Talent retention in the era of the Great Resignation
The global labour market has seen a significant shift in the past two years when, following lockdowns and remote work, many people refused to return to pre-pandemic work conditions.
What ensued is the memorable phrase researcher and professor Anthony Klotz coined: the Great Resignation. The term refers to a massive wave of job departures as a result of people re-evaluating their values, forcing organisations they work for to do the same.
Klotz explains that global surveys indicate that a rise in resignation rates is a worldwide phenomenon, but that there is variation in the size of these increases depending on the country.
Why are people quitting their jobs?
There are many reasons behind this decision. While some people want flexible work schedules and the possibility of working remotely, many others are looking for improved working conditions and better salaries. But what seems to be a common denominator is that now they are all striving for purpose and impact, and are looking for workplaces that share values similar to their own.
Sergey Gorbatov, adjunct professor at IE Business School explains that the reasons why people leave, or are not attracted to companies, can be labelled as the “3 Cs: Covid, career and culture”.
For him, Covid generated the YOLO (You Only Live Once) philosophy: a desire for greater flexibility and a shift to the values of a better personal-professional life balance. From a career perspective, he explains that people want careers on their terms, as opposed to what organisations are compelling them to do. People want meaningful work, whereas a few years ago the dimension of ‘meaningful work’ wasn’t really factored in people’s perception of jobs.
Regarding his stance on culture, Gorbatov refers to a study carried out by McKinsey, which concluded: “The 3 top reasons for attrition are uncaring leaders, unsustainable performance expectations and lack of growth opportunities.”
Anthony Klotz suggests that flexible work facilitates the pursuit of a balanced life. At the same time, there is no single ‘most important factor’ for retaining employees right now, and that is what makes this such a challenging time for leaders.
He explains that whereas some employees want more flexibility, others want more career development or more respect. And of course some workers are squarely focused on higher pay, while others seek better benefits. The reality is that the past two years have affected each individual differently; as a result there is no single factor that will address what all employees are now seeking in their lives and work.
Daniela Lup, Professor of Management at ESCP Business School, states that the flexible schedule has grown in importance over time, but it is still far from being the most important factor. A Pew Research Center survey shows that pay remains by far the main reason why employees quit their jobs to look for another. Lack of advancement opportunities is the second most important factor, followed closely by an indicator of poor people management, namely lack of respect. Similarly, McKinsey found the same two factors – pay and better career opportunities – as the main motivators for finding a new job, with flexible schedules in third place.
Retention as an organisational challenge
While this trend started during Covid lockdowns, a global study by PricewaterhouseCoopers (PwC) conducted in May 2022, reveals that it is set to continue through 2022 and arguably beyond. The study states that “while an increase in pay is a main motivator for making a job change (71%), wanting a fulfilling job (69%) and wanting to truly be themselves at work (66%) round out the top 3 things workers are looking for. Nearly half (47%) prioritised being able to choose where they work.”
Associate Professor Klotz explains that the global workforce is increasingly made up of knowledge workers, and in these jobs talent is the product. From that sense, talent retention is more important than ever.
So in this new world of work, what can companies do to retain their employees and, more importantly, the talents that are essential to the company’s survival and growth?
Create an environment of communication and trust
The PwC study showed that employees like to discuss social issues with their co-workers, and that these topics allow them to have a glimpse into different cultures and opinions. It also gives them a better understanding of their colleagues, leading to a more inclusive workplace.
Companies often believe these conversations are divisive and so they tend to forbid employees to have them. Today, more than ever, it is time for companies to reconsider their policies and allow the workplace to become an environment of communication and trust, where employees can be themselves more freely, without fearing possible repercussions.
Klotz explains that the first thing leaders need to do is listen to their workers, and hear from these employees whether work is providing them with a sense of happiness and purpose.
However, according to him, this is not as simple as it sounds. In fact, the workloads of managers and leaders are stretched quite thin right now, and multiple reports indicate that companies are experiencing high leader turnover. But leaders need to make time to talk to their employees, and from these conversations dedicate resources to initiatives that will yield the highest returns in terms of employee engagement and wellbeing.
Vital to foster empathy
The ability to have and demonstrate empathy is becoming vital for leaders, so they can show their teams that they care for their needs – whether professionally or personally.
Empathy allows a leader to be person-focused and to deal with employees with a genuine interest in their personalities, as opposed to looking at them simply as members of a team.
Leaders should factor in that people come to the workplace every day from different places – be it geographical, physical, mental, emotional or cultural. For the workplace to become a safe place and evolve into a happy place, employees need to know that they are seen, heard and felt for in everything they experience. Once this is achieved, there is no reason for talents to leave the company.
Professor Lup explains that any company that wants to attract and retain talent needs to ensure that those who manage talent offer the support and feedback needed for further career growth. And to offer flexible schedules that are sustainable in the long run for both the employee and the business.
Engagement beyond retention
It goes without saying that flexible work schedules, hybrid or remote work, performance-based rewards and overall better working conditions must be fulfilled to meet employees’ needs. These have now been in the discussion for the past two years and are slowly becoming the baseline.
Klotz suggests that it is not enough just to retain workers. To gain a competitive advantage through talent, companies must motivate workers to bring their best to their jobs.
According to him, the only thing worse than having a bunch of engaged employees quit is having a bunch of disengaged employees stay in their jobs.
“In addition, companies now recognize that their relationships with their employees do not end when an employee quits,” he says. “Former employees represent ambassadors of an employer’s brand. They also represent potential boomerang employees, a growing trend in which workers return to a firm they previously left. Overall, retention is just part of the objective. The goal of contemporary organizations has shifted from simply retaining employees to engaging employees, and to maintaining a positive relationship with those individuals even if they leave the company.”
Sergey Gorbatov suggests that companies need to become more agile in providing employees with developmental experiences. “We call it scrambling: rapid-response assignment management. It is no longer a carefully orchestrated sequence of career moves, but serving up a role/candidate as needed.”
Klotz concludes by affirming that the key to retention is investing in employees – but not all investments will lead to retention. It is up to leaders to figure out which investments will most improve their employees’ work lives. Workers have been through a lot over the past two years, and now is a good time for leaders to (re)connect with their employees, and learn about what investments will most contribute to their employees’ wellbeing.
It is time for companies to look at a higher level of engagement with their employees if they wish to avoid the constant churn that can easily become a burden – and bypass the Great Resignation. They need to rethink workplaces to become spaces where it feels good to work, to strive and to grow.