Surveys and official data both offer compelling evidence that the projected wave of employee resignations is both here and likely to increase as we move into 2022.
Earlier this week the U.S. labour market data for August was released. Altogether, a record 4.27 million people left their jobs that month. The overall employee quit rate climbed to 2.9% and 3.3% for private-sector employees. Both are the highest figures on record since the American government began to keep track in 2000.
A McKinsey survey, published in early September reported that 40% of employees were, at least, ‘somewhat likely’ to leave their current job within the next six months. Fifty-three percent of the employers surveyed said that they are experiencing greater voluntary turnover than they had in previous years, and 64 percent expect the problem to continue, or worsen, over the next six months
Official data in this country suggests that a surge of employee resignations has not materialised; yet.
Although the Australian Bureau of Statistics does not report an equivalent quit rate, the three-monthly job vacancies data provides some insight.
The most recent data (August 2021) shows that 75.1 per cent of Australian organisations with vacancies reported ‘replacement/resignation’ as a reason for the vacancy (more than one reason can be nominated). This figure was actually a slight decline compared to the pre-pandemic equivalent data for February 2020, of 78.5%.
However, you only need to read a small selection of surveys to know that employees are more bullish about resigning than they have been for many years.
In February and March this year Richard Lloyd Accounting Recruitment surveyed over 1,600 Sydney-based accounting professionals with an astonishing 59% of respondents nominating themselves as likely to look for a new job in 2021. This was despite nearly 58% of those same respondents reporting that they feel either ‘highly valued’ or ‘valued’ by their existing employer and 74% stating that they were either ‘happy’ or ‘very happy’ with the way their employer has treated them through the COVID-19 pandemic.
It’s those sorts of, seemingly, contradictory pieces of employee feedback that will be leaving many employers in a cold sweat.
Richard Lloyd’s data on Australians planning to leave their job was validated by Slack’s most recent 2021 Future Forum Pulse report, a survey of 10,569 knowledge workers across the U.S., Australia, France, Germany, Japan, and the U.K. conducted from July 28 to August 10, 2021. Some 57% of those surveyed said they are open to looking for a new job within the next year with Australia’s result even higher at 60%; a figure exceeded only by the US result.
In New Zealand, a recent survey of employees by HR software company, Employment Hero, reported 48% of workers are planning to change jobs in the next year. The survey also found that 40% of workers are planning to search for a new job within the next six months while 15% are already actively searching.
Unfortunately, for employers, there is a perfect storm of reasons that make a surge in resignations inevitable; here are the most significant seven:
1. Pay: In America, pay was easily (41%) the major reason employees were departing their jobs with benefits (23%) a long way behind in second place.
Over 50% of respondents to the aforementioned Richard Lloyd survey received no salary increase, or took a pay cut, during 2020.
Consulting firm, Oxford Economics reports that this year pay in the rich world is growing at a rate well north of its pre-pandemic average.
An early October survey of 1,083 CFOS from across the US by Duke University’s Fuqua School of Business and Federal Reserve Banks of Richmond, Virginia, and Atlanta reported that 74% of the companies represented in the survey are having difficulty filling open positions and 82% of those firms are raising starting wages by an average of 9.8% in an attempt to fill vacancies.
Now that flexible working has become far more common, if not mandated due to the pandemic, women are prioritising pay, rather than flexibility, in their search for a better role.
A recent survey of 6,000 women in six countries including the US, UK, Brazil, India, Mexico, and China reported that 90%, of women, say they will make at least one move in the next 12 months to boost their job prospects or change careers with 32% of the respondents citing a competitive salary as their most important employer-provided benefit, followed by flexible schedules (25%).
Australian workers are unhappy about their pay and will quit in order to be paid more; with good reason. Over the period from June 2014 to June 2021, the average income for Australian workers has increased by 2.36% per year. Inflation over that period has averaged 1.62%.
Company profits before tax increased over the last seven years by an average of just under 9% per year according to the ABS. Just over a quarter of productivity gains are going to labour and just under three quarters of these gains are flowing to shareholders. This is a historic level of imbalance.
Employees know employers can afford to give them a decent pay bump and if it’s not forthcoming they will go elsewhere to get it.
Many employees may say to their employer they are quitting for better career opportunities or new challenges elsewhere but in a large majority of these cases, the underlying driver of the worker’s job seeking activities is dissatisfaction with their pay.
2. Change industries: Linked to better pay will be the greatest opportunity that most job seekers will have in their career to move industries.
The NHS in the UK is bemoaning the competition that the likes of Amazon provide in the battle to recruit and retain staff.
Earlier this year a NAB executive posted on Linkedin a Branch Manager role he was recruiting for in New South Wales, in which he wrote;
I’m sick of fishing in the same pond of people jumping from bank to bank.
Are you a barista who knows how to work under pressure with a smile? Please apply.
Do you know how to manage a busy clothing store whilst delivering a great in store experience? Apply now!
One of my highest performing home lenders worked at KFC a couple of years ago until he decided he was ready to make a move.
In the struggle to fill jobs, many companies have finally woken up to the benefit of assessing job seekers on their attitude and core competencies, rather than their skills and experience.
This change spells big trouble for many industries with low pay, unsociable hours, and poor conditions.
3. Travel: When I was 22 years old I left Australia to head off backpacking. I was away for nearly two years. For tens of thousands of young Australians ‘going OS’ has, for decades, been a rite of passage; but not since March last year.
