It is almost impossible to make it through a week without reading at least one article exclaiming the “Great Resignation” as a result of the COVID-19 pandemic. Each week new pieces proclaim that never before have we seen such high levels of employees voluntarily leaving their jobs. However, what if we told you that the pandemic, although playing a factor in this wave of resignations, was not the leading cause of employees leaving their jobs.
So what are the main factors?
Why Are Employees Leaving Your Business?
In 2021, according to the U.S. Bureau of Labor Statistics, almost 48 million Americans voluntarily quit their jobs. On average, over 4 million people left their jobs each month in 2021. According to a new Pew Research study, 63% of people shared that they left their job for low pay, 63% left because there was no opportunity for advancement in the company, and 57% shared they quit because they felt disrespected at work.
Another reason many employees are leaving their jobs is that they do not feel safe at work. The pandemic provided workers in traditional office jobs with the opportunity to work from home. As offices began to open up again, the return to an entirely in-office work environment has upset some employees. Recent research conducted by the Harvard Business Review indicates that “many workers are prepared to quit if their employer does not offer a hybrid-work option: In a survey of over 10,000 Americans conducted in the summer of 2021, 36% of workers said that if not given a hybrid or remote option, they would search for an alternative, and 6% reported being willing to quit outright, even without a new position in hand.”
The leadership experts at InitiativeOne shared their thoughts on the “Great Resignation” and found, “People may be leaving companies, and in some cases “rage quitting,” because of more than just feeling burned out or wanting more flexible work arrangements. Many may be leaving because their conscience has been wounded and their innate sense of justice violated.”
The Impact on Business Value
The four intangible capitals make up roughly 80% of the value of a business. The Human Capital, or the people that work within an organization, ultimately account for a large portion of that business value. Bill May, President of High Value Manufacturing Consulting, shares, “If you are focusing an inordinate amount of time trying to retain workers, you will most likely not pay attention to your performance and this will likely have a negative impact on your value.”
When one of your intangible capitals suffer, the overall value of your business is diminished. Dyanne Ross-Hanson, President of Exit Planning Strategies, LLC, shares, “When preparing to sell your business, it’s crucial that you determine the best way to retain your key employees. A strong management team is critical to achieving maximum value when you sell.” A business with a stable workforce, strong leadership on every level, and well-documented training programs will be more attractive to a potential buyer.
How to Improve Employee Retention
InitiativeOne shares, “Checking in on your people beyond projects shows their value goes far beyond the tasks they complete and elevates the organization’s morale. As Theodore Roosevelt stated, ‘People don’t care how much you know until they know how much you care.’”
As we shared previously, over half of all workers state that pay is a top reason they’d look for a job with a different employer. Additionally, 43% would leave for a mere 5% increase in their salary. This shows the importance of paying your employees what they are worth, or you could face the risk of losing key employees.
The Harvard Business Review shared, “An analysis by the Brookings Institution revealed that employers in industries with the highest quit rates have responded by raising wages sharply in an effort to rebuild their staffs.” Think of the time your business would save if you paid your current employees more to match their experience and knowledge instead of training new employees who are paid a higher starting salary.
However, the same survey found that 20% of people would take a new job for the same pay if the culture, health and retirement benefits, and working arrangements were better than their current job. Bill May highlights the importance of strong company culture. He says, “Next to competitive compensation, the company culture is the most important, especially for the younger worker.”
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