What is the Great Resignation?
The term Great Resignation defines the elevated rate at which employees started to voluntarily quit their jobs beginning in early 2021: during that year more than 40 million people left their jobs in the United States alone. Management professor Anthony Klotz coined the term and then a number of other names came to describe the same trend: the Great Renegotiation, the Great Reshuffle, the Great Rethink. Klotz believes that the rise of hybrid and remote work helped cause the phenomenon; he says: “How we spent our time before the pandemic may not be how we want to spend our time after.” And it hasn’t affected everyone equally: women have been more affected by the Great Resignation than men, and younger age groups more than older ones.
Great Resignation Statistics
According to the Job Openings and Labor Turnover Survey (JOLTS) released by the U.S. Department of Labor Statistics, the “Great Resignation” in the United States saw a record of more than 4.5 million workers leave their jobs voluntarily in March 2022, which equals to 3% of the total workforce. A similar quit rate was matched for several months following this initial wave.
And there seems to be no signs of slowing down: in the summer of 2022 40% of U.S. workers and 20% globally were still considering quitting their jobs before the end of the year. These are enormous numbers when we consider that recent layoffs in the tech industry, which are considered to be a sign of a looming crisis, amount to roughly 5-6% of the workforce in that specific industry.
However, this has not started with the pandemic. Data shows that from 2009 to 2019, the average monthly quit rate increased by 0.1% each year: the pandemic has just accelerated the pace.
But what about Europe specifically?
Shortly after the pandemic, there was the feeling that European-based companies were watching the Great Resignation happening in the United States from a safe distance, confident that their people would not be affected. After all, many European countries had strong social safety nets in place to support both employers and employees during the last disruptive years. However, recent data shows that there is a shift taking place, as demonstrated by a rise in job vacancies: about 3% of jobs in the EU were vacant in the third quarter of 2022, with Austria, Belgium and The Netherlands reaching a record of 5%.
One might think: shouldn’t Europeans have nothing to complain about compared to Americans, because of shorter working hours, longer holidays and stronger support from the government? Well, it seems that employees from both sides of the Atlantic Ocean – and across the globe – are quitting their jobs for largely similar reasons.
Why is The Great Resignation Happening?
The COVID-19 pandemic allowed people to rethink their careers, work conditions, and long-term goals: the many quarantines, lockdowns, health scares, and unfortunate deaths have caused people to reconsider the role of work in their lives. That shift in perspective is likely one reason to have motivated some workers to quit, especially those who were burning out in demanding jobs that intruded on their ability to care for and spend time with their families. However, there are other reasons too.
Flexibility and Work-Life Balance
During 2021, many workplaces attempted to bring their employees back to offices for in-person work. But workers had started to desire the freedom that remote work offered, and many people had become used to it during the pandemic. Schedule flexibility was the primary reason to look for a new job, according to a Bankrate study in August 2021. In research done in February 2022, the majority of workers who quit a job in 2021 said unfair pay, no opportunities for advancement and feeling disrespected at work were the top reasons why they quit. Roughly half said childcare issues and a lack of flexibility were the reasons they quit a job.
Perhaps in Europe, the effect was manifested later, because of the stronger government support during the pandemic. But as the war in Ukraine started and the fears about climate change grew during 2022, people increasingly began to reflect on what matters most to them. Many of them decided they no longer wanted to work in a job they were not passionate about and switched to an employer that offered more opportunities for growth, purpose, and a healthy work-life balance.
High levels of burnout
Another driver has been the high levels of burnout that many people are experiencing. According to recent statistics, up to 50% of workers in Europe report symptoms of burnout during their careers. This seems to be one of the after-effects of the pandemic and the increasing use of technology, which has made it more difficult for people to disconnect from work. Of course, causes of burnout might depend on personal circumstances, but it has certainly contributed to an increasing number of people quitting their jobs in search of more fulfilling and less stressful work environments.
A Lack of Purpose and Appreciation at Work
A third reason has been a growing sense of disappointment, especially among younger employees in Europe who feel that their jobs could be more meaningful and that they are not fully appreciated for their work. This has even contributed to the so-called “hidden resignation wave” also known as “quiet quitting”, where people remain in their jobs but are disengaged and unproductive. This can be even more damaging to organizations. It can lead to a drop in productivity and morale, as well as a consequent drop in customer satisfaction. Strangely enough, while European countries are considered the happiest places on Earth according to Gallup’s State of the Global Workplace Report, Europe scores a mere average of 14% in terms of employee engagement, which makes Europeans unhappier in their workplace than anyone else in the world.
The Great Resignation seems to be a great example of what can happen in an extreme case of inappropriate leadership and company culture, combined with people being forced to re-evaluate life priorities.
Toxic culture is driving the great resignation
According to The High Cost of a Toxic Workplace Culture, a report from the Society for Human Resource Management, the number one indicator of a toxic workplace culture is high employee turnover, which has cost U.S. employers more than $223 billion over the past five years (to put that in perspective, it is roughly the 2022 GDP of a developed country like Finland). The report shows that the majority of workers (76%) consider their managers responsible for setting the culture and 58% of employees who quit a job say their managers are the main reason they left.
Obviously, leadership and company culture play a significant role in shaping the disposition and the feelings of employees. Good leaders and an appropriate company culture can foster a sense of engagement, purpose, and meaning among employees, while poor leadership and a negative company culture can lead to feelings of disengagement and apathy. It is important for leaders to create an environment where employees feel valued, heard, and empowered to contribute and for companies to promote a positive culture that values employee well-being, promotes open communication, and encourages employee participation in decision-making.
However, as Derek Thompson reflects, “this high level of quitting, is really an expression of optimism that says: We can do better”. Companies can too. Organizations that rethink and renew their cultures can win in the battle to attract and retain talent.
How to Keep Employees During the Great Resignation
One thing is for sure: the dynamic between employees and employers has shifted.
Employees want more from their employers than just a paycheck. They want to be challenged, they want to work in an environment where they can bring their whole selves, and they want leaders to be authentic. Recent research shows that employees who feel cared for at work, are almost four times more likely to recommend working for their company.
Companies have no choice but to address the problems listed above if they want to keep their people and attract more talent. There are five key ways they can improve.
- Improve working conditions and create a more positive and supportive work environment, including better support for work-life balance.
- Address the new “burnout pandemic” and take actions to prevent burnout. This may involve reducing workloads and promoting a culture of self-care and belonging.
- Increase employee engagement and create the conditions that encourage people to feel more connected to their work.
- Offer a fair compensation and make sure that people feel rewarded.
- Offer employees the opportunities to learn and grow.
Skills development is key
Companies that excel at skills development retain employees twice as long as companies that struggle with it. By allowing employees to expand their skills and creating a culture of continuous learning, companies can develop Learning & Development strategies that improve employee engagement and retention and ultimately business success. Engaged employees impact the company’s ability to innovate, delight customers and beat the competition.
Leaders play a unique role in creating a culture where all employees feel empowered to learn and develop their skills. But leaders need support to engage their people. Companies that invest specifically in leadership skills can benefit from a multiplier effect across the whole organization.