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What’s driving the great resignation?

What is the biggest challenge facing businesses right now?

When Professor Lynda Gratton put this question to 150 executives from 23 companies in the U.S., Asia, and Europe in late 2021, their answer was clear. The overwhelming response was ‘retaining people’, closely followed by ‘recruiting people’. Today, the evidence suggests they were right to think so. As the labour market continues to recover from the disruption of the Covid-19 pandemic, resignations are rolling in at record rates. Data released by the UK’s Labour Force Survey in November 2021 showed that, of the 1.02 million people who moved jobs between July and September 2021, 391,000 of them had resigned – the highest spike ever recorded by the LFS. Across the pond the picture is much the same, with 4.5 million Americans quitting their jobs in November 2021 alone, up from 4.2 million in October and 4.4 million in September. As numbers continue to soar, many are calling this period ‘the great resignation’. But what’s really fuelling it? And crucially, what can business leaders do to retain their staff in an increasingly competitive and volatile market?

Why is this happening now?

In part, there is a very practical reason for the spike in resignations. As economies and businesses around the world continue to recover from the pandemic, many organisations are hiring again. A rush of new jobs is strengthening the labour market and offering workers an abundance of choice. With so many options, workers are less likely to stay in a role they’re dissatisfied with. But can this alone account for such a huge number of resignations?

Professor Dan Cable, Professor of Organisational Behaviour at London Business School, believes that we shouldn’t be too quick to rule out more personal reasons. He has suggested that the most confronting aspects of the pandemic have spurred a phase of post-traumatic growth. “Normally, people are very keen to forget about their own impermanence. For obvious reasons, the pandemic has made that impossible. We have been confronted with the reality of our mortality.” This has forced people to think deeply about what they really want from life – including their careers. “Thinking about death is scary, but it’s also extremely clarifying. People are asking themselves what their real values are. Why, when our time is so finite, would anyone want to spend their days doing something that doesn’t align with those values?”

On the other hand, Professor Gratton points out that, the pandemic’s tragic death rate notwithstanding, people are actually living longer, which is also having an impact of our relationship with work. “When we live longer, we focus more on health, so we value healthy work and building resilience”, she explains. “Rather than experiencing their life journey in those three traditional phases of education, work and retirement, people are starting to see life as a multi-stage voyage. They are hungry for the flexibility to mix and match the stages.”

Professor Gratton believes that this new outlook has encouraged many of us to reconsider what makes a ‘good’ job. What’s more, many families now live off two incomes and are therefore able to withstand the risks of one person moving jobs – meaning a ‘job for life’ is suddenly far less important.

The great reprioritisation

Even before the pandemic, Professor Gratton was seeing the effects of these shifts in thinking. “The power pendulum has been, subtly but perceptibly, swinging toward employees. They no longer want to just work and then retire. They are starting to reject bad jobs and they are paying close attention to what other companies are offering their workforces.” Overall, she claims, “the average employee is operating with a higher sense of personal agency.”

Wanting to understand more about how workers were feeling about work in the post-pandemic word, Professor Cable teamed up with behaviour scientist and award-winning researcher Francesca Gino on a study of 300 professionals. The main takeaway? “Many people are feeling apprehensive about the future. As many 82% of people we surveyed indicated they’re anxious about returning to work.” Professor Cable says this anxiety fuelled not just by health concerns – pre-existing conditions or fluctuating case numbers – but a fear that bosses will forget the lessons of remote working. “For many, the pandemic gave us the chance to identify new ways of working and discover how we perform best. Rushing back to what work looked like before Covid-19 without reflecting on what we learned and how work could be different produces much anxiety.”

This anxiety could be of serious consequence to not just employees’ overall wellbeing but their willingness to stay on in a role. “In a second survey, we found that re-entry anxiety decreases employees’ work engagement, while increasing their intentions to quit”, Professor Cable explains. “In other words, leaders will pay the price if they ignore their workers’ anxiety.”

Professor Gratton feels there is “no doubt that the waves of people quitting or looking for different work comes in part because many have a cushion of savings; those who were able to work during the lockdowns had fewer experiences to spend money on.” That said, she doesn’t believe the reasons for these short-term causes alone can account for the rise in resignations. “It seems to be the case that, as a result of the long-standing changes we’ve discussed, many people used the lockdowns as an opportunity to revaluate their life and work choices. They unlearned some old ways of working and began to build new habits - like spending more time with their families, serving their communities, and avoiding the daily commute.”

Essentially, while short-term circumstances have made it easier for many workers to leave their job, the issues motivating that choice have been brewing for much longer.
What should business leaders be doing to retain staff?

Adopt a listening mindset

Professor Cable believes adopting the right mindset will make all the difference. “Let’s face it, leaders are used to doing a lot of talking. But this isn’t a situation that can be solved by top-down thinking.” In order to retain existing staff and attract new talent, leaders should be offering a personalised approach to working practices, based off individual preferences. “There’s no one right answer”, he explains, “but bosses who are willing to adopt a listening mindset and actually celebrate the lessons learned during the pandemic will find they gain the respect of their staff.”

Professor Gratton believes there are three things leaders can do to weather the storm of the great resignation:

1. Expect wanting a healthy and multi-stage way of working to be at the top of employees’ agendas. The thing many people most treasure right now is flexibility. Flexibility about both where they work and when they work, flexibility to take time off to explore, flexibility to launch a small company or work for a not-for-profit.

2. Understand that is the beginning of the end for bad jobs. When unemployment is high people are often forced to settle for jobs with unsociable hours, low pay, no training and poor prospects. Right now, this isn’t the case. Talent is in high demand across many industries, meaning workers can enjoy more choice. If you’re not willing to make someone a quality offer, the chances are you’ll lose them to someone who is.

3. Keep an eye on what competitors are offering.
Right now, we’re living through a period of huge experimentation. On one hand, many of the strategies we’re seeing businesses test right now could ultimately end up being reversed. On the other, if an industry leader adopts certain practices - particularly around flexibility - employees will be asking why their own companies are not adopting these opportunities. It will be critical to keep abreast of these experiments as they emerge and to consider which practices will help your organisation stand out.

Useful resources:
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