Amid all the headlines about millions of workers quitting their jobs during the Great Resignation, it’s easy to miss the signal in the noise.
Yes, a recording 47.4 million Americans quit their jobs last year – more than A quarter of the total workforce. And, yes, the first understandable response from employers was to throw money at the problem in the form of higher compensation. For many, it’s just the supply and demand dynamics of a temporarily tight labor market created by a rapidly recovering economy.
But all the noise that surrounds the Big resignation tends to drown out the much more informative signal that workers are sending. What employers perceive as the Great Resignation is perceived by workers as the Great Transition.
People from a variety of backgrounds, places, and circumstances are looking for something different than what they currently have. Those who quit find new jobs that they perceive as more attractive. This Great Transition is a key attribute of a new dynamic, an environment shaped by constant and rapid change, where there will never be a new normal.
Here’s why: not only are workers more valuable today, as rising wages indicate, but they will be even more so tomorrow. Far from being a temporary condition, the labor shortage is likely to be long term. According to a July 2021 forecast of the Congressional Budget Officethe U.S. workforce will grow only 4% over the entire 2020s. This is barely half the growth rate of the 2000s (9.2%) and only one-seventh the growth rate 1970s (30.2%).
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Workers are willing to take greater risks and are more likely to change companies. Just when a strong economy needs more workers, there are fewer workers entering the workforce. This change gave workers a greater sense of agency.
The answer to attracting and retaining workers for employers must be a cultural solution, as well as a financial one. Demographic trends are making workers scarcer as the demand for their services increases. As workers realize they are more valuable, what workers want and value will have greater influence than ever on the strategic direction of institutions.
In order to attract and retain valuable workers, employers will need to engage in their own great transition, a transition more responsive to workers’ priorities and values. As newly empowered stakeholders, workers will have more say in the future of their organizations. In this environment, managers must ask themselves if the customer is always right, or if the workers must also have a say? Meeting investor expectations is always important, but employee expectations will also need to be considered.
A recent multi-regional McKinsey survey of managers and workers reveals that there is a significant disconnect between how management and employees currently perceive this new dynamic. Managers perceive workers’ desire for more money, greater development opportunities and remote work options, as well as recruiting competitors and pandemic health complications, all as more important factors for change jobs than workers. Workers say their departures are more influenced by the fact that they are valued by the organization, have a sense of purpose, work with caring and trusted colleagues and can have a schedule flexible working.
This disconnect is particularly acute in the tightest part of the labor market: young employees at the start of their careers. a november Ernst & Young survey found that 63% of Gen Z employees believe it is “very or extremely important to work for an employer who shares their values.” Only 32% said earning a lot of money in their career was a priority. This is not just an American phenomenon. A Deloitte survey 2021 of 8,200 Gen Z workers in 45 countries found that nearly half (49%) make workplace decisions based on their personal ethics. In this environment, Gen Z’s concerns about diversity, inclusion, and sustainability must also become the concerns of the organizations they work for.
As workers realize that they have agency, that they can act and that they can make a difference, more of them will take action, making it more likely that they will make a difference. This, in turn, changes the direction of businesses, professions and governments around the world. The transformation will not happen overnight; but because demographics are fate and economic trends create political trends, it is inevitable.
The workers are sending the signal loud and clear. The smartest employers will eliminate the noise and figure out what the signal means.
Joseph Andre is the global president of Denton, the largest law firm in the world, with more than 20,000 people in 81 countries. He served as National President of the DNC from 1999 to 2001.
