We’re used to thinking about the labor market through the simple lens of supply and demand. Need skilled workers? Offer better compensation than your competitors, and manpower and talent will flow in your direction. Looking for unskilled labor? No need for high salaries—there are always workers who need the jobs and are willing to work for minimum wage.
But like in so many other fields, the Covid-19 pandemic has broken the mold of established economic theory in the labor market. In many countries, unemployment is high despite the fact that there is an almost unprecedented number of job openings. Even more surprising, people are quitting their jobs en masse in a time of absolute uncertainty, something that was unthinkable in the past. Researchers have coined this expected phenomenon “The Great Resignation” or TGR.
What forces have led to TGR? How can it be explained? And even more important, what can companies do to prevent TGR from impacting their business?
What Has Caused The Great Resignation?
TGR is a complex phenomenon, impacted by many factors and multi-faceted trends that are too numerous to be detailed in one article. In this article, we’ll zoom in on two interesting trends and changes in perception that have occurred as the result of the global pandemic.
Expect the unexpected (and be prepared for it)
2020 and 2021 have taught us all to expect the unexpected. It’s not only Covid-19—extreme weather events and political upheavals have contributed to the sense that there’s no way to predict what’s coming next.
This has impacted the way people perceive their jobs. Many employees are reevaluating their work situation and placing greater importance on things like flexibility, the ability to work from home, and the option to take sick days to care for a family member. They want better health insurance and worker’s compensation in case they or a loved one are impacted by Covid-19 or another health condition.
The desire to prepare for an unexpected future has shifted the conversation in the HR world in general, and in tech in particular from a focus on salaries to a focus on benefits and work environment. However, these things are challenging for employers to track and benchmark, leaving many HR managers feeling like they are navigating the situation in the dark.
Money can’t buy you love (Or health. Or happiness.)
Another key driver of The Great Resignation is changing priorities about money. At the beginning of the pandemic, many of the things we needed money for—like travel, expensive work lunches, tickets to a game or concert, or even a stunning outfit for a night out on the town—were suddenly unavailable or no longer relevant. People who were fortunate enough not to lose their jobs had nothing to spend their money on. That changed how employees prioritized their salaries—a raise is less exciting when you’re sitting on your couch eating takeout. Many people became less interested in financial compensation and focused on alternative ways to achieve satisfaction and happiness.
And in many cases, their high-paying tech jobs didn’t deliver on their new priorities. For example, if employers weren’t sympathetic to the difficulties of balancing remote work and homeschooling or expected employees to show up physically and expose themselves to danger during Covid surges, high salaries were often not enough to compensate. Likewise, after spending forced time at home with their families, many employees simply did not want to return to a daily routine of prolonged separation. They wanted more time to spend with their loved ones and on things they cared about, and no type of financial compensation could change that calculation.
How Can Companies Build Resilience in the Age of TGR?
TGR is likely to cause the greatest fluctuation in compensation that the tech industry has ever seen, forcing employers to rethink salaries, benefits, work requirements, and even promotion policy. HR managers can’t rely on data from the past for direction—the current situation is so dynamic that they need real-time industry data about salaries, benefits, remote work options, and vacation policy to create relevant strategies and benchmarks.
It’s not only that. With more people searching for that elusive work-life balance, increased flexibility, or simply being less concerned with earning money that they don’t know how to spend, employees are more at risk and ‘poachable’ than ever before. HRs/CFOs need a way to track wages and benefits against fluctuating industry averages to ensure they are offering competitive packages. The traditional annual Compensation Cycle isn’t enough—the changes are so rapid that benchmarks need to be updated every few months. This places an increased workload on already overworked HR leaders who are struggling to keep their heads above water.
Better tools are needed to respond effectively to The Great Resignation. With Compete, HR leaders are empowered with the analysis of over 50 types of benefits including signing bonuses, parental leave, remote work policy, and health care provision. Compete makes it easy to create benchmarks and respond to trends in real-time.
TGR doesn’t have to be a disaster for companies—it can also lead to a positive change. Compete helps you respond effectively to the challenges and leverage opportunities so that you can navigate the dynamic HR world of 2021.