Great Resignation – Lessons And What Next
Many C-suites and business commentators seem to believe that the Great Resignation is a short-term, post-Covid blip which will fizzle out as the global recession hits consumers.
However, this superficial analysis ignores the underlying drivers behind the Great Resignation, as well as sweeping changes globally in people’s attitudes towards what they want from their jobs and work-life balance together with the developing demographics of the global workforce.
We’re at an inflection point when it comes to how organisations move forward. The Great Resignation offers a window into why companies are failing as well as opportunities for those who learn its lessons to change, develop and improve performance.
Those that deal in denial will almost certainly waste these opportunities.
Organisations were put to the test by COVID, given its speed and depth of impact. Chronic pre-existing problems related to leadership, culture, empowerment, agility, and effective decision making were highlighted and exacerbated. These were long-standing issues which should have been properly addressed but never were
It also highlighted new possibilities to improve performance and wellbeing.
Hybrid working, for example, had never been fully utilised despite it having been a very real possibility for many organisations for years.
Only by acknowledging the truth that our experiences shape our views, which subsequently influence our behaviour in response to various circumstances can we hope to understand and learn from what we have been through.
Keeping this in mind helps make sense of what we are seeing now and what we need to do next.
The COVID Lessons
Everyone’s experience of COVID varied widely, depending at least in part on their proximity to the risk of infection. Based on this, McKinsey divided the working population into four distinct groups:
- 20% – continued to work – low risk roles, e.g. outdoor & construction
- 30% – furloughed / unemployed – e.g. hospitality and retail
- 30% – remote work – e.g., office-based staff
- 20% – essential workers – high risk but continued to work, e.g., healthcare and transport
Impact varied across different groups too.
The most affected were women, minority groups, younger adults and lower-paid workers. Those industries that essentially closed down during the pandemic had higher proportions of employees in these groups.
In terms of organisations there was a significant difference between different individual organisations and sectors. Some failed, some thrived. Few leaders are aware of the vast differences in events and outcomes. That’s because business leaders only know what happened where they were and do not have clear insights into what happened elsewhere.
The reality was that organisations which survived well if not thrived had a positive culture, trust, empowerment, and where leadership adapted more successfully. Their teams were able to work together more effectively and were more agile in reacting to the rapidly changing circumstances created by the pandemic.
COVID required executives to create the right environment for their organisation’s continued success set against unprecedented demands. They needed to step up their game, but many did not.
Speaking to many of these executives post-COVID about their experiences, I was struck by one consistent theme: “COVID showed us who the leaders really were in our organisation.”
There is often an assumption that almost everybody has ended up working remotely. But, in practice, remote working is not consistently applicable.
Overall, only 30% of workers were able to do so. Only 5% of those earning under £20k pa were able to remote compared to 95% of those earning £50k pa. Furthermore, 55% of jobs in London were “remotable”, whereas in northeast England, the figure was only 35%.
The experiences from pandemic-induced remote working teaches us valuable lessons about how to make hybrid working effective in the future.
What were they?
Simply that, if set up and implemented correctly, remote working works well. It delivers improvements in work performance over office-based work, especially in individual activities that require creativity or focused work.
It also enhanced wellbeing even during the pandemic, which itself negatively impacted wellbeing globally.
Within this the overall experience of remote working gives us an excellent roadmap to make hybrid working highly successful, if we learn the lessons.
One of those lessons is that, in cases where remote working was not set up effectively, the cause could be traced to insufficient support from leadership. Here’s how this impacted the results:
- 30% found difficulty adjusting to the remote environment.
- 30% felt lonely and disconnected from their organisation.
- 15% felt their mental health suffered.
These are leadership problems rather than technology issues.
Post COVID: Great Resignation and Causes
Why did the Great Resignation happen? Because we’re human.
As we know, our experiences create our perceptions. These then determine our behaviour in response to different situations.
