the workforce, they do not wholly explain why so many people have left their jobs in recent months, especially considering that COVID-19 concerns have receded slightly, schools have reopened, and the expanded unemployment benefits ended back in September—the same month that had the highest number of quits so far.

Instead, there have been additional factors that have contributed to this wave of resignations, some of which are societal shifts that may be here to stay.

Employees vs. employers: The shift in dynamics

Mass quitting is typically a sign of growing power among workers. When there aren’t enough people to fill positions, those in the workforce have greater bargaining power against employers. With so many job openings available, employees have more confidence in leaving workplaces that don’t meet their demands.

While this has occurred across industries, it’s been starkly seen in front-line, lower-wage sectors. From retail to hospitality, these are the workers that get the short end of the stick in terms of hours, wages, and benefits. The pandemic only exacerbated those conditions, with many workers either overworked or let go with no support from their employers.
Unsurprisingly, countless burnt-out workers were eager to leave these positions. That fact, combined with businesses opening back up, dramatically drove up demand for employees and shifted the power back to the workers. In response, employers had to improve conditions to attract team members, while companies who failed to do so saw their own employees leave for those better jobs.

Burnout gets real for everyone

Of course, lower-wage workers were far from the only ones experiencing burnout. Sectors that were in high demand due to the pandemic, such as healthcare, also saw increased levels of resignation rates due to increased workloads. In other industries, the transition to remote work ended up escalating burnout as the line between office and home blurred.

According to a survey of those who changed jobs in 2021, 40% cited burnout as the top reason for leaving, with more than a quarter (28%) so dissatisfied that they left without another job lined up. Without a doubt, the Great Resignation is partly being driven by workers who have reached their limit. For companies, this means that investing in your employees’ overall well-being has to be a top priority to stave off turnover and lost productivity.

Is the Great Resignation really the Great Awakening?

Finally, beyond job availability and burnout, there is also a cultural shift occurring that is driving some to quit.

Various conversations around the Great Resignation are centered around the idea that people’s attitudes toward work are changing, that people are reevaluating their priorities and quitting jobs in favor of paths that better fit their passions. Granted, this sort of “great awakening” is only possible for those who have the privilege to abandon their current path, but there is a truth to this sentiment that rounds out the phenomenon.

Researchers have found that quitting is often a direct response to big life events that trigger a reassessment of one’s life. Called “turnover shocks,” these moments usually occur sporadically, differing from individual to individual.

Quitting is often a direct response to big life events that trigger a reassessment of one’s life.

In contrast, the COVID-19 pandemic was a shock moment that affected the masses. Workers, as a collective, simultaneously began to reconsider their relationship with work, think deeper about what they truly cared about, and redefine their work-life boundaries. Employees are increasingly looking for work that accommodates life, not the other way around. As a result, waves of workers have been quitting in order to pursue paths that actually fit their priorities, in numbers that haven’t been typical in decades.

During the pandemic in which we were separated from the office, the soft social bonds that form as part of in-person work were removed as factors in choosing to remain at a workplace. Without the soft bonds supporting a feeling of belonging and comfort in stability and with social interaction reduced to endless Zoom meetings, workers have started asking questions such as “What am I doing?” and “Is this the way I want to live my life and are these the people I want to share the majority of my waking life with?” Essentially, the pandemic radically undermined the hold of the status quo with respect to work-related social bonds, and this opened the psychological space to seriously consider other options.

When it comes down to it, the Great Resignation is about workers not only exercising the power they have over their lives but realizing that the cost of doing so was lower than they previously thought. It’s about them feeling a sense of greater agency—empowered to quit and much more comfortable with the idea of quitting. The role that this awakened sense of agency and autonomy plays in these developments cannot be ignored by those seeking to retain or recruit employees.

Employees are increasingly looking for work that accommodates life, not the other way around.

The organizations that will succeed through the Great Resignation will be the ones that can effectively adapt to workers’ changing standards while also maintaining their own core values. They need to find ways to incorporate both concrete and psychological considerations that factor into employees’ selection of an organization with which they choose to share their time and gifts. In this context, organizational alignment will be needed to strengthen their internal brand and attract like-minded individuals who are given the power to own their responsibilities and make their own decisions.

With demand tipped in their favor, workers have bargaining power and, more importantly, they know their value. Transformation in employee acquisition and retention efforts is underway. The crux of that shift will not be about what is convenient for the company, but rather what will work for everyone involved.

___
Image courtesy of iStock

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top