The Great Resignation: What’s Driving It and How to Prevent Turnover
By Candace Coleman, CultureWise Content Manager
Hear that? It’s the sound of millions of workers walking out the door. The exodus, now labeled The Great Migration, started early in the pandemic as companies began to see employees dropping out of the ranks. Then, as 2021 progressed, the attrition momentum increased until it seemed like the flood gates had opened in many companies.
Here’s the bad news: new predictions indicate that high quit rates will dominate the work world for at least another year.
While many attribute the turnover trend to issues related to COVID, enough research now exists to partially dispel that notion. The pandemic was indeed at the root of many resignations. But more specifically, the health crisis revealed and worsened existing issues causing people to dislike their jobs.
Consequently, employers shouldn’t make the mistake of believing attrition will settle down when we finally enter a post-pandemic period. Instead, they should find ways to restore employee engagement and inspire valuable team members to stay put.
What’s Causing the Turnover Tidal Wave?
According to the US Bureau of Labor Statistics, over 24 million American employees left their jobs between April and September 2021. The drop-off was so intense that many studies were launched to analyze the phenomenon, including one commissioned by the authors of an MIT Sloan Management Review article to help business leaders make sense of the numbers.
Among their findings:
- The Great Resignation is equally affecting blue-collar and white-collar sectors.
- Resignation rates are high on average, but they’re not uniform across all companies.
They also noted that while the type of industry plays a part in the numbers, it wasn’t the sole driver—they observed significant differences within single industries.
In addition, MIT Sloan Management research revealed that while some people may leave or change jobs for higher pay, compensation pales in comparison to other reasons behind attrition. They found that toxic corporate culture is the leading predictor of turnover, noting that it’s 10.4 times more powerful than compensation in predicting a company’s retention rate.
And culture is directly connected to the other top turnover predictors they identified. These include:
- Job Insecurity
People want assurance about their company’s stability. Consequently, unexpected organizational changes negatively affect employees’ attitudes, depleting workplace culture. Workers who lose confidence in leaders who fails to share information and will look for less volatility elsewhere. And remaining employees having to shoulder heavier workloads are also more likely to leave.
- High Levels of Innovation
While it may seem like highly innovative companies would retain rather than repel staff, this study shows the opposite. The authors reported that “staying at the bleeding edge of innovation typically requires employees to put in longer hours, work at a faster pace, and endure more stress than they would at a slower-moving company.”
So it’s not that innovation itself is driving people away—it’s how companies blend it into their culture. Consequently, many workers currently reevaluating their work-life balance are reconsidering the toll of relentless innovation on the job.
- Failure to Recognize Performance
Put simply, companies that don’t recognize and reward outstanding work are losing some of their best employees. Of course, financial compensation for performance is always welcome, but it takes more than bonuses for people to feel genuinely appreciated. Workers walk out on employers who don’t personally celebrate their people’s successes.
As the authors of a recent McKinsey article pointed out, “employees were far more likely to prioritize relational factors, whereas employers were more likely to focus on transactional ones.” According to their Great Attrition survey, more than 50 percent of employees who left their job in the past six months didn’t feel valued by their organization.
Meaningful recognition is an essential component of healthy workplace culture.
- Poor Response to COVID-19
In the study cited by MIT Sloan Management, employees who referred negatively to how their company handled the pandemic were more likely to jump ship. And while responding to COVID was a singular event, the same attrition pattern is tied to employees’ poor perception of their organization’s policies protecting their health and wellbeing.
The pandemic accelerated many mental health and stress issues already occuring in the workforce. A key denominator for healthy company culture is empathy. People crave leaders who relate to their employees as individuals rather than roles.
Turning Back the Tide
Since organizational culture is at the heart of the issues spurring today’s rampant turnover, it should be the starting point for leaders wanting to retain staff. Here are some tips about how leaders can leverage company culture to avoid the pitfalls listed above and fortify retention.
Weak company culture isn’t the same as toxic culture. For example, a weak culture can be comprised of relatively happy workers with dysfunctional habits that undermine productivity. In contrast, toxic culture creates an unhealthy work environment that people want to escape.
According to the MIT Sloan Management analysis:
“The leading elements contributing to toxic culture include failure to promote diversity, equity, and inclusion; workers feeling disrespected; and unethical behavior.”
Companies often address these issues in their policies and value statements. But an organization’s written acknowledgment of these critical areas means little unless leadership and staff live up to them every day.
CEOs must define the behaviors that make these policies and values integral parts of the company culture. Then they need to devise a system to coach and reinforce those behaviors to ensure they become part of the company’s standard operating procedure. And, of course, the leadership team must model the conduct they want their staff to embody.
The Pew Research Center calculates that 57 percent of people who quit in 2021 did so because they felt disrespected at work. Employees are far more likely to stay in a job when integrity is woven into the fabric of the culture and where they feel included, respected, and have equal opportunity to succeed.
