The great resignation exploded in late 2020 because of the COVID-19 pandemic, resulting in workers leaving jobs and demanding better wages and environments. However, after two years of mass resignations and a flooded job market, the tide is shifting toward downsizing and hiring freezes. Only time will tell what the market and economy will do next. Prepare yourself with these tips.
The great resignation is a term that describes the increased rate at which workers in the U.S. have quit their jobs since late 2020. Also called “the Big Quit,” the great resignation is attributed to the effects of the COVID-19 pandemic. However, the tables have turned.
Could the great resignation lead to “the great reset?” should we prepare for a series of downsizing efforts across multiple industries? Here is what you can expect, plus tips to help you make the most of it.
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What is the Great Resignation?
The COVID-19 pandemic brought uncertainty to workplaces as people chose to hold onto their jobs for as long as possible amid mass shutdowns. However, following the rollout of stimulus checks and vaccines, people felt more empowered to leave their jobs and take their labor elsewhere. The result is the Great Resignation.
Over 47 million people in the U.S. left their jobs in 2021. Voluntary exits were driven by various personal circumstances, including finding a better job elsewhere, following up on a delayed planned departure, or choosing to start one’s own business. Other reasons workers gave for becoming part of the great resignation included:
- Over-Worked and Underpaid
- Lack of Advancement Opportunities
- Reevaluated Priorities
- Lack of Remote Work Opportunities
- Difficulty Obtaining Childcare Amidst Daycare and School Closures
Despite so many people choosing to leave their jobs, they weren’t just resigning for nothing. They’d quit leveraging their labor elsewhere to find a job that paid better and offered more benefits or flexibility. With unemployment low and the demand for labor high, companies began competing to provide incentives to job seekers. The strategy worked.
The Great Resignation Isn’t New
“While the COVID-19 pandemic certainly exacerbated the great resignation, it’s not a new phenomenon.”
Quit rates across the board have steadily increased since 2009. Five key factors significantly contribute to the exits, all of which have been amplified by the pandemic.
Especially when combined, each factor plays a part in the great resignation and worker behavior. Those factors generally include:
Due to the pandemic, older workers left their jobs at an accelerated rate, sometimes at younger ages than expected. Many chose to resign for their health and to reprioritize, spending more time with family and friends.
People have been moving to new states less often since the pandemic started. They’re more likely to relocate within their current areas, which doesn’t always force resignation. However, some sought remote work opportunities instead of searching for jobs nearby.
The weight of the pandemic led people to reconsider their priority list and where work fits best. This perspective change motivated much of the great resignation. Burnout is also a primary cause, especially in industries requiring direct interactions with the public.
Reshuffling is seen a lot in lower-wage industries, like food service. Those working at these lower-paying jobs are looking to bring their labor elsewhere, preferably for more pay. This has led big companies like McDonald’s and Walmart to increase their hourly wages to attract and retain more employees.
Some employees feel reluctant about returning to the office after working remotely. This led many workers to demand hybrid or continuous remote work options. When their upgraded list of needs isn’t met, they often quit.
Impact of the Great Resignation
“The great resignation resulted in mass worker shortages across all industries, from gas stations to hospitals.”
Ultimately, it forced employers to reevaluate their organizational structure to better face higher turnovers and the stress of acquiring new talent.
From white to blue-collar, big corporations to small businesses, no industry was safe from the effects of the great resignation. While some were undoubtedly hit harder than others, the most affected sectors included:
In the tech industry, the high turnover can be closely attributed to burnout. Transitioning from the office to remote work was overwhelming and stressful for some. It also led to uncertainty. Many businesses have returned staff to the office while others migrated to hybrid or remained remote.
The fast-paced fintech sector has been a significant contributor to the great resignation. The fintech industry is innovative and cutting-edge, and working in the field can be exhilarating. However, the demands can also affect one’s mental health.
Companies that ignore their employees’ mental health risk higher employee turnover, resulting in lower productivity. In the war for talent, fintech leaders need to improve mental health resources and enhance working conditions to retain their employees.
The manufacturing industry is salary-sensitive and prone to labor movements. Workers always look for better opportunities and will change jobs for even the slightest wage increase.
The manufacturing industry also saw several COVID-19 outbreaks during the start of the pandemic, forcing factories to close. Low wages and the danger of being exposed to the virus motivated manufacturing workers to seek new employment. This resulted in significant labor shortages, which led to gaps in both national and global supply chains.
Seen as the first responders or frontline workers during the pandemic, those in the healthcare industry have experienced sizable burnout, resulting in workers choosing to quit. With mass hospitalizations, strict COVID-19 policies and procedures, long hours, and the general emotional weight of the job, healthcare workers haven’t had a break since early 2020.
Both small storefronts and larger chains like Walmart and Walgreens have had to cut down store hours and close or turn away business due to short staffing issues. A mix of fatigue, low wages, and poor benefits has led retail workers to seek new employment. Some business owners have even stepped away from their managerial duties to help staff the stores. This isn’t a sustainable business practice to retain the employees they have left.
How To Respond to the Great Resignation
In the wake of the great resignation, employers had to pull out all the stops to incentivize workers to stay and not seek other employment. It can cost a lot of time and money to replace employees, and it’s even more complicated when hundreds of other companies enter the search simultaneously.
“This means businesses must revamp their retention methods and consider offering new and improved perks based on employees’ desires.”
In response to the great resignation, many companies have amped up their hiring efforts or started to downsize. For those looking to retain employees amidst the quitting wave, these tactics may be helpful:
- Offer More Flexibility
- Reward Productivity
- Give More Employee Support Resources and Benefits
- Provide Growth Opportunities
#1. Offer More Flexibility
In a time of great uncertainty, flexibility is a must. Rigid 9-5 schedules in an office space aren’t the norm.
“Employees want more flexibility in the workplace, like a four-day work week and remote and hybrid options.”
It’s also important to consider the culture shift in the workforce and allow employees more time to balance their work and personal lives. For example, employees may need a more flexible schedule to accommodate childcare needs, appointments, and mental health days.
#2. Reward Productivity
With the workplace culture shift, the work-life balance is becoming most employees’ top priority.
“They want a flexible schedule that gives them more autonomy over their hours and when they work.”
By setting clear expectations and benchmark goals, employers can allow employees to work on their own terms while still being productive and accomplishing tasks.
#3. Give More Employee Support Resources and Benefits
“Employees need reasons to stay with your company if a better opportunity arises.”
Increasing wages and flexibility is one way to do this. Still, employees will often look for other perks and benefits when deciding. Offering mental health resources, gym memberships, time off, and more engagement opportunities will help beef up your benefits offerings.
#4. Provide Growth Opportunities
Most of your employees want to know how they can grow within the organization.
“Thus, the growth path should be as straightforward as possible.”
You can implement development programs for employees to ensure they’re continuously feeling challenged and improving their skills.
Making the possibilities exciting makes your employees feel valued. When they feel appreciated and assured regarding their place in the company, they’re less likely to look for new jobs. Better business operations can help slow the great resignation or stop the great reset.
What Is the Great Reset?
While the phenomenon of great resignation has been ongoing, we finally see a shift. Employees had the upper hand when the great resignation started taking shape. With increased bargaining power, employees who navigated the job market had employers at their will. They were able to make demands for higher pay and more flexibility in the workplace.
However, instead of companies working hard to increase hiring efforts and provide more incentives, they’ve shifted to making cuts and downsizing in a phenomenon called the “great reset.” Several large tech companies, like Cameo and Robinhood, have recently announced reductions in their workforce.
At the start of the pandemic, tech startups laid off employees in response to the pandemic’s shock and the uncertainty of how it would impact business. Now, companies are making cuts due to a lack of discipline. Organizations that overspent during the market boom now must reorganize their finances and general structure. In most cases, the best solution is making labor cuts and downsizing.
Incessant inflation and fear of recession have also led to the great reset. Companies that grew too quickly and tech giants like PayPal, Meta, and Tesla are not only laying off employees but also entering a hiring freeze. This is in direct contrast to the great resignation, which saw a flooded job market as companies frantically tried to recruit workers. However, those opportunities are slowly disappearing.
Is the Great Resignation Over?
This begs the question, is the great resignation over? Amid high inflation, the rate of people leaving their jobs has begun to slow down, though it’s still present in some industries. It’s more likely that the great resignation is evolving rather than altogether ending.
Instead of increased resignations, downsizing has emerged as the primary issue. On top of that, the “great regret” — a term used to describe the regret employees and employers feel following hasty resignation and hiring decisions — is also beginning to emerge as a concern.
With the significant amount of anxiety in the labor market and the uncertainties both employers and employees face, only time will tell whether the great resignation has ended. As the economy and job market continue to drastically ebb and flow, employers and employees must stay on top of the trends to pivot as needed.
The great resignation describes the increased rate workers in the U.S. quit their jobs since late 2020. It is attributed to the effects of the COVID-19 pandemic. However, the tables have turned, and the great resignation leads to “the great reset,” a series of downsizing efforts across multiple industries.
Only time will tell whether the great resignation has ended and what’s next for the market. As the economy and job market continue to experience drastic ups and downs, employers and employees stay on top of the trends to ensure they’re positioned for success.