The Great Resignation refers to the record number of workers who have quit their jobs or left the workforce since the start of the Covid-19 pandemic.
The Great Resignation refers to the ongoing economic trend characterised by employees voluntarily leaving their jobs or resigning from the workforce.
This trend was brought on largely by the Covid-19 pandemic, which caused many people to re-evaluate their lives and careers and seek out more fulfilling work, flexible work arrangements or a better work-life blend. It has resulted in abundant job opportunities, labour shortages and big pay increases for workers who quit one job to take another.
While the Great Resignation has created challenges for employers, such as talent shortages and workflow disruptions, it has provided opportunities for career exploration, improved work-life balance and employee empowerment.
History of the Great Resignation
In an article with Bloomberg Businessweek in May of 2021, Anthony Klotz, a professor of business administration at Texas A&M University, explained that a major pandemic-related labour shift, which he coined the ‘Great Resignation’, was on the horizon.
According to Klotz, “When there’s uncertainty, people tend to stay put, so there are pent up resignations that didn’t happen over the past year.” He explained that this was further exacerbated by “pandemic-related epiphanies” about life, death, family time, remote work and more, which led many people to find new jobs or quit the workforce entirely.
While the term was originally used to describe the US labour force, the Great Resignation is a much broader trend that spans multiple industries, geographical regions and demographics. According to PwC’s Global Workforce Hopes and Fears Survey, which collected data from more than 52,000 workers in 44 countries and territories, 1 in 5 workers planned to quit their jobs in 2022.
According to the 2023 survey, which surveyed 54,000 workers in 46 countries and territories, a quarter of workers expect to change jobs in the next 12 months – up 19% from 2022. Be that as it may, recent data suggests that resignations and job openings will plateau in 2023, indicating a gradual easing of labour shortages.
Recent trends in the Great Resignation
Improving employee retention
According to the ADP Research Institute’s chief economist, Nela Richardson, “The Big Quit of 2022 could be easing into the Big Stay of 2023” as attracting and retaining talent during the Great Resignation has caused many companies to take a closer look at their retention strategies. This has often led to the introduction of flexible work arrangements, increased wages and revamped benefits packages – all of which have had a positive impact on employee retention.
Flexible work arrangements
While remote work was first implemented out of necessity during the Covid-19 lockdowns, it came to be the preferred method for many employees as it allowed for greater flexibility and autonomy. Companies also began to recognise its benefits, as it improved productivity, employee wellbeing, cost savings, removed geographical boundaries and more.
As the pandemic subsided, many companies continued to offer remote work arrangements, while others opted for a hybrid work system that combined both remote and in-office work. In a post-Covid world, this flexibility has become increasingly important to employees – meaning that companies must adapt if they want to attract and retain employees during the Great Resignation.
According to July 2022 data from the consulting firm Mercer, more than two thirds of US employers are planning to enhance their employee benefit offerings over the next 12 months. As 71% of PwC’s Global Workforce Hopes and Fears Survey respondents cited pay as the main factor in wanting to change jobs, providing competitive compensation is a good place to start. However, enhancing employee benefits can take on a variety of forms, such as improving company culture, employee engagement and recognition, work-life balance initiatives, employee wellbeing programmes, professional development and training, and more.
With regard to the latter, companies should consider conducting a skills assessment and gap analysis to identify where there may be gaps or emerging skill requirements. This analysis will help determine the specific upskilling and reskilling needs within the organisation, which can help bridge the skills gap, create a more adaptable workforce and retain valuable talent. These initiatives can range from training and development programs, internal mobility programs, mentoring and coaching, and more.
The cost-of-living crisis
While the Great Resignation seems to be slowing down, the cost-of-living crisis rages on. According to the 2023 Hopes and Fears Global Workforce Survey, 46% of respondents said either that their households were struggling to pay bills every month, or that they could not pay bills most of the time. As such, some scholars believe that a ‘Great Resignation of 2023’ is inevitable as employers are not providing their employees with enough, or oftentimes any, cost-of-living support.
Advantages of the Great Resignation
- Career exploration and personal growth opportunities
- Improved work-life balance and flexibility
- Increased focus on employee well-being and mental health
- Emphasis on upskilling and professional development
- Entrepreneurial opportunities and innovation
- Enhanced diversity and inclusion in the workforce
- Empowerment of employees to demand better working conditions and benefits
Disadvantages of the Great Resignation
- Talent shortages and increased competition for skilled workers
- Disruption and instability within organisations due to frequent resignations
- Loss of institutional knowledge and expertise as experienced employees leave
- Financial impact from recruitment, hiring and training costs
- Uncertainty and risk for individuals without clear next steps
Even before the Great Resignation, Microsoft has been making strides in promoting work flexibility and accommodating employee preferences. In 2020, the company announced its ‘Hybrid Workplace’ strategy, which emphasised a flexible work environment and allowed employees to choose their work location. Microsoft also provided resources and guidance to help managers and employees navigate the transition to remote work during the Covid-19 pandemic.
Additionally, in October 2020, Microsoft unveiled its ‘Work from Home’ policy, which gave most of its employees the option to work remotely permanently, even after the pandemic. This shows that the company recognises the benefits of remote work, such as increased employee satisfaction, productivity and diversity. Microsoft's response to remote work and its focus on employee flexibility demonstrates a proactive approach to meeting employee needs and adapting to changing work trends in the face of the Great Resignation.