All of us had come through two years of being locked in and locked down. We all saw serious illness on a scale that none of us had ever experienced. Some of us suffered personal tragedy.
It was brought home to each of us how precious and short life could be.
As a result, many of us reprioritised what was important in our lives. For most, this meant that the importance of work compared to the importance of family, free time, quality of life and wellbeing significantly dropped. It was probably the greatest reality check many of us have ever experienced.
It was those changed perceptions that raised the benchmarks by which we measured what we wanted and expected from work.
People are no longer prepared to tolerate poor leadership, excessive work hours, not being treated with respect, having our personal lives undervalued, not being able to grow and develop as a person or see a positive future ahead.
Pre-COVID, people tolerated these. Post-COVID, the world is different.
That feeling was so powerful that, as the world of work slowly re-opened, record numbers of employees (36%) left their current job without having a new role to go to, a resignation rate never seen before.
The Great “I’m Not Going Back”
The Great Resignation records people who returned to work when able and who then quit their jobs. But there were also a large number of people whose pre-pandemic work experience left them deciding not to return to work at all!
Many unemployed and furloughed workers had time to think about what mattered most to them in their work life and what they truly wanted. For many, their pre-COVID jobs didn’t make the grade.
Employee Engagement Drops
This is also confirmed by employee engagement scores; the percentage of people in an organisation who consistently give their best.
For 10 years, this percentage has been rising across the board. During COVID, it fell, perhaps unsurprisingly.
But the trend has continued post-pandemic. The most plausible reason is not that leaders have gotten worse since the return to work but rather that people now have higher expectations of them.
The evidence supports this; according to Gallup in the UK, employee engagement is now down at around 9%.
Take a moment to reflect on that. This means that only 9% of people on average in UK organisations are giving their best.
That’s worrying enough, but what about the other 91%?
Taking aggregate Gallup data from across Europe, potentially of these 70% are only “sometimes engaged” – which is not good – and about 20% are “disengaged” – which is a serious problem.
What does disengaged mean? It means this: disengaged people aren’t just apathetic to the organisation’s objectives, they are negatively impacting it. To counter the impact of one disengaged person on a team you need to have 4 people or more to prevent this.
The estimated impact of the disengaged is a potential loss of between £50-70bn a year.
Not only do they negatively impact others at work but they have the same impact at home with gallup funding 51% behaved badly towards friends of family as a result. Bringing Work Problems Home (gallup.com).
How good can things be if you get leadership right? WD40, the household chemicals manufacturer, led by long time CEO Garry Ridge has an engagement rate of 93%.
The Perfect Storm
When you combine the change in personal perceptions and priorities that COVID has caused, the significant number of jobs suddenly coming on to the market as businesses reopened, the ease of access to a new job literally anywhere in the world via the Internet and the high proportion of people who are prepared to leave jobs without another to go to it, you have the perfect storm; the Great Resignation.
Do Employers Understand Why People Left?
Why did people leave their jobs? Here are the reasons people gave:
- Uncaring leaders: 35%,
- Unsustainable workloads: 35%,
- Lack of advancement potential: 35%,
- Lack of meaningful work: 30%
Employers, however, believe the top reasons are different. They say that people left because they wanted better pay, were poached or had health concerns.
Note that none of these reasons attribute any blame to the employer. This demonstrates poor management of recording the cause of employee exits. They do not accurately reflect the reasons for departure.
All of this serves to demonstrate why organisations which do not try to understand the drivers behind The Great Resignation are at significant risk.
People Got Better Jobs
Again, digging into the details gives us lessons that we need to learn and which set out our road map for future action. CIPD data shows resignations were up 40% on pre-pandemic levels and that 36% of people left without a job to go to.
That implies there were a lot of people not doing anything. But the reality is they wanted, and often found, a better job.
47% of those who left one job without another to go to subsequently returned to work of some type.
Interestingly, only 21% of those returning to work took a similar role in the same or similar sector. A further 76% were able to get greater flexibility, higher salary or more reasonable workload expectations. In short, they found a better job.
