The Great Resignation - Why Throwing Money at Employees Doesn't Work Anymore
Updated: Nov 18, 2021
A new McKinsey study has found a concerning gap between management and employees' perceptions regarding the most significant resignation wave of all times – aka "The Great Resignation". Organizations willing to take the time to learn why and to lead towards change boldly will emerge strengthened and desirable from this crisis.
Since April 2021, over 19 million employees have resigned from their positions, a record that has caused utter chaos in the job sector. A new McKinsey study examined the issue among 5,774 employees and 250 HR managers in large and medium-sized companies in the U.S., Singapore, Australia, Canada, and Great Britain and found alarming results. 40% of employees responded that there is a likelihood that they will leave their job within 3-6 months, 53% of employers are experiencing greater employee abandonment than in the past, and 64% of them expect the problem to persist or worsen in the next six months.
War of Attrition
If employers were to stop and ask themselves these questions, they would find a huge chasm between what they assume and what their employees are actually feeling. For example, McKinsey's study found that 36% of workers who had left their job in the past six months did so without having a new one lined up. Moreover, two-thirds of the workers who responded that they were considering resigning replied that they would do so even if they did not receive an alternative job offer.
These alarming findings signify that the large-scale resignation wave is unlike any we have ever seen. It also indicates how detached management is from the difficulties their employees have faced since the outbreak of the Covid-19 pandemic. Therefore, it is no coincidence that the term "The Great Resignation" has also been coined "The Great Attrition." And herein lies the problem: our employees have undergone a war of attrition, and as the late Menachem Begin once said, they can go on no longer.
In other words, while the employers attributed the resignation wave to a lack of material incentives, the employees attributed it to a lack of emotional, interpersonal rewards.
Money Can't Buy You Love
When employers who participated in the study were asked why their employees left the organization, they cited wages, work-life balance, and health as the main factors. In contrast, employees cited three main factors as more significant:
54% cited lack of appreciation on the part of the organization.
52% cited lack of recognition and gratitude from their supervisor.
51% cited they were lacking a sense of belonging to the organization.
In other words, while the employers attributed the resignation wave to a lack of material incentives, the employees attributed it to a lack of emotional, interpersonal rewards. Every child knows that money can't buy love, therefore monetary solutions do not address the root of the problem and cannot hold back the wave of resignation.
Starting from Scratch
Change in here: the Covid-19 pandemic undeniably shifted employees' expectations of organizations. These changes will continue to take hold as the hybrid work approach expands. Employees today are exhausted and frustrated; they long for appreciation, a sense of belonging, and close interpersonal communication and are not motivated by materialism but rather are led by emotion. Any attempt to return to old work habits will do more harm than good. Therefore, organizational leaders have no choice but to start from scratch. They must reshape the corporate culture based on the needs that arise from the field.
Employees today are exhausted and frustrated; they long for appreciation, a sense of belonging, and close interpersonal communication and are not motivated by materialism but rather are led by emotion.
The following action plan can serve as a foundation for a healthy work environment for your organization, help to hold back attrition and resignation, and position yourselves as a desirable organization:
1. Creating change together, at eye level: If you do not include your employees in the change process as equal partners, they will continue to abandon you. Even if you have invested time, thought, and money on external consultants, strategy, branding, and media. First and foremost, a healthy change develops trust, therefore plan, execute, communicate and lead hand in hand with your employees as equal and willing participants.
2. Resilience of corporate culture: The resilience of corporate culture is measured by its ability to overcome crises. Therefore, these post-pandemic days are ideal for examining which cultural characteristics have held or even strengthened and which have been exhausted and or lost relevance, and what is required to replace them with new sustainable cultural characteristics that your employees need and want.
3. Materialism, substance, and awareness in rewards: Attentiveness to the needs arising from the field will help formulate a reward program that is consistent with what matters to employees. Remember that money doesn't buy love nor appreciation; therefore, any material reward will have to be supported by authentic interpersonal rewards. The more you do this, the more you will be able to boost your image from a compensating organization to one that genuinely cares.
4. Musical chairs and professional development: Post Covid is a great time to evaluate whether each manager is the right person at the right place – both from their point of view or from an organizational point of view. Horizontal mobility of people and positions with relevant skills can create more precision, enhance performance, and generate opportunities for employees' learning and personal growth.
5. The strength of community: A supportive organizational community is the bedrock for creating a sense of belonging and meaning. Ensure that community strengthening actions are an integral part of your corporate culture and that you have made the necessary adjustments to adapt to remote work.
6. Zero tolerance policy for toxic managers: Abusive managers that do not value their employees and spread negative energy will drive people out of your organization and cause severe financial damage. Ignoring the issue is nothing short of cultural and economic suicide. Don't lend it a hand.
Dr. Ravit Oren is an expert and lecturer at the Bar Ilan University and the Israeli Institute of Technology in Organizational Leadership, specializing in innovative Talent Management, reward systems, and performance evaluations that create profit margins. Throughout her professional career, Dr. Oren has held several executive key positions in large industrial companies in the field of Human Capital.
Dr. Oren holds a Ph.D. from the University of Haifa, where she explores the relationship between organizational leadership and performance management.