The Great Resignation What It Means for Employers

"The Great Resignation" has become a popular term after the 2020 pandemic when people start quitting their jobs in large numbers. People voluntarily start resigning from their job positions in 2021, which is the year followed by COVID-19. The most common reasons for this mass resignation are delays in salary payment, intense competition for workers, and the increased cost of living because of the pandemic.

What is the Great Resignation?

A "great resignation" or "great reshuffle" is a term used when people start to quit their jobs in mass to find better prospects that offer them stability and a better work culture. People have their causes for quitting jobs, but wage stagnation, poor work ambiance, and schedules have become the most popular reasons for job quitting. Most people look for more flexible jobs that do not require them to visit the office daily. Apart from sustainability and safety reasons, other factors that facilitated the great resignation were that people got more time to reconsider their career choices, work conditions, and long-term goals during the lockdown and shifted their career preferences after leaving their earlier jobs.

People started to be habitual of the comfort that comes with job flexibility during the lockdown. Most people preferred working from home even after the pandemic was over, and many firms agreed to maintain this flexible schedule of working from home permanently, which is more appealing to some people because it saves their travel costs and time. People who work in hospitality and travel left their jobs because these sectors were severely hit by the pandemic, forcing people to resign and look for better opportunities.

People quitting their jobs in large numbers for better opportunities shows the strengthening in the economy because people know they will get their desired opportunities in the market, unlike the Great Depression when the quit rate decreased from 2.0% to 1.3% as the hire rate fell from 3.7% to 2.8% in the US itself.

The Main Causes of Great Resignation

According to recent studies, the pandemic itself is the single main cause of the Great Resignation. The changes that have been made by the companies during the pandemic forced the employees to quit their jobs because the workload caused them mental stress and burnout (burnout is a condition when the employee is extremely tired to a point where he becomes ineffective due to insufficient breaks and extreme pressure). The trend shows that resignations were higher in the low-wage sector in comparison to high-wage sector employees, and the sectors which were most affected by the Great Resignation are hospitality, healthcare, retail, transportation, warehousing, and many more.

Another reason for widespread job abandonment is toxic workplace culture. A study conducted by the MIT Sloan School of Management highlighted how a toxic culture in workplaces was a major reason why many employees decided to call it quits in 2021. IT Companies like SpaceX, Tesla, Netflix, and Nvidia faced higher resignation rates than their competitors.

This pattern is not just limited to IT companies; innovative companies like Goldman Sachs and Red Bull have also suffered higher turnover rates.

According to the study, employees not only quit their jobs over salary but they have issues beyond salary, which is considered to be the toxic work culture of the corporate sector, which is a much bigger reason for this issue of Bulk Quitting and looking for opportunities with peaceful work culture, flexible schedule, and salary. Other factors for resignation were lack of reorganization, job insecurity, failure to recognize employees, high levels of innovation, and poor response to COVID-19.

What Is the Effect of "The Great Resignation" on Employers and How Does It Affect Companies?

When employees start to quit their jobs in mass, it is a red flag to the employer that something is not right with their organization’s work culture or their employees are not satisfied with the salary they are offered. It affects the performance of the organization abruptly, causing trouble in the business to carry out its activities smoothly. Most of the people who resign say that they are not getting enough support from their managers, and even the most popularly known ed-tech company suffered from a very toxic work culture in India itself. An organization is built on strong moral and ethical values, which are supposed to be fulfilled at every level of a business organization. Only then can it hold its employees for a longer period.

According to Maslow's theory of needs (1943 A.D.), five needs should be fulfilled by the employer to motivate the employee.

  • Physiological − Basic needs (food, water, shelter, air, warmth)

  • Security requirements include safety, a steady job, and insurance

  • Social needs − A feeling of belongingness, attachment

  • Self-esteem needs self-worth and accomplishment

  • Self-actualization needs Self-awareness and personal growth

This theory explains the needs of the employees, which is still being used in 2022 to motivate the employees of an organization. For example, an employee keeps on asking for a pay raise, but the HR manager keeps on ignoring their request, and now they find a better job with a higher salary. When the employee submits his resignation, the HR manager says we can discuss it and offer you a higher salary, but now the employee has already decided to switch jobs because his needs were not acknowledged by his previous organization, and he resigned and moved to an organization where his needs are acknowledged.

How to Understand the Employee’s Needs?

Companies can solve this issue of mass resignations by developing a deeper connection of empathy with their employees and letting them feel heard and understood. Employees want to get rewarded and recognized for their hard work. They want to develop social and interpersonal relationships with their co-workers and managers to improve communication between employees and their bosses. Leaders are expected to develop a much deeper connection of empathy and compassion to understand the employee’s personal or professional situation. Companies should become flexible with their work schedule to give employees a proper pace of work. Many companies opted to let their employees work from home during the pandemic, and they continued to offer work from home after the pandemic was over. They have given employees the choice to work either from the office or from home. Flexible working schedules make it easier for employees to work at their own pace without feeling pressured.

The Great Resignation can be handled if a proper channel of communication is established and managers make their employees feel heard and understood and revise their employment policies according to the changing environment and needs of the employees.

Updated on: 30-Jan-2023


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