Employers On Probation
Of those who have returned, 25% say they have put their employer on a six-month probation. If their expectations aren’t met, they will be ready to leave. This is clearly more of a reshuffle than a resignation.
But for organisations who don’t reach the leadership and other benchmarks that employees expect, the outcome could be much more dramatic. 64% of returners say they will leave if the job doesn’t meet their expectations.
The Hybrid Debate
Now that organisations have reopened, there is a debate about how hybrid working should be implemented. Some organisations are trying to minimise hybrid, some are trying to implement standardised approaches, e.g. “you need to come in three days a week”. Others are closing down offices and telling everybody to go home and work remotely.
This presents not only a confusing picture for organisations but an even more confusing one for employees on an issue that could impact their lives and wellbeing significantly. Clarity on how to optimise hybrid working is much needed.
What Is The Reality And The Perspective?
Attitudes on where people want to work are split approximately like this:
- 30% office
- 50% hybrid
- 20% home
As with all aggregate figures, the most interesting detail is under the surface.
For example, 69% of people who work in London want to work from home. However, that’s not because of a desire to avoid the office environment, it’s a desire to avoid the time and cost that it takes to commute (Reference Kings College London).
So what’s the potential for hybrid?
Largely, it is determined by the type of work. “Hands-on” practical roles do not translate well to remote work, if at all, while “information working” does.
So, in economies that are heavily service-led such as the United Kingdom and United States, hybrid has great potential. In economies that are centred around “hands-on” work such as India and China, the potential is lower.
Digging deeper, in the UK, 25% of employees could work remotely for 3 to 5 days of an average week and be no less effective in their job. Another 20% could do so for 1 to 2 days a week (Reference McKinsey).
This doesn’t take into account team or organisational needs so the remote work potential suggests who “could”, not necessarily “should”.
There are significant differences across sectors too. In finance and insurance, 70% of employees could work remotely but in construction, only 15% could.
There are also generational differences.
Amongst Gen Z’ers, 79% will not consider a job that isn’t hybrid whilst older adults are less concerned. Gen Z now make up 20% of the workforce and it is estimated that will be 40% by 2030. Soon, hybrid will have to become the norm.
Will A Recession Kill The Great Resignation?
Some believe a recession will make people “see sense” and there will be a return to a world where employees do what they were told, remote working doesn’t exist and people tolerate poor leadership regardless of the impact on their wellbeing, all because they do not want to lose their jobs.
That’s both delusional and morally corrupt.
The world has changed and there is no going back. Hybrid working, where possible, is now part of life and is likely to be more so in the future.
Most importantly, there are clear advantages – if implemented successfully and supported well by leaders; better performance, better wellbeing and a happier, healthier, more engaged workforce.
The drivers which created the Great Resignation; poor leadership, excessive workloads, not being valued and no clear growth plan at work, existed before COVID.
Even at its height, employee engagement pre-COVID was only 30% on a global average. As a result, many people would already have been considering a job change. COVID simply delayed action for two years.
This created a pent-up demand coupled with a globally changing perception of what people would accept in their work lives. When the dam burst, it created The Great Resignation.
Danger of leaving becoming “quiet quitting”
A recession could potentially mean that the volume of people changing jobs will drop. But that does not mean that the underlying drivers have been addressed. For those organisations that fail to recognise this and do something about it, there will still be more employee losses than necessary and it is highly likely that the best talent will be the first to go. But there is an even greater danger.
Assuming that departures are the critical measure is only half the picture. The most dangerous recession danger will be hidden, “quiet quitting”, in other words people not leaving but becoming less engaged. “Engaged”, as in employee engagement, effectively means people giving their best. A drop in engagement can potentially eat away at organisational performance un-noticed. The impact of “quiet quitting” will, in time, feed through into employee engagement data. But by the time its does the problem of reduced of engagement or even disengagement it will already be embedded.
