How can employers avoid the Great Resignation?

Over the past 18 months, the movable feast that has been the COVID pandemic has seen snap lockdowns, forced employee stand downs, forced redundancies and countless employers go out of business. It has led to understandable employee anxiety over job security, but now, with the country slowly opening back up for business and employers looking to return their workers back to work in some capacity similar to that prior to lockdowns, somewhat ironically, the last several months have seen a global trend of mass resignations, particularly in the United States, and there is genuine concern that the same trend will manifest in Australia.

So, what is driving this trend of mass resignation and how do Australian employers safeguard themselves from further loss of employee talent just when they are desperate for employees to return to work?

The Great Resignation

According to the US Bureau of Labor Statistics, 4.3 million Americans quit their jobs in August 2021. Coined the ‘Great Resignation’, voluntary resignations reached their peak in April 2021 and have remained abnormally high for the past several months with a record 10.9 million advertised jobs at the end of July.

In Australia, the trend appears to have been delayed somewhat due to ongoing lockdowns, particularly in Sydney and Melbourne. However, by way of comparison, an estimated 780,000 Australians lost their jobs in April 2020 with around 90% of those lost in the first week of April 2020 and yet the Grattan Institute cite a recent survey by PwC which showed 38% of employees surveyed expected to leave their jobs in the next 12 months.

So, if job security was such a key priority for workers in April 2020 when jobs were being shed in the thousands, why are workers contemplating resigning from their jobs, or in cases where they have been stood down, be resistant to returning to work? There are several theories as to why this is the case. Post lockdown, many workers are rethinking their relationship to work. The pandemic showed that workplaces could offer flexibility and continue to be operational and productive. Workers have had a taste of that flexibility and do not want to return to the traditional model of working in the office, 9am to 5pm.

For those working from home in September 2020, an ABS Household Impacts of COVID-19 Survey found that 40% of people reported working from home at least once per week. A second study, also conducted in September 2020 by the Institute of Transport and Logistics Studies at Sydney University, indicated that 75% of workers think their employers will support their future work from home plans. This might explain the lure of relocation to regional areas less affected by the volume of COVID cases, a scenario supported by the Federal Government’s Centre for Population’s central projection that sees a net shift in migration away from capital cities in favour of regional areas in 2020-21.

The pandemic has also exposed our fears and vulnerabilities and some workers have decided life is too short to stay in a job they do not enjoy and are now prepared to take the plunge and take up a new career challenge. For workers who have been stood down without pay for long periods, or had been made redundant, opportunities to apply their skills in different roles or capacities became more of a necessity and in many cases, workers have discovered opportunities that they had previously not considered when confined to the ‘four walls’ of their previous work environment.

From our own experience, our clients in the hospitality industry are reporting that many workers are leaving hospitality in droves and employers are finding it harder than ever to fill those roles. Similarly, corporate employers are finding it harder, for example, to fill mid-level accounting roles as employees opt to pursue new opportunities that provide a more gratifying work-life balance. Unsurprisingly, both in Australia and abroad, resignation rates were/are also higher among employees who work in fields that had experienced extreme increases in demand due to the pandemic, leading to increased workloads and burnout, such as the health care and technology industries.

The pandemic has changed the landscape for many workers who are increasingly retreating from pre-COVID work patterns. Put simply, there is not a shortage of labour but there is a shortage of workers who are willing to accept the terms employers are accustomed to offering. As a result,  employers will need to consider the real challenge of retaining their workforce as a top priority for the remainder of 2021 and into 2022.

What Approach can Employers take to Improve Workforce Retention

It is trite to say that high employee turnover creates a serious cost to business. It necessitates the expenditure of time and resources in training and re-training staff and the invariable diminution in productivity (and profitability) as new hires are ‘brought up to speed’. So, the first step for employers is to distinguish how much employee turnover comes form voluntary resignations as opposed to redundancies and other employer driven terminations. This is the employer’s retention rate and provides the necessary visibility around where the retention problem arises.

The next step is to determine the impact of resignations on other parts of the business. When employees leave an organisation, remaining teams often find themselves under-resourced or lacking key competencies which negatively impact everything from the quality of work output, the time taken to complete tasks, and revenue. It can also lead to the remaining employees feeling overworked and burned out, which in turn, can result in further resignations thereby compounding the problem.

Once the scope of a retention problem has been identified employers need to determine what is causing employees to resign. The Great Resignation might be prompted by a range of different factors but what incentives can an employer utilise to prevent an upheaval in their workforce?

The obvious incentives are monetary compensation, size of pay increases and frequency of promotions, but can also include a commitment to career progression through training opportunities, provision of greater resources and support structures within the organisation, discretionary bonuses and flexible working arrangements (that could include reduced hours of work and/or fewer days in the office). This latter incentive is especially attractive to workers with carer responsibilities and also accommodates workers who have chosen, for lifestyle reasons, to move outside of metropolitan areas.

Of course, it is not a case of ‘one size fits all’ and the agile employer will construct a tailored retention programme that is aimed at correcting specific issues within a given workplace or within a given cohort of workers. To be successful in developing a customised program for its workplace and workforce, the key lever will be to consult with the employees in a collegiate manner to discover what is most important to them and make genuine attempts to accommodate them where possible.

For HR managers and employers who seek guidance in implementing the steps outlined above, particularly with respect to the consultation process and the formation and implementation of bespoke policies regarding workplace flexibility, we are ready and able to assist.

If any further information in relation to any aspect of this alert is required, please do not hesitate to contact us. Otherwise, we are available and ready to assist should you require any other employment law advice or support.

This alert is not intended to constitute, and should not be treated as, legal advice.