Bound by the same four walls day after day has caused many of us to reassess our lives during the past 18 months. The pandemic has seen people move jobs in record numbers. In August last year, 4.3 million American workers (almost 3% of the workforce) left their jobs, the highest number on record. In the UK, the situation was the same with the number of open jobs surpassing 1 million for the first time.
The great resignation is not a myth. However, what is interesting is who is resigning. Whilst staff turnover rates are historically highest among younger staff, this has not been the case during the pandemic. Rather, the great resignation is being driven by mid-career employees in the 30 to 45 age range, with an increase of more than 20% year on year.
The need to maintain objectivity
Organisations are rightly concerned. So, what can be done to limit the bleeding? Many businesses, especially those exceeding Dunbar’s number of 150, have sought to bring performance management techniques front and centre. By doing so, they feel they can build a clear view of who their most talented people are, and then reward and promote them. At the same time, of course, they are looking to “manage out” poor performers. However, this approach is not infallible. Managers, as we all know, often struggle to be objective. This means that good people can fall through the net, and vice versa.
The other problem with a simple performance management approach is that the focus tends to be on the individual, not the team. It would be wrong to assume that the best performing teams always have the best managers. Top teams are more than their component parts and are made when different strengths are blended together effectively. There is no ‘I in team’ as the saying goes. This should never be forgotten. By building teams that have a clear purpose and find their jobs rewarding, churn significantly decreases.
For many organisations, if certain key people were to quit, the viability of the entire company would be in doubt. This is famously the case in sports teams. Imagine Liverpool without Mo Salah, or the Tampa Bay Buccaneers without Tom Brady. Because of this, it is important that organisations don’t become overly dependent on a small number of people. Make sure you have a plan B, so that if the worst was to happen you can steady the ship. By doing so will ensure you have greater resilience in the long run.
Whilst employee retention brings with it various economic benefits, no company has ever survived for long by standing still. Sometimes, people resigning can be the catalyst to change by bringing in fresh ideas. It is a question of balance. However, just the right level of employee turnover differs from company to company. Seasonal businesses, for example, can withstand far higher levels of turnover as they will likely have swift training and recruitment processes in place. However, for many organisations, it is best to aim to get the churn rate somewhere between 8 and 12% per annum. Below that and you can become stale. Above that and it is difficult to maintain any corporate culture.
Stagnation within the business is like putting all your savings into an account that bears no interest. There is only one possible outcome for a stagnant business, and it always ends badly. A good leader will be cognisant of this and not allow the situation to reach a point where drastic action is required.
If drastic action is required, though, there is a moral obligation for employees to handle redundancies and firings sensitively. Heavy-handed firings can not only have negative implications for a company’s culture but can cause untold damage to its reputation. Only recently, Better.com had to deal with a huge media fall out after its CEO insensitively laid off 900 workers during a Zoom video call just three weeks before Christmas.
Diverse teams are better teams
Even before the great resignation, it was important that organisations did all they could to retain their most talented individuals and teams. It has just come into sharper focus. The biggest IP in any business is its staff. It’s important that businesses recognise this before it’s too late. Businesses should strive to create a learning culture where staff are incentivised to expand and improve.
There is a silver lining to the great resignation, however. It has enabled many organisations to swiftly readdress the diversity and gender balance. And not before time. My hope is that we see more organisations adopt diversity and inclusion programs in 2022. Not just because these programs are morally right, but because more diverse teams lead to better teams.