After several volatile years, people are exhausted and craving stability. Employees have always been uneasy when they feel insecure about the future of their company, department, or position. Now many refuse to remain in an organization where they feel like they’re always waiting for the other shoe to drop.
Leaders earn their staff’s confidence by being open and honest about anticipated changes and adaptation strategies. Even when news is bad or problems arise, employees are much more likely to have faith in a transparent boss than one who conceals information. Instead of hearing about things after the fact, proactive transparency makes workers feel included in developing solutions.
In addition, when the leader openly shares information, employees will be encouraged to do the same. A culture of transparency builds trust and a tighter workforce community.
One of the most surprising findings in the MIT Sloan Management study was that companies renowned for innovation had high turnover. They noted that “the attrition rates of the three most innovative Culture 500 companies are three standard deviations higher than those in their respective industries.” (Culture 500 is a sample of large, mainly for-profit companies that employ nearly a quarter of the US private sector workforce.)
Faster-paced environments may be exciting and satisfying in the short term but require an energy level that’s difficult to sustain. As people reassessed their priorities during the pandemic, many who worked for relentlessly innovative companies quit after taking stock of the personal toll of their jobs.
Intriguingly, innovative companies that operate with more steadiness than the hard-chargers have had far less attrition. In other words, the success they achieve by being innovative doesn’t occur at the expense of people’s well-being.
These more pragmatic companies have cultures grounded in supportive work behaviors. They encourage creativity without making unrealistic demands on people’s energy and time. And they encourage their people to embrace change but don’t expect them to do it at an untenable speed.
Lack of Recognition
If you ask most people why they left their last job, not feeling appreciated is almost always high on their list. And according to Gallup, research indicates that the more talented an under-recognized employee is, the faster they leave.
Building acknowledgment into company culture is one of the least expensive but most effective ways to combat turnover. But it must be done right to work.
Most companies have recognition programs, yet many don’t consider what kind of appreciation is meaningful to individuals. For example, workers might like getting points on a workplace social media platform, but a manager’s hand-written note of appreciation carries far more weight.
CultureWise CEO David J. Friedman outlines these components for recognition that matters:
- Be authentic. Leaders should extend acknowledgment for an exceptional performance or attitude. Applauding everyone for simply showing up to work is meaningless. High performers will easily see through and resent an “everybody gets a trophy” environment.
- Be specific. Tell individuals precisely why they are appreciated, instead of passing out quick catch-all phrases like “good job.” The more details the person issuing the acknowledgment provides, the more genuine and meaningful it will be.
- Be timely. Acknowledge people soon after their accomplishments to have the most impact. Recognize people while their outstanding achievement is still fresh in their mind, not as an afterthought the next time you happen to communicate with them.
- Describe the impact. Let recipients know the positive impact their actions had on the team and the organization. They’ll feel an extra level of pride after they understand the breadth of their contribution.
- Use the appropriate forum. Some people thrive on public recognition, especially in front of their peers. Others who are more self-conscious might greatly prefer a private acknowledgment. Understand the person being acknowledged to make the experience valuable for them.
When done correctly, workplace acknowledgment lifts employees’ spirits, reinforces their self-worth, and encourages ongoing achievement. People are far more attached to organizations where they feel valued.
Lack of Empathy
Not surprisingly, many workers walked away from employers who demonstrated a lack of empathy during the COVID crisis. Unpopular back to the office policies, lackluster health and safety protocols, and remote worker surveillance are just a few complaints registered by departing employees.
The ways these companies handled COVID-related issues wasn’t just poor reaction to a crisis. Instead, they reflect their overall failure to understand or address the wellbeing of their employees. Unfortunately, that lack of empathy in a post-pandemic workplace will continue to erode company rosters.
The pandemic put a spotlight on the cost of weak employer/employee relationships. But at the same time, the crisis presented an opportunity for organizations to reevaluate how to foster better connections with their staff. As a result, many companies are now providing more comprehensive benefit packages that include mental health care and flexible scheduling.
But leaders wanting to strengthen retention should also focus on building a more empathetic culture as their companies resurface into a more normal work world.
Leaders and their managers can forge more personal and productive relationships with their team members by incorporating methods to build stronger connections, such as routine one-on-one check-ins and emphasizing effective listening behaviors. Making an effort to establish closer ties is particularly vital when working with asynchronous or remote team members.
Boost Retention by Improving Your Culture
The Great Resignation is proof that when people don’t feel respected, valued, and secure at their job, they will jump at their first chance to leave. Creating corporate policies that promote these values is an important step—but fortifying company culture is the only way to make these standards actionable.
David Friedman created the CultureWise system to help leaders identify, define, and promote behaviors that create a supportive and inspiring work environment. Developing a healthy and vibrant organizational culture is a CEO’s most powerful tool to increase employee engagement and mitigate turnover.
Explore the website for an overview, and then set up a free consultation to discover how CultureWise can improve your company’s culture. And learn more about the impact of culture on every aspect of business with a complimentary subscription to our newsletter, Culture Matters.