07 December 2021 #Employment
The 1920s were defined by the Great Depression, economic collapse, hunger marches and political instability. According to research by the World Economic Forum, the 2020s are likely to be defined as the period of ‘The Great Resignation’. This is a time when record numbers of people are quitting their jobs or planning to do so. In the US, 4.3 million employees handed in their resignations in August 2021 and in the UK evidence suggests one-quarter of employees are planning to resign over the next 3 to 6 months.
There are three key questions here:
What is causing the great resignation?
There appears to be multiple factors which have come together to fuel ‘The Great Resignation’. Perhaps the main one is Covid-19. The pandemic and lockdowns associated, have brought about a change in mindset amongst many people. For many it has highlighted the fragility of life and led to a fundamental reappraisal of what life is about. This has caused life to win out over work.
Others have experienced for the first time and over a sustained period, what it is like to skip the daily commute and work from home. The extra time created has been to some extent used to do more work, but also to spend more quality time with loved ones and family or to undertake hobbies or other activities.
Covid-19 has also caused many to prioritise their health and well-being before all else. This has accelerated an attitude shift towards health and well-being, which was already being seeded prior to the pandemic.
On the negative side, mental health had already become the number one cause of absence in many workplaces and there is evidence that burn out has increased, especially amongst employees in sectors which have been under extreme pressures due to Covid-19. Work intensification is unlikely to abate and unless Governments legislate to regulate it, which some - such as the Portuguese Government - have done, there will continue to be burn out amongst employees.
Added to this, there have been a number of ‘push factors’ causing people to leave their organisations. Their organisations have not adapted to these realities and have continued on with pre-covid, ‘business as usual’ attitudes, they have not provided the flexibility employees now want and, in many instances, employees have lost trust in their managers/leaders because of this. Depressed wages over the course of a decade or more may also be causing employees to take their promotions externally. A two-way decline in organisation-employee loyalty is also a factor causing the relationship between many employees and their organisations to be tenuous.
However, all of these factors alone would not drive ‘The Great Resignation’, if the economic situation provided few alternatives to staying put. The fact is that there are ‘pull factors’ as well, beckoning employees to an alternative. Many employers are utilising technology to enable employees to work remotely from home or elsewhere. In this sense there is a blurring of the local, national and even international labour markets.
There is the opportunity for people to pursue portfolio careers, working for themselves and/or several organisations at the same time and there is the growth of the ‘Gig Economy’ enabling individuals to commoditise their time and their wide array of talents. Perhaps, one of the most significant pull factors is the level of vacancies in many advanced economies, because of demographic changes.
Vacancies are at record high levels in the UK and over and above the factors impacting other economies, there is undoubtedly a Brexit factor in this, with over one million EU workers said to have left the UK since the EU referendum of 2016. It should be remembered that this tight labour market comes at a time of sluggish economic activity in many economies. It is difficult to imagine how great ‘The Great Resignation’ is likely to become if the global economy really takes off.
How long will ‘the great resignation’ last?
It is always dangerous to forecast the future, but the fact that ‘The Great Resignation’ is the product of the range of trends outlined above, suggests that as long as those trends endure, ‘The Great Resignation’ will endure too. It is likely, therefore, that organisations need to see themselves as being in this environment for the long haul, unless technological solutions provide alternatives to employing people.
What should employers be doing about this?
Firstly, start with awareness. Organisations need to be constantly looking outward and horizon scanning to understand the evolving environment around them. Next leaders need to conduct honest and robust assessments of how vulnerable their organisations are to ‘The Great Resignation’ and how well-placed they are to withstand it. Ultimately, this is about leaders and managers. Research has consistently shown that employees join organisations but leave bad leaders or managers.
Leaders need to fundamentally re-set their relationships with their employees, both in terms of their inter-personal relationships, but also, in terms of their policies, procedures, work practices and work cultures. As an employment lawyer, it might constitute heresy to state that there is a more important contract than the employment contract, but in the current context particularly, the ‘psychological contract’ as defined by Denise Rousseau, is just as important.
The ‘psychological contract’, which is based upon the expectations of employees and employers and whether these expectations are being met or not, determines the level to which an employee is emotionally invested in an organisation and the nature of the relationship between the employee and their organisation. Employers need to pay attention to this ‘psychological contract’ if they want employees to be engaged, provide discretionary effort, stay with the organisation and advocate for it. Of course, these ‘psychological contracts’ are determined not only by the inter-personal relationships between leaders and followers, but also by the policies, procedures and practices in place within organisations.
Developing great leaders and managers with high emotional intelligence, adopting progressive policies and practices and living strong values is likely to be the antidote to ‘The Great Resignation’ and those organisations which can deliver these solutions will thrive, whilst heaping more misery on those which cannot.
If leaders and managers need assistance with the implementation of any of these tips, they can contact our HR consultancy, Forbury People, or our employment law team at Clarkslegal.