According to the United States Bureau of Labor Statistics, there were 4 million Americans quitting jobs in July 2021- and it doesn’t seem to be slowing down any time soon. How are employers supposed to retain their employees in the face of great resignation?
The Great Resignation is a term coined by a professor, Anthony Klotz, at Texas A&M University that describes the record numbers of people who decided to leave their jobs following the pandemic and return to "normal" life. One thing is for sure, the great resignation is here, and it's real.
The pandemic caused many employees to take a step back and re-evaluate their careers and then exit in record numbers. This has left a ripple effect for managers to learn to navigate through. The best way to address the root cause of this phenomenon is to understand it better.
Researchers have discovered that there are two trends related to the great resignation.
We will take a closer look at these two trends below:
A closer look at the great resignation revealed that resignation rates were highest among those employees between the ages of 30 to 45. The average increase in resignations between 2020 to 2021 was around 20%.
Typically, the turnover rate is highest among the younger employees, but this research indicated that the resignation rates in the 20 to 25 age group decreased. This was due to increased uncertainty regarding finances and the decreased demand for entry-level workers.
Additionally, the research revealed that resignation rates also decreased for employees in the 60 to 70 age group. There was a slight increase in resignation rates among employees in the 25 to 30 age group and the 45+ age group in 2021 compared to 2020. However, this increase was not nearly as significant as the increase in resignation rates of employees in the 30 to 45 age group.
Perhaps the shift to remote work led employers to believe that hiring entry-level workers with little to no experience would be a greater risk since they would not access in-person training/guidance. This resulted in a greater demand for the mid-career employees, which increased their leverage in obtaining new positions.
Second, perhaps these mid-career employees delayed resigning from their positions due to uncertainty caused by the pandemic. This means that perhaps this mass exodus by these employees was due to over a year's worth of delayed resignations.
Finally, perhaps because after months of increased workloads/responsibilities, hiring freezes, and other demands, these employees finally reached their breaking point. This led to them giving serious thought to their overall work and life goals.
Another interesting fact that was found by the research was that there was a significant difference in turnover rates in various fields. In industries such as finance and manufacturing, there was a minor decrease in resignations. On the other hand, resignations in the healthcare field increased by 3.6%, and in the tech field, resignations increased by 4.5%.
Overall, it was found that resignation rates were highest in those fields with increased demand due to the pandemic. It is believed that this increased demand led to increased workloads- which ultimately led to burnout and more Americans quitting jobs.
By looking at these trends, it's clear that employers must implement a data-driven approach to improve employee retention. This will help them determine how many of their employees are quitting and a few other factors, including which employees are high-risk when it comes to turnover, why employees are leaving, and what they can do to prevent it.
Of course, the details will be different from one company to the next, but three basic steps can help employers leverage this data to improve employee retention.
The first step in determining what is causing turnover within a company is to quantify the scope and impact of the problem. You can use the following formula to calculate your turnover rate: # of separations per year ÷ total number of employees = turnover rate.
You can use a similar formula to determine how much of this turnover rate is due to resignations versus how much is due to firings or layoffs. This will give you the information you need to determine the cause of your retention problem.
The next thing you must do is figure out how these resignations affect your key business metrics. When employees resign from a position, the remaining team members are often left without key skillsets. This could have a negative impact on everything, from the time it takes to complete a project to the quality of work provided to your bottom line. You must take the time to see how an increase in turnover rates can change these metrics. This will help you get a big picture of what these resignations are costing you.
Now that you've determined the scope of the retention issue, you'll want to look closer to find out why your staff is leaving. You must ask yourself what factors are driving the increase in resignations- and you must be willing, to be honest with yourself.
Several metrics must be explored, including compensation, training opportunities, the time between promotions, size of raises, performance evaluations, and more. These will help you find any trends and blind spots within your company.
You may also wish to separate employees based on demographics such as function, location, and others to better grasp how retention rates vary across the various employee populations.
By taking the time to evaluate this information, you can determine which of your employees are most likely to resign and which of those employees can be retained by making changes in those factors that are causing them to resign.
Once you know more about which employees are leaving- and why they are leaving- you can create programs that correct the issues your company struggles with most.
For example, if you find that people of color are leaving at higher rates than their white peers, you might wish to implement an approach that focuses on diversity, equity, and inclusion.
On the other hand, if you find that people are leaving because there are few to no opportunities for advancement and promotion within the company, you might wish to evaluate your policies regarding advancement/promotion and adjust them as necessary.
This evaluation may reveal that you can't make these data-driven decisions due to a lack of useful data infrastructure. If this is the case, you may need to invest in a system to track and analyze these metrics that is organized and user-friendly.
You need to understand that it's not always easy to adopt a truly data-driven retention strategy, and however, it's worth spending the time and effort in the current market. Once you build and implement a targeted retention campaign, you should see your resignation rates decrease.
After all, when you're informed on the severe nature of your turnover rate and what is driving resignations, you'll have the information you need to invite top talent to your company, decrease the cost of turnover, and build a team that is more engaged and effective.
Consider working with Advantis Global, Advantis Government Solutions, and AG Studios to find candidates with the appropriate experience you need for your company, as well as candidates with long retention rates. Adding team members that are excited to work with your brand will help be proactive about the great resignation within your company.