Was it Even the Great Resignation: What Can Companies do to Curb Attrition?

As a phrase, “the great resignation” has consciously figured in our discussions, apprehensions, curiosity, and even readings over the last two years. It does stand as a reality in front of us, and merits due consideration. But before delving deeper into its consequences, let’s get some of the facts straight.

Fact 1: Yes, in the US, attrition rates have been the highest in 2021 compared to the preceding decade. Approximately 57 million Americans quit their jobs between 2021 – 2022. At the other end of the globe, in the last quarter of CY21 the top 3 Indian IT companies – namely, TCS, Infosys, and Wipro – saw attrition rates of 15%, 25% and 22% respectively.

Fact 2: This is not a new development – the corporate world has witnessed this trend for almost a decade. A recent HBR report clarifies, between 2009-19, the average monthly attrition increased 0.1 percentage point each year. However, with all its uncertainties and fear of job security, Covid-19 had halted the trend in 2020. The resignations resurfaced in 2021, with a spillover of those who might have left their job in 2020 had the pandemic not hit. Building on a smaller the base of the 2020 resignations, the impact appeared huge. And the great resignation assumed existence and significance.

But with or without the pandemic, are the underlying factors for resignations mostly the same? Has Covid-19 really brought about a shift in the mindset of employees globally? Perhaps the answer to both is in the affirmative.

PwC’s 2022 Global Workforce Hopes and Fears Survey reveals the top three factors for workers to change their jobs are higher pay (71% respondents), more job fulfillment (including instances where there were lack of opportunities of advancement and feeling disrespected at work, 69% respondents) and wanting to be “truly themselves” at the workplace.

A HBR study exposes some of the crucial factors that have driven these resignations particularly in 2021. These are Retirement, Relocation, Reconsideration, Reshuffling and Reluctance. In 2021, older and mature workers retired at comparatively younger ages to spend more time with their loved ones. Their focus seems to have shifted from work to social priorities beyond work. They are also reconsidering their lifegoals. The pandemic has been especially hard for frontline workers, parents and caregiver and women. The burnout from long and tiring working hours resulted in a lot of them quitting their jobs. Reluctance and Relocation worked in conjunction. The pandemic induced restrictions on travel and ease of work with WFH gave rise to the next issue of relocation. Moving within one smaller geographical area (county/town) is much easier and remained most frequent form of relocation. Also, employees remained reluctant to move to new states or territories for work with 36% respondents stating they will look for alternatives if hybrid-work options are not introduced, while 6% of respondents are even willing to quit without a job in hand. Employees are also prepared (mentally), more than ever before, to reshuffle and switch to new jobs either in the same sector or even between sectors.

This entire scenario presents an opportunity for employers to assess their own stance and look at employee retention afresh. What they need to emphasize more on is to prioritize ‘purpose’ for an employee. Organizations need to help employees in their journeys and explore the possibilities of their internal questions like “why do I do what I do?”, “what am I good at?”, “how can I thrive?”. A Unilever sponsored LSE research paper suggests, employees with discovered purpose are 49% more likely to report intrinsic motivation, 33% more likely to express higher job satisfaction, and 25% more likely to go the extra mile. For these to materialize, businesses must explore different approaches including bringing variety and passion to the workday, supporting flexibility, creating brand ambassadors, and even hiking wages, among others.

Organizations can take cues from several examples of encouraging variety at workplace, including Unilever’s Flax platform with 10K+ active users who can work on short-term work opportunities across the company, EY’s CSR program “EY Ripple” which motivates employees to solve urgent social and environmental challenges, and an Intel team which mandates its members to devote ~20% of their time to projects which are nonprofit initiatives or pro-bono work or an entirely new venture. For loyal and diligent people, it is imperative that companies support flexibility. Modern remote working tools allow building flexibility around workforce schedules. EY2022 Work Reimagined report highlights that several companies have allowed flexible start-stop times (GitLab, Dropbox etc.), condensed 4-day work weeks (Unilever), reimbursed expenses for home workplace set-up, and are flexible for self-managing teams as part of new ways of working. Even sabbaticals, fellowships, or an informal open-door return policy can ease employees and win their trust eventually.

Companies might also respond to high attrition by raising wages or beefing up benefits to make employees feel adequately rewarded. In 2021, McDonalds increased overall wages by ~10%, Walmart announced a $1 billion Live Better U program; AON India’s 26th Annual Salary Increase Survey expects an average hike of ~10% in 2022 as against ~8.5% in 2021. Organizations can promote employee growth with better compensation packages. These investments may not only attract new job seekers but might also help curbing attrition rates.

There is no one-size-fits-all solution and not every method will be suitable for every organization. The need of the hour is for companies to embrace them rather than shunning these ideas and be rigid.

The ‘pandemic years’ have stirred the business-world a lot in terms of how they operate, and how employees live and work. It was bound to bring to the surface issues and dissatisfaction at work either resulting from the pandemic or those that existed prior to its onset. It is an opportune time for companies to listen to feedback, rethink their ways, and find paths to ensure that the employer-employee relationship comes out even stronger than before.

Author: Shivam Agarwal

Assistant Consultant, Strategy Consulting

Image credit: Kaique Rocha