DX: The Cause & Solution to the Great Resignation

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Between April and August of 2021, 20 million people quit their jobs in the US.? This has put great pressure on businesses in many sectors, especially dining, retail, hospitality, healthcare and logistics.?

And it’s not letting up.

In September, another 4.3 million people quit and according to one survey, 55% of people say they will likely be looking for a new job within the next twelve months.

At this rate, by the end of 2021, it’s estimated that many companies may have said goodbye to a third of their employees.?

The consequences of this for businesses include lost revenue due to reduced capacity as well as declining customer satisfaction resulting from insufficient staff and a disproportionate number of new hires that are not yet fully trained.

Digital transformation is both a major factor causing the Great Resignation as well as a potential key part of the solution.

In this article, I’ll share why I believe we're seeing these resignations, based on my digital transformation consulting work with dozens of companies, and I’ll share three things that I think you can do to combat this trend.??

Let’s start first with the causes.?

I group the causes of The Great Resignation into two main categories — there are factors that are pushing people to want to leave their jobs, and there are factors that are attracting them to other opportunities and are pulling them away.? Not all of these factors of DX related but quite a few of them are.

THE PUSH: WHAT’S CAUSING PEOPLE TO LEAVE THEIR JOBS??

THE RETURN TO THE OFFICE?

At the start of the pandemic, many companies allowed employees to work remotely if their job was able to be done from home.??

While some businesses are allowing remote and hybrid work to continue, others are requiring their staff to be back in the office full time.?

Many people enjoy the freedom and flexibility of working from home, and don’t want to lose that option, and companies that are forcing employees to come back to the office are seeing a lot of resignations due to this decision. ?

COVID BURNOUT?

There are many industries where the pandemic has taken its toll on workers. Many healthcare professionals and educators, for example, are feeling burned out by the pandemic.?

Some are leaving the workforce or seeking a position in a different industry or location, simply to escape.

THE LABOR SHORTAGE?ITSELF

A negative cycle has been created by the large quantity of people quitting their jobs. Workplaces are short staffed, which then puts even more pressure and stress on the remaining employees, making their jobs worse both because of increased workload and also because they face the emotional brunt of customer backlash caused by company’s inability to maintain prior service levels with reduced staff.??

For some, the pressure may eventually become too much to handle, and even more employees will likely end up quitting— which contributes to the labor shortage even more.?

HISTORIC EMPLOYEE DISSATISFACTION

Many employees who are resigning simply weren’t satisfied with their jobs in the first place. Quitting your job is certainly not a new thing—it’s just elevated right now.?

There are many reasons for this, but studies show that for millennials and younger in particular, working an a digitally enabled environment is very important and so one factor leading to job dissatisfaction is having to work with clunky, aging technology.

And given the hot labor market, employees are taking the opportunity to look for a position if they didn’t like the work they were doing previously, the company’s culture, boss or technology.?

CORPORATE CYNICISM

Decades ago, it was common for people to find a job with a company when they were young, and stay there until retirement. The attitude was, if I do a good job, they will keep me around and take good care of me.?

That attitude has changed for a lot of people. Many employees today have a very transactional mindset about their jobs and their employers.?

With ups and downs of the economy and layoffs, offshoring (enabled by digital communication and collaboration technology) as well as digital disruption of many jobs via various types of automation, it’s a common belief that a company will keep you around as long as they need you, and get rid of you when something better or cheaper comes along.

As a result, many employees don’t feel much loyalty to the company they work for. If a better opportunity comes along for them, they will take it.

REDUCED PERKS?

With fewer employees in the office, many perks that come with having a corporate job are being reduced.?

Some people are losing their corner offices, or other perks they were used to having access to, because they are no longer coming into the office to do their work.

And many large companies are also reducing in-office perks in general, including the perks for employees who are coming to the office, simply because there are fewer people to enjoy them.?

THE PULL: WHAT IS ATTRACTING PEOPLE TO OTHER OPPORTUNITIES

THE TIGHT LABOR MARKET?

Since so many employees are choosing to leave their jobs, most companies have many open positions right now and are hiring as quickly as they can.?

This tight labor market has created the opportunity for people to quit a job they don’t love, without the fear of not being able to find another one.?

A lot of companies are also offering more competitive wages due to the tight labor market, so many employees are leaving their current jobs for higher paying opportunities.?

REMOTE OPPORTUNITIES?

Many companies have discovered during COVID that their employees are highly productive when working remotely. This has opened the door for organizations to hire more full time remote employees.?

This is an attractive option for people hoping to find a new job, because they are no longer restricted by the opportunities that are within commuting distance.?

