POSTED Tuesday 08-02-22
What is the Great Resignation, and how should we respond?
Employees are looking for flexibility including fewer hours, working from home or hybrid working, three-day weekends, and healthy relationships with colleagues and bosses. Another stress factor is economic: in the US in 1970, $15,545.03 was the average cost of living per year, (adjusted for current inflation). Today, the cost of living on average is $52,000-60,000; this means the cost of living has gone up 300-400% with the minimum wage only adjusted to match inflation, not the inflated cost of living. Companies offering low wages and limited opportunities for advancement are no longer being tolerated by workers, frustrated that the ability to afford a house or to a have a family is out-of-reach. The relative poverty of many Americans may be one driving factor behind the current baby bust as well as low rates of home ownership for people under 34.
It’s unlikely that the Great Resignation in the UK will so starkly resemble the American situation, the latter of which has been made significantly worse by lower minimum wages, much higher healthcare costs, and generally fewer benefits and leave afforded to American workers. But certainly the sense that workers deserve more flexibility is making waves in the UK, and employers will need to respond in order to retain their talent. How do we respond?
At the heart of this issue is the uncertainty and precarity caused by the pandemic, and so the solution lies in material measures (not just platitudes) to help employees feel valued and secure. For this to work, employers may need to do some research: Ian Cook recommends tailored retention programmes depending on the cause for resignations within a company.
For instance, he notes that truck drivers were seeing higher rates of retention amongst those who received in-person training and support; the response therefore is to increase training, as the cost of having a high turnover generally outweighs training costs. He similarly recommends that if employers find that the time between promotions correlates with high resignation rates that it may be time to review the company’s advancement policies.
It’s important too to listen to employees’ needs, and this is likely to include higher salaries as the dual forces of increasing inflation and rising cost of living mean that lower end salaries are becoming unliveable. One burger restaurant in Washington, US has made a statement by paying its fifteen employees $19-20/hour – much higher than the state minimum wage of $13.69/hour, or the federal minimum wage of $7.25/hour – to show that retention relies on paying employees liveable wages. This is despite attempts by out-of-touch commenters to insist that ‘nobody wants to work anymore’, a patently false and tone-deaf accusation that ignores the emotional and financial cost of living through a two-year pandemic.
Employers may need to look towards more flexible working for employees too, which is easier and more profitable to grant than employers maybe realise. Studies show time and time again that a four-day working week (for the same pay) improves productivity. At Aspen we’ve touted the benefits of flexible working/working at home before: from improved gender equality in the workplace, better work-life balance for employees, and a healthier and more productive work environment, there are very few reasons not to offer it where possible.
It’s difficult to predict the impact of the Great Resignation in the UK, but all of its causes in the US point towards it being avoidable. Workers are leaving intolerable situations. The solution therefore is fairly simple: to ensure their needs are being met.