Turnover is sweeping organizations at every level
Gallagher's Engagement Survey Consulting team looked at factors associated with an employee's likelihood of remaining in a job, including loyalty (defined as "not seriously considering looking for a new job"). The team then compared survey findings over three periods: March 2019 (pre-pandemic), March 2020 (pandemic) and March 2021 (pandemic transition). Loyalty spiked during the height of the pandemic when few employees felt comfortable making a move, and few opportunities existed. As employees began to feel optimistic and signs pointed to a strong recovery, loyalty fell sharply. Many employers were caught off guard by the erosion in employee loyalty, leading to record numbers of employees walking away from their jobs.
A Harris Poll for Fast Company found that 52% of U.S. workers considered a job change in 2021, and 44% had concrete plans to make a move. An August 2021 pulse poll conducted by PwC revealed that 65% of employees were looking for a job, and 88% of executives reported seeing higher than average turnover.1
This phenomenon has come to be known as The Great Resignation – a term coined by Texas A&M University management professor Anthony Klotz.
The emphasis on "resignation," however, distracts from the need to dig below the surface to understand what's driving resignations at the organizational level. Employees resign for different reasons. To retain a healthy workforce and re-build loyalty, employers must embrace change and make employees feel good about where they work. The right people strategy and technology can differentiate an employer and foster a "Great Reset."
Roots of The Great Resignation Lie in Wage Neglect
The labor market was poised for a reset before the emergence of the coronavirus, but COVID-19 tipped
the scales. We've observed a tendency to oversimplify and misinterpret some quit rate factors—notably extended unemployment payments and work values associated with younger generations. More complex reasons include a workforce system that for decades neglected wages and employee needs for work-life balance.
The last minimum wage increase came in 2009, marking the longest period in U.S. history without an increase. During this time, rising costs reduced Americans' purchasing power. Adjusting for inflation, minimum wage workers in 2021 earned 21% less than they did in 2009. While about half of the states and several cities have increased their minimum wage, as many as 26 states have passed laws prohibiting local governments from raising the minimum wage.2
Understanding what employee's value
Organizational size and employee generation grouping impact what workers value. Employers need to track and monitor employee engagement and identify the values most aligned with organizational loyalty and employee satisfaction. Numerous tools in the marketplace support this effort. Once employers understand what their employees value, organizations must be strategic about delivering on these values. Companies can address employee engagement through surveys, analytics, benchmarking, consultative guidance, reporting and action planning technology, and more.
Numerous studies cite the high number of workers who say they would consider changing jobs if forced to return to the office full-time. The pandemic proved that workers could be productive from home, minus lengthy and costly commutes, using the right supporting technology.
Employee expectations of their employers have expanded well beyond a paycheck. Employees seek a work environment that suits their personal needs and interests— whether that's working remotely, customizing the benefits package, finding an employer whose values match their own, and where the culture makes them happy. Employers hoping to retain their workforce must find ways to accommodate these expectations.
Leverage technology with people strategy to counter The Great Resignation
Many organizations view technology as a "what." These days leaders need to leverage it as the "how" to accomplish organizational goals. If an organization's goal is to gauge employee engagement on an ongoing basis, they should use an online engagement platform as the how. Sophisticated HR technologies that easily integrate with other tools can provide technology solutions that address multiple "whats." Such technology platforms can help operationalize leadership, culture, training, flexible benefits and other factors that support employee retention.
The world has changed, the workplace has changed and employees have changed. Organizations must change too. As your trusted advisor, Gallagher can help you respond to The Great Resignation and guide your organization to a Great Reset so you can face the future with confidence.
Learn more about Gallagher's HR Consulting team and HR Technology Consulting team, or Contact Us to connect directly with an expert.
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© 2021 Arthur J. Gallagher & Co.
1PwC US Pulse Survey: Next in work, pwc.com.2021. https://www.pwc.com/us/en/library/pulse-survey/future-of-work.html.
2Cooper, D. The Minimum Wage. 2021 Advocates' Guide. NLICH.org: National Low Income Housing Coalition, 2021. https://nlihc.org/sites/default/files/AG-2021/09-02_Minimum-Wage.pdf