Although some would-be backpackers will be discouraged from travelling because of the border closures you can be sure there’s a large majority who haven’t been and they are just waiting for international travel to return to somewhat normal so they can resign and see the world.
An unintended benefit of long lockdowns will be the balances of twenty-somethings’ savings accounts; they are likely to be far healthier than would otherwise have been the case. Lockdowns closed the greatest recipients of young people’s spending – restaurants, pubs, clubs, festivals, and other live entertainment. Much of those savings will now be spent on international travel.
4. WFH/remote work policies: An Ipsos survey for the World Economic Forum among 12,500 employed people in 29 countries found that a majority want flexible working to become the norm. And almost a third (30%) said they would consider looking for another job if they were forced to go back to the office full time.
A Grant Thornton survey of 1,500 full-time employees in the US found that 79% want flexibility in when and where they work, and 40% would look for another job if forced to return to the office full time.
The 2021 Future Forum Pulse reported that of those currently working fully remotely, nearly half of all executives surveyed (44%) want to work from the office every day, compared to 17% of employees (2.6x difference). The stark differential continued when asked about working three to five days per week; 75% of these executives expressed this arrangement as a preference compared to only 34% of employees.
A Qualtrics survey of 1,000 full-time employees throughout Australia and New Zealand found that 77 per cent of respondents believed it was important their employment allowed them to live anywhere when looking for a new role. Fifty-one per cent of Australians say they would stay longer with their current employer if the remote working policies introduced over the last year remain permanent, and 12 per cent said they would probably quit their job if they were forced back into the office full time
Two months ago, New Zealand software company, Xero, recently announced a recruitment drive with all roles being available as remote ones. While employees will have to be located in a country or province where Xero has a presence and is registered for payroll, they are welcome to relocate to anywhere within that. For those who opt for permanent remote work, Xero will fund up to four visits to an office each year.
It’s clear that employees will quit if they are dissatisfied with their current employer’s WFH policy and with many companies heading down Xero’s path there will be many other employers with more suitable WFH options for unhappy workers.
5. Burnout/mental health: Inextricably linked to WFH policies is the issue of burnout and mental health. Although lockdown-induced burnout seems more prevalent in the US and the UK than in Australia.
A survey of 1,500 people across the UK about their attitudes to job changes, mental health, and burnout found that 62% of workers are working more hours since the start of the pandemic, totalling 8.7 billion hours.
More than half, or 59%, of workers say their mental health is driving them to change jobs. Over half the workforce (51%) feels they are less than a month away from burnout. If this result was extrapolated across the UK economy then 16 million British workers could change jobs in the next six months.
A recent Deloitte Access Economics survey commissioned by Telstra found 54% of employees valued hybrid work as or more important than a 5% pay rise. The study also found that 90% of workers think hybrid work has improved their mental health, while 83% say their physical health has improved.
Research indicates that working 38 hours per week and taking six weeks’ holidays each year maximises the well-being of full-time workers.
The Richard Lloyd survey revealed that 76% of respondents reported their work/life balance had improved as a result of WFH and 87% want to continue working from home at least one day per week.
If these results mirror other Australian professionals it’s a sure bet that if a return to the office leads to burnout, especially extra work borne of prolonged staff shortages, workers will have much less tolerance for it and will resign.
6. Workplace vaccination policies: A Randstad USA survey of 1,227 employees conducted two months ago found that 73% remain concerned about workplace safety and cleanliness standards as protection against COVID-19. It also found that 38% would like to see employers request proof of vaccination from returning employees before re-opening their workplace.
The findings from ELMO Software’s Q3 Employee Sentiment Index reveal the proportion of Australian workers uncomfortable working alongside unvaccinated colleagues has climbed to 58% from 43% in the June quarter. Vaccination passports have also been welcomed by nearly four in five Australian workers (79%).
Both PwC and Deloitte recently announced vaccine requirements for workers returning to the office or attending company events. It follows similar moves by Telstra, food manufacturer SPC, Qantas, and Virgin Australia.
Although astonishingly some US healthcare providers are using ‘no COVID-19 vaccination requirement’ as a recruitment differentiator it seems unlikely that tactic will win favour with anything other than a tiny minority of existing and potential employees in Australia.
Workers who feel strongly, either for or against vaccinations, will quit if their employer adopts a vaccination policy that they disagree with. Pro-vaccination employees will also quit if they believe their safety is being compromised by their employer’s inconsistent enforcement of existing policies designed to protect them.
7. FOMO (or the domino effect): Scariest of all for an employer is that employees will quit because they are emboldened by colleagues, family, and friends who are securing a better job elsewhere. Even previously satisfied employees can experience Fear Of Missing Out (FOMO) when better jobs seem to be available to others; “Why not check out the options for myself?” they think. And guess what? In a job-rich market they find plenty of employers ready to offer them something more interesting or well-paid compared to their current job.
McKinsey reported that 36% of US employees who recently quit did do so without a job to go to. Such a high figure indicates great confidence in one’s short-term job prospects and with the job market likely to get even hotter into 2022 this quit-with-no-job-offer percentage will surely climb.
If employers are frustrated with their current inability to fully staff their business then it’s more than slightly terrifying to consider what’s ahead when ‘the great resignation’ of 2022 is upon them.