November fueled another record month for the Great Resignation, as 4.5 million workers either left or switched jobs, according to data released Tuesday by the Bureau of Labor Statistics.
The November milestone usurps the previous record of approximately 4.4 million workers who ditched their jobs in September.
The so-called quits rate, which examines the amount of voluntary departures as a percentage of total employment, increased in both smaller businesses employing one to nine workers as well as larger shops with 1,000 to 4,999 workers.
The data paints a grim portrait for those with high hopes that the Great Resignation would subside along with the pandemic. It’s especially a thorn in the side for smaller businesses already stretched thin when it comes to talent and other resources.
The wave of departures is also pressuring businesses to pay their employees more amid the current tight labor market. “To the extent that employers are having difficulty filling positions, wages will rise,” says Peter Earle, a research fellow at the American Institute for Economic Research (AIER). “But with the rise in the general price level, many firms will find the amount that they can raise wages constrained.”
The quit rate signals rising operating costs for business, since replacing one employee can cost between one-half to twice the amount of a worker’s salary. Not to mention the burden workers left behind take on when they pick up the duties previously reserved for a former colleague.
Though pay is a driving force behind why some are leaving their roles,other reasons such as burnout and concerns with management factor in as well.
Increased flexibility and the opportunity to advance careers are also adding fuel to the burgeoning Great Resignation fire, according to Erica Groshen, a senior economics advisor at Cornell University’s School of Industrial and Labor Relations. That’s because many people not only earn more, but also are more likely to get promoted when they’re hired for a new position, Groshen explains.
So what are businesses to do as workers continue to leave their jobs in droves?
Small business owners are paying up to retain their workforce, says Simon Worsfold, a senior data manager at Intuit’s accounting software package arm, QuickBooks. In fact, 46 percent of small businesses are “planning to increase pay for existing employees and 36 percent [are] offering larger bonuses,” according to a December QuickBooks survey of 2,000 small business owners.
But business owners themselves are helping to increase the churn. “They aren’t just on the defensive; nearly half of small business owners expect to expand their workforce in [the first quarter this year] and are increasing pay to attract this necessary new talent,” Worsfold adds, backing up Groshen’s point.
Recalculating your compensation and benefit packages to make sure that they’re competitive is a start, but engaging with your workforce and taking the temperature on worker satisfaction is another leadership hack shown to also improve employee retention. A February 2021 survey from Workhuman highlighted that a simple thank you can help boost retention rates. Both gratitude and recognition are seen as drivers of employee engagement, something that proves especially useful when worker morale dips.
While you can’t prevent employees from leaving, you can limit the damage by building resiliency into your organization. “It’s important to build in redundancies and eliminate single points of failure,” AIER’s Earle says. “The probability that a key worker suddenly quits without notice seems to have never been higher.”