As the months of 2023 have ticked by, the Great Resignation has quietly lost something: its greatness. The worker resignation rate in June fell to 2.4%, essentially returning to where it was in June 2019. For employers who had been in a war for talent, the dramatic lack of turnover has brought welcome relief. But what does that mean for workers, who in 2020-22 enjoyed a wealth of new benefits, job flexibility, and employer concern about their well-being? Will employers start taking workers for granted?
While HR experts say that most employers won’t be inclined to turn the clock back to 2019, workers will see a more miserly approach. In terms of total rewards, you could call it the Great Moderation. “Employee retention at all costs–in terms of very high salaries; PTO and other employee perks–is over,” Janine Yancey, CEO of the corporate-culture platform Emtrain, told From Day One. While she believes that job flexibility and pay equity are here to stay, “we’re moving into a time of scarcity, not abundance, which impacts the employee experience.”
The Great Resignation’s obituary was written earlier this month, when the management professor who coined the term in 2021, Anthony Klotz, told Fast Company, “I believe the Great Resignation has largely come to an end.” Added Klotz, who is now a professor at University College London’s School of Management: “The backlog of quitting has certainly cleared, as has the turnover contagion and tight labor market it caused in its wake. People who had pandemic epiphanies and planned life pivots have enacted them; and in some cases, boomeranged back to what they were doing before.”
Why They’re Staying
Employee surveys indicate that workers are motivated to stay in their jobs by a mixture of caution and the need for a calm stretch of time. The massive layoffs early in the pandemic, followed by the wave of austerity-inspired layoffs in the last year, have made workers less inclined to be job-hopping if they trust their situation.
At the same time, they are overdue for some R and R for the sake of their sanity. “We are now in a time when stability and routine are supporting mental-health needs as many recover from the shock of unplanned life/work changes,” Laura Sewell, EVP of North American HR for the IT services consultancy Avanade, told From Day One. “It has only been in the past 12 to 18 months that more and more people have begun planning vacations, events, and other activities which were put on hold during the pandemic. As such, having access to paid time off through their employer offers them both the time they need and the financial backing to finally take those trips and plan the events. And you are less likely to switch employers when you are planning big, fun things outside of work in your personal life.”
The incentive to switch jobs for higher compensation has eased as well, Sewell notes. “While the war for talent was raging, employees could often get 20%+ more by leaving their employer to join a competitor. Job seekers today may not find that same opportunity for significant increase in earnings, thus reducing a motivating factor for making that move.”
Why Employers Are Tightening Up
The combination of high interest rates and slow economic growth have inspired companies to clamp down on spending as well as hiring. “2023 has been the year of massive downsizing across the board,” observes Yancey. “Capital is scarce and capital fuels business growth, so that will impact job growth. Businesses are focused on showing profitability first and foremost.”
How will the austerity mindset affect employee benefits? That issue has caused tension between finance departments and HR leaders who just recently had been working overtime to create new incentives to attract and retain employees, including programs to support worker well-being and family caregiving. “We’re in this constant battle with finance,” said Ken Wechsler, VP of total rewards at Akamai Technologies, in a recent From Day One webinar on employee benefits. “We’re fighting for it, and I guess my colleagues on this call will also fight it. We might not get as much moving forward, but we will fight.”
Benefits leaders are finding that they need to justify spending much more than they did in the recent past, said Todd Cowgill, VP of global rewards for Equinix, a digital-infrastructure company. “If you cannot tell what the return on investment of your program is, you will lose that program,” he said in the webinar. “You have to understand what the company as a business gets because of the program, what it costs, and what it gets back.”
Which Workplace Improvements Will Endure
Part of the reason for low turnover right now, Avanade’s Sewell points out, is the enhanced working conditions that were inspired by the hardships of the pandemic. “Over the past three years, inclusion and well-being have rocketed to the top of our people priorities. With this increased focus, employees are feeling better supported at work, have access to more resources and benefits to take care of themselves, and in general, most have greater flexibility in how and where they get their work done.”
Despite well-publicized efforts by some major employers, notably in finance, to bring workers back to the office for a majority of the workweek, job flexibility is a value that has become well-embedded in the expectations of most workers. Asserted Emtrain’s Yancey: “I believe the need for job flexibility is here to stay and employer's obligation to create jobs with pay equity and a healthy, inclusive work culture is here to stay.”
So is the inclination for workers to negotiate their terms. “Everything is in play now–things I had never even thought of when it comes to total rewards,” said Akamai’s Wechsler. “We give employees the choice of where they want to work, and 90% of them have said they want to work from home. They’ll self-select. We make the effort to do things in the office a lot–but now a lot means quarterly. We know that most will not want to come, and some folks will want to attend an event because they get to go to the office.”
Trying to Reach an Equilibrium
While turnover may be low at the moment, forward-looking employers know that future job shortages driven by an aging population and new attitudes toward work mean that they can’t forget the lessons learned during the Great Resignation. “It’s a new culture of work,” behavioral scientist Laurel McKenzie told Fast Company’s AJ Hess. “No one’s staying at organizations for years and years. The new culture of work is that people are willing to leave and find something better. There’s not a sense of loyalty to organizations anymore. People are more focused on taking care of themselves and finding organizations that will enable that.”
Avanade’s Sewell says her company keeps close tabs on employee-engagement surveys to pick up on trends in employee sentiment. “We take nothing for granted. There will always be cycles, which can often be unpredictable. Our goal is to maintain the hearts and minds of our employees through all of the ups and downs and be prepared for what is ahead. By building loyalty now, we are creating a stronger foundation for whatever wave comes next.”
In a book to be published next month, The Retention Revolution: 7 Surprising (and Very Human!) Ways to Keep Employees Connected to Your Company, workplace strategist and bestselling author Erica Keswin calls for a new paradigm in thinking about the relationship between workkers and employers. “The time is now to reconsider everything we know about the employee journey and why linear thinking is being replaced by the more human reality of cycles, revolving doors, and dynamic change.”
Steve Koepp is From Day One’s chief content officer.