Gallup data for UK indicates a reduction in overall engagement in 2022 indicating “quiet quitting” may already be building momentum.
Prevention is better than cure. The only effective answer to minimising both departures and “quiet quitting” is ensuring better leadership as soon as possible.
Optimising Our Response For The Future
Organisations need to decide how seriously they are going to address these drivers and how they are going to manage hybrid working. It makes commercial sense and optimises the benefits for the organisation, investors, employees, customers and, in a wider context, society to take action on this.
There are two simple steps to make this happen. One involves leadership across the organisation and the other focuses on those employees who are suitable for hybrid working.
- The reason – uncaring leadership or poor leadership is still a primary reason for departure, and potentially the less visible “quiet quitting”. It’s also a major reason for ineffective team performance. That’s because of 1) poor employee engagement, i.e. only 20% giving their best and 2) a lack of basic task management skills. For example, 70% of leaders have never been trained to delegate effectively.
- The action – These can be addressed quickly if C-suite champions implementation and leads by example:
- Create a “we not me” culture where everyone gives their best.
- Make up shortfalls in task management capability, leadership capability and develop entrepreneurial leadership for everyone.
- The benefits – This works. Recently, a residential construction company implemented these action points. The number of employees who said they would recommend the company to their friends or family as a great place to work (as good a measure as employees giving their best) rose from 40% to 82% in 2 years.
Any organisation that improves leadership in this way could see 30% more effort from 60% of their people. This potentially:
- Improves performance and customer service.
- Delivers faster change and transformation.
- Drives innovation.
- Develops disruptive thinking.
- Makes every employee a brand ambassador.
- Enables cost efficiencies.
- Embeds effective risk management at operational level.
It also potentially adds 10% onto the bottom line simply because people would genuinely care about the success of their team and the organisation as well as their own (Reference: Engage for Success).
Optimised Hybrid Where Applicable
Standardised approaches to hybrid, such as “you need to be in the office three days a week” are not sufficient to ensure the full benefits of hybrid are realised. Hybrid needs to be optimised:
- Overarching guidelines – which give people a feeling for how much time they should spend in the office or at home, e.g., one or two days a week in the office.
- Team and individual tailoring – to fine tune the guidelines, based on a simple assessment process for individuals and teams conducted by line managers to optimise what happens with each team member. Getting this right will minimise departures and “quiet quitting”.
These are the important factors to consider when tailoring:
- Individual – what do they want to do which fits their lifestyle and career? Different people doing exactly the same job will have different needs in terms of the level of hybrid they think is best for them and their family.
- Job – what is the optimum hybrid pattern for the work structure of the job, e.g. team working vs individual and client or peer interaction? Clear structure and accountability need to be provided by leaders to enable those who are hybrid working to know what they need to do and to avoid overwork.
- Team – what is required to retain and develop team integrity and deliver team working? This might be to say one day a week should be in the office to bring the team together, collaborate and plan the next week. Maybe including a “lunch and learn” session to help breakdown silos. It’s interesting to note that Google increased rented office space in the United States to bring teams together more often for interaction.
- Organisation – what is required to maintain organisational effectiveness? To ensure that the organisation’s network, vision, values, key objectives and culture are clear so that employees are aware of them, understand them and act to deliver them? Maybe here half a day a month for major organisational “town halls” to hear from senior management or collaborate across silos.
The world has changed forever – both at work and home. We need to recognise that in the way we work as individuals, teams, organisations and societies.
People will no longer tolerate poor leadership or poor work life balance in the way that they did pre-COVID. This was a key driver of The Great Resignation and continues to damage organisations and their people every day, potentially if not triggering departures then more dangerous “quiet quitting”.
But we can address and halt this by:
- Improving leadership
- Optimising hybrid working
This will give us happier and higher performing people, more successful organisations and happier societies. For a little work on our part that’s got to be a good investment.
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