Is there really a ‘great resignation’?
The coronavirus pandemic and a skills shortage have apparently combined to prompt hundreds of thousands of people to resign en masse, leaving many businesses with a vacancy headache. How far is this really the case and what can business do about it?
One of the unexpected outcomes of the coronavirus pandemic has been the upheaval of how we work. From hybrid working to the need for new skills to changed expectations of what an employer should offer, Covid-19 has impacted how, where and why we work.
This has, in turn, led to both employers and employees reassessing what they need. And this reassessment has led many to label what is going on at the moment as the ‘great resignation’.
Desperate times call for desperate measures. And major moments of upheaval are wont to have unexpected consequences. In the case of the Covid-19 pandemic, hundreds of thousands of employees have decided it is time for a new challenge in what is being called the ‘great resignation’.
What does the big quit look like in numbers?
Certainly, people are talking about the great resignation. Data from Google Trends shows it was a term that was barely used before June 2021 but experienced a huge spike in October.
The data would suggest people are not just talking about resigning. The total number of resignations in the UK hit a 12-year high in the third quarter of 2021 - a high that was made to feel even more dramatic by the huge drop in resignations at the start of the pandemic. Job vacancies are also at record levels, reaching almost 1 million in the same period.
Dr Charmi Patel is associate professor of international human resource management at Henley Business School. She believes the conditions have been perfect for the mass movement of jobs due to the push of the pandemic and pull of new roles.
“Suddenly, the very micro concept of leaving a job - which people always do, for numerous reasons - becomes a macro thing, triggered by an external environmental event, like the pandemic,” she says.
“But we’re not simply seeing people resigning,” she continues. “We’re seeing excessive mobility of employees. People are quitting jobs and joining others which they think are a better fit, because job vacancies have risen but the supply of talent for those jobs has not risen in the same way.”
Back in 1997, management consultants McKinsey coined the term ‘the war for talent’ to describe an increasingly competitive landscape when it came to attracting and retaining certain, specifically talented employees. Patel now believes this definition of talent has broadened to include all workers, making the competition even starker.
“There are a lot of jobs available and less talent supply, with that same talent moving across many jobs. This is why people are talking about this as a great resignation,” she says.
Despite, or perhaps because of, this, employment levels have remained relatively high. The furlough scheme ensured there were no mass job cuts during the worst of the pandemic-induced lockdowns and since a low of 74.7% at the end of 2020 and into 2021 have been on the rise again, hitting 75.4% in the third quarter of 2021 (the most recent data available).
Employment levels remain much higher than historic levels and the slight downturn during the pandemic was minor compared to events such as the 2012 financial crash or recession of the early 1980s.
What is driving the great resignation?
The data on resignations, vacancies and employment levels suggests 2020 was a year that employers put the breaks on hiring and employees stayed put, meaning the great resignation is in many ways a natural reaction to the economy reopening, and both companies and staff rethinking their needs.
However, Brian Kropp, chief of HR research at Gartner, believes there were more influences at play, at least for workers. He points to three major factors impacting this mass movement of workers.
The first, he says, is that a growing economy needs lots of people wanting to work. The second is that the pandemic prompted many people to realise they want something different from their job and life.
He explains: “The idea that [moving jobs] is all about the role and how much I get paid and how quickly I get promoted has changed. Now it’s more about being able to spend time with your family and on your hobbies. That is causing people to shift what it is they want to do.”
The third factor driving the great resignation is the rise in remote or hybrid working. “In a remote/hybrid world you’ve got more opportunities, which gives you more choice. And you have fewer friends at work, which means the cost of quitting is less,” says Kropp.
For employers, however, this newly empowered workforce poses a challenge. While 2020 was a year of turbulence, of protecting cash flow and halting ambitious projects, it was also a year of savings. Many companies froze hiring, getting more out of their existing employees. Most firms also shut their offices, leading to a drop in cleaning costs, electricity bills and other real estate expenses.
This combined with stimulus spending from the government, while many British businesses benefited from CBILS (the coronavirus business interruption loan scheme) or the furlough scheme.
“You put all of that together,” says Kropp, “and it’s really a shift in terms of where companies can spend money.”
Unfortunately, while businesses were hiring less the labour market moved on. In this new world, employees and candidates are much more in control.
“If, as an employee, I need my employer less than I did before, I have more options,” explains Kropp. “And that is a sustained shift that will be there no matter what.”
How should employers respond?
With recruiters now operating in an incredibly competitive market, the need to differentiate from other potential employers has never been greater. Chris Adcock, managing director of recruitment specialists Reed Technology, says the number of live opportunities on his company’s site is the highest he’s seen in his 16-year career.
The high demand from employers has so far gone unmatched by interest from candidates, meaning that Adcock prefers the term ‘great flirtation’ to great resignation. “People are starting to dip their toe in the water and have a look at new opportunities but we’re not seeing people actually making moves yet,” he says.
With hiring plans in the private sector rising three percentage points in the third quarter of 2021 – taking them above pre-pandemic levels for the first time – the pressure to find talent is only going to grow.
“As with any skills shortage, clients are struggling,” Adcock explains. “We’ve had plenty of clients who are coming to us and proactively saying they will pay more to try and get hold off the best talent quickly.”
As they look to make themselves a more attractive proposition for prospective candidates, employers are considering a range of perks. These include salary raises, additional time off, better benefits packages, improvements to the working environment and more remote working opportunities.
This is broadly in-line with what employees are looking for from a new job, with higher salary and more flexible working arrangements in the top five reasons for people changing jobs.
However, compensation is not be at the top of every potential new employee’s list of priorities and Adcock warns that businesses should make sure they “appeal to the individual’s motivations for joining the business, not just to the broadest base”.
One thing is clear, this movement of workers does not appear to be over. A survey by CV Library found that 76.4% of the UK workforce intends to look for a new job this year, meaning the landscape for employers could get even more competitive.
And while the temptation might be to focus attention on these new recruits, taking care of current staff is equally as important.
“Some candidates feel that their current employer hasn’t looked after them as well as they wanted during the pandemic,” says Adcock. Now that the Covid situation appears to be more stable, many workers are fed up and ready for a job move.
“It’s very expensive to replace people; you’ve got recruitment fees, increased salaries, training costs and other hidden costs. So companies need to work on retention too.”
Many businesses are aware of this and do see their current stuff as key to dealing with vacancies. Upskilling staff is the second most popular way to fill hard-to-fill roles, although widening the potential pool by looking at apprenticeships, hiring under-used groups such as ex-offenders and making more effort to recruit older works is also key.
Whether it really is a great resignation or more of a great re-evaluation, employers are likely to face recruitment challenges in the short- to medium-term at least.
“The market has gone through a rapid change,” Adcock says. “It will revert back to being candidate heavy eventually but it could be a long time before it does, the pace of change will be slow.”
Businesses will therefore need to be prepared to expand their arsenal in the ongoing war for talent.