The Great Resignation: What is it and how will it affect business?

The Great Resignation has hit America and the UK, and we’re told it will be making its way to Australian shores soon. With an expected mass exodus of employees, what does this mean for business and the job market as a whole?

What caused The Great Resignation?

The pandemic changed many facets of our life. Including, importantly, how we work. For some, this meant losing their livelihood, changing careers, or finding out that they could complete their work from anywhere. Varying person to person, there are several factors that may be contributing to The Great Resignation.

1. Favouring remote work

For those that thrived with remote work, returning to work in an office may no longer fit the lifestyle they want to lead. Some companies that no longer offer the workplace flexibility that they once did during the pandemic may lose employees who are not prepared to add a commute back into their workday.

2. Questioning their treatment

Some companies didn’t handle the uncertainty of the pandemic as well as others. If an employee began feeling undervalued or mistreated last year, it’s likely they will be making moves to leave. This jump will likely occur when the job market in their industry has completely recovered.

3. No job security

Again, in the uncertainty of the pandemic, a once clear company vision may have become muddled. Whether the business is in an industry that particularly suffered (think: travel, aviation, hospitality) or the business just cannot guarantee job security, employees are looking for certainty and will not settle.

4. The job was a stopgap

Those that lost their job last year may have taken a role that was outside of their skill set or at a level lower than they are qualified for. This is known as underemployment. As of August 2021, the Australian underemployment figure sits at 9.3 per cent.

Individuals who are underemployed never really stopped looking for a role that was right for them. Instead, they waited for the market to recover. We expect to see several exceptional candidates with short stopgap tenures re-enter the market soon.

5. New passions and priorities

With time to reflect, many people may have simply realised they are not doing what they love. As the adage goes, “Life is too short to be miserable.”

The Great Resignation and the rest of the world

Resignations usually show that the economy is healthy and job opportunities are plentiful. What’s unique about this spout of mass resignations is that many people are out of jobs (and have been since 2020) and there are labour shortages in industries (in America this is on a far greater level).

In July 2021, 4 million Americans quit their jobs, according to the U.S. Bureau of Labor Statistics. At the end of July, America had 10.9 million open jobs.

The data also noted that resignations are the highest:

1. Among mid-level employees.
2. In the tech and healthcare industries.

How will it affect business?

It’s hard to know how exactly the Australian version of The Great Resignation will affect business. Will the Great Resignation be all that bad? One thing is certain: we have much to learn from what is happening overseas. Businesses in America and the UK are making serious investments in employee retention strategies.

The best approach moving forward is to reconnect with your employees. How do they feel about returning to the office and the ‘new normal’? If you do see several resignations coming in, quantify the problem. Calculate your turnover rate and its impact on business. Look for commonalities between your resignations so you can make changes that stem the issue. This analysis may also help you predict where you will have emerging business needs, so you can get ahead of your hiring.