With remote positions, employees are able to work from almost anywhere with a wifi connection, which allows them to apply to jobs all across the country, instead of just in their own city, expanding the range of options and increasing the likelihood that one of those options will be more appealing than their current role.

COVID MIDLIFE CRISIS?

When the pandemic started, it caused a lot of people to assess where they were in their lives, and ask themselves if they were truly happy. Some discovered they were simply unhappy with their job, and they just needed a change.?

Many people took this time as an opportunity to pursue their dreams instead of staying in a job that just provides them a paycheck but is not fulfilling.?

GIG ECONOMY?

Companies like Uber, Doordash, and Instacart have created a whole new way of working. These apps allow people to earn money when and where they want.?

The gig economy is revolutionary, and that lifestyle is attractive to a lot of people.?

The idea that you can work to make money around your schedule, and you can work as many or as little hours as you desire, is a great option for people who would rather not be tied down to a 9-5 job.

ONLINE BUSINESSES?

Digital platforms like eBay, Amazon, and Etsy, have changed the way people buy and sell things.?

Almost anyone can sell items on these websites. Some people use this as a side hustle to make a little extra money, but others run full fledged businesses by selling goods and services online.?

Many people desire to be their own boss, and these platforms make that easier than ever.?

INFLUENCER ASPIRATION?

Years ago, when you asked a kid what they wanted to be when they grow up, chances are you would hear answers like a firefighter, a teacher, or a ballerina.?

But today, kids want to grow up and be YouTubers. The opportunity to create content online, and make a living doing that is exciting to a lot of people, and not just for kids.?

SHARK TANK HAS BECOME THE NEW AMERICAN DREAM?

While creating a product or service and starting a company is hard work no matter what, it’s become easier to do so in recent years.?

There are so many digital tools and resources that entrepreneurs can tap into to help them get their businesses’ off the ground. This has helped many people achieve the dream of starting their own company.?

Additionally, the gig economy and positive labor market have decreased the risk for employees interested in leaving a job to start their own venture because they have many options to work part time jobs with flexible hours to support themselves while getting their business up and running.?

WHAT CAN YOU DO ABOUT IT?

It can be a major problem for businesses if a large portion of their employees leave. There are multiple ways of solving that problem, some of which involve replacing employees who leave, and others may not.?

DISCOURAGE RESIGNATIONS?

This may sound obvious, but there are a lot of things that you as an executive can do to help discourage people from quitting.?

Simply showing appreciation for your employees can go a long way in keeping team members happy at work.?

And of course, increasing their compensation helps as well. Whether you increase their wages, provide better health benefits, or offer more vacation time, these things are excellent motivators for employees and help discourage resignations.?

Making sure your company culture creates a positive work environment is crucial as well. This goes for both in-person and remote employees.?

Additionally, when employees feel as though they have the opportunity to grow and advance within the company, they are less likely to quit.?

Perhaps the most important of them all is to offer flexibility in the workplace, such as allowing employees to work from home when they prefer to. A global study done by Ernst & Young showed that 54% of employees will leave a good job with great wages, for one that offers a more flexible workplace.

INCORPORATE MORE DIGITIZATION?

Finding ways to allow fewer employees to do the same or even more work by applying automation has been an ongoing trend for some time.?

If you’re finding yourself in a labor shortage, like so many companies, it may be time to accelerate that process.?

If employees have left and you are short staffed, it could be an opportunity to employ more digitization to automate, hopefully increasing quality, reducing costs in the long term, and making life easier for the employees you still have.?

For example a short-staffed restaurant could implement a platform that allows diners to order on their device right from their table and pay their tab that way as well, saving waitstaff from two of their three primary moments of customer interaction.

EMBRACE THE GIG ECONOMY?

Large corporations can stand to learn something from the gig economy.?

Imagine if Target hired people and allowed them to work the way Uber does. They could provide online training to get people qualified, and then those workers could sign up for as many or as few shifts as they’d like.?

This could be beneficial for the employee, because it would give them the flexibility that so many people are looking for, and while makes the hiring and scheduling process more complex for Target, it could not only increase their labor pool but give them more flexible capacity. Imagine a "smart" Target store that automatically sends an alert out to local, Target-trained "gig" workers when the store gets too busy, and if not enough people respond, the "smart store" starts offering "surge" rates to entice the labor needed to run the store effectively at that moment.

These models may not work for every company, but there may be bits and pieces that companies can adapt to fit their own models that will benefit the company and their employees. I predict that The Great Resignation will continue well into 2022, so it’s important that employers and executives are doing what they can to combat it, embrace it, or a combination.

I did a whole livecast on this topic recently, by the way. You can view that here.

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Howard Tiersky is the founder of FROM, The Digital Transformation Agency where he works with leading brands on Digital Transformation.

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