“When we have had an economic downturn, historically, employees were concerned about keeping their jobs. This crisis is different because we have an economic downturn, but suddenly employees quit. So how is this even possible? What happened?”
Radek Nowak, PhD, Associate Professor in Management at the New York Institute of Technology
The Great Resignation, also known as the Great Reshuffle or the Great Quit, is an ongoing workplace trend that has many economists, public policy experts, and management professionals puzzled: “Starting spring 2021, we noticed some unusual trends and movements in the labor market,” remembers Dr. Radoslaw Nowak, associate professor in management at the New York Institute of Technology. “The main manifestation was a large number of employees quitting jobs. The second manifestation of this interesting trend was that there’s a very high number of jobs that are unfilled.”
Not only were employees quitting their jobs en masse—up to four million a month—but they also weren’t returning to work. “When we have had an economic downturn, historically, employees were concerned about keeping their jobs. This crisis is different because we have an economic downturn, but suddenly employees quit. So how is this even possible? What happened?” asks Dr. Nowak.
Many experts have dedicated themselves to answering this question. One such expert is Robert Parker, director of strategy and technical solutions for the University of Oregon’s Institute for Policy Research and Engagement (IPRE). In January 2022, he and colleague Benjamin Clark published a report: Unraveling the Great Resignation: Impacts of the Covid-19 Pandemic on Oregon Workers.
What he found was fascinating: “I was hypothesizing that we would see people quitting in leisure and hospitality or anything that could be considered a frontline or essential service like healthcare,” he shares, “Mostly because of the perceived risk in staying on the job during the pandemic. But that didn’t turn out to be the case. It was pretty much across the board that people were quitting.”
Based on his research, Parker has a fair number of theories about why the Great Resignation is happening. “I think part of what happened was the economy was adding jobs so quickly. There was such demand for workers in fields where people historically didn’t have a choice about their employer. If they were dissatisfied or thinking about a new career, they decided that now was the time to make a change,” he says.
As employers, it can be hard to figure out the best next steps to attract, hire and retain top talent, given this increased propensity for job mobility. Continue reading to learn from these two experts about the other potential causes for the Great Resignation, what employees want, and what employers can do.
There are many theories as to the cause of the Great Resignation—and many of them are hotly debated. “This is so complex,” says Dr. Nowak. “Many dissertations could easily be written describing this phenomenon.” However, there is little debate about initial precipitating factors.
Dr. Nowak continues, “Covid was obviously the starting point. Then, the government made some fiscal and monetary policy decisions that generated some unintentional consequences. On the monetary policy side, they lowered interest rates as much as possible, which increased liquidity in the financial system. On the fiscal policy side, they distributed a lot of money in stimulus and rescue plans. The combination of those created a very specific environment that was a factor in generating the Great Resignation.”
Parker’s research found that, while people surveyed in Oregon were generally very or somewhat satisfied with their jobs (75 percent), many were currently considering quitting (26 percent). According to the survey, the primary reasons workers were considering leaving were burnout and not enough pay, although 48 percent of respondents cited four or more reasons. Parker offers another theory: “I think it has to do with worker leverage. For the first time in my life, it feels like workers have the leverage to better dictate the terms of their employment,” he says.
He continues, “What I have, which may be more anecdotal and less supported by my data, is that the social contract about work has eroded to the point where the corporations or employers have all of the control over employees. So all these converging factors came together, and some employees may have felt like they had leverage and weren’t going to take it anymore. People started looking around and saying either the terms of this employment were unacceptable, it’s not worth it, I’ll sit on the sidelines and wait till there is something better, or I’ll switch careers.”
On this point, Nowak agrees. “I think the employees feel more empowered right now because there are so many jobs available, some of which can generate significant financial rewards. So you can make more money, so why wouldn’t you try?” he asks.
Recently resigned employees, or those looking to move jobs, tend to have similar wants and needs. Dr. Nowak puts it very simply. “Employees want extrinsic motivation, which is money,” he says. “We are operating in a new environment with strong inflationary pressures and everyone is talking about it.”
While money is a factor, it isn’t the only one. This is called the Employee Value Proposition (EVP) and includes all the employment conditions that will convince a candidate to say yes, or current hire to stay.
According to Parker’s research, 65 percent of workers are considering quitting because of burnout, but other top reasons include wanting to change careers, issues with management, insufficient benefits, and too many work hours. And for most people, it isn’t just one thing. Over 80 percent of respondents cited two or more reasons for wanting to leave their job.
Likewise, there isn’t just one reason for picking a new job. Of those surveyed, 92 percent said there were two or more factors they considered in choosing a new job. The survey found that, aside from money, people were looking for:
Dr. Nowak agrees that employees aren’t looking for just one thing. “I think money is very critical, but I also think people are in a position to select better employers in terms of managerial practices. Sure, employees can ask for more pay, but they can also notice that they don’t like their manager, they aren’t treated well, they don’t have flexibility, the promotion process is not clear, and they don’t know what to expect in terms of career development. So why not try to find something else?”
One factor that seems to be critical to many employees is the ability to work remotely. Parker encourages employers to be as flexible as they can. “A lot of jobs that required people to be in the office previously have now been proven to work remotely,” he says. “We found that over 40 percent of the people that worked remotely want to continue. Only 2 or 3 percent said they wanted to go back to the office full time. Remote work is here to stay and is a significant determining factor in people’s choices about their type of employer.”
In addition to providing employees flexible work environments, most employers will be able to entice good employees to work for them by getting back to the basics: “The most critical thing is to go back to the principles of good management. We have over 50 years of research that we teach our MBA students,” says Dr. Nowak. “I think the critical role of a manager is to understand that different employees have different needs. So if you’re a good manager in a good company, you will tailor conditions of employment based on the needs of employees. This will be critical to keep talent and attract new talent.”
As a final note, for employers looking to beat the Great Resignation, here are some suggestions: