Global experts are calling the current shift in attitude towards work the “Great Resignation,” and for good reason. Employees have had time to reflect on their careers — and during those reflections, many decided they’d be better off not working or working elsewhere.
What do these dramatic changes mean for your organization? While this new normal begets new obstacles in both retaining and attracting employees, it’s possible to come out on top with a happier workforce and thriving culture.
Here, we’ll explore the factors that gave rise to these changes in the workforce — and the steps you can take to improve employee engagement and retention.
Why is the current job market so unique?
What people are resigning from is “hustle” culture: the idea that we’re defined primarily by our work and how hard we work, and everything else—other important parts of our life—must fit into the increasingly small space that is left.
As a result, nearly 47 million workers voluntarily left their jobs in 2021, with millions more making the same decision in 2022. Whether it’s a desire for more flexible work models, the promise of a higher salary, or simple dissatisfaction that’s driving this upheaval, one thing is certain — employers are facing a considerable challenge when it comes to employee retention.
So what’s driving this widespread employee exodus? Even before the pandemic, employee retention was a major issue for employers. Low unemployment for high school grads and above meant companies had fewer jobseekers knocking on their doors, giving workers an edge in negotiating new, better-paying opportunities. But once the pandemic hit, job-hopping rapidly came to a halt. In April 2020, the unemployment rate skyrocketed to 14.7%, the highest number in years. Unsure of what was to come, many workers decided to ride out the bulk of the pandemic with their current employer.
Vaccinated, eager for a change, and with more visibility into what the future may hold, employees are now making their next career move. Many are pursuing better offers at different companies. Some are switching industries to find roles they’re more passionate about, while others are opting out of the workforce entirely, leaving stable careers to start a business or regain personal time. Employees’ reasons for quitting may differ, but their decisions are impacting employers in the same ways — resulting in steep costs and countless vacancies.
How does low employee engagement and retention affect your organization?
It’s no secret that employers pay a high price for turnover. According to Gallup, replacing an employee costs one and a half to two times the employee's annual salary — not including less measurable costs, like reduced team morale and lower productivity. Gallup also estimates that across the U.S., the costs associated with voluntary turnover total $1 trillion each year.
To make matters even more difficult, companies are having a hard time filling vacancies while simultaneously grappling with the loss of top performers. The National Federation of Independent Businesses found that 46% of small business owners weren’t able to fill job openings this June, with industries like food service and hospitality, retail, and manufacturing struggling most.
Wondering where your organization stands? Here’s how to calculate your employee retention rate:
First, choose a time period to measure, like a month, quarter, or year.
Next, divide the number of employees who lasted the duration of the time period by the number you had at the beginning, and multiply by 100.
If your employee retention rate is lower than you’d like, consider taking time to understand the reasons why your employees are pursuing new opportunities — and how the pandemic affected them — so you can properly address the issues that spurred their departures as well as consider what benefits and job perks could move the needle.
3 ways the new normal has impacted employees
The new normal has challenged us all in many ways, and it also caused employees to rethink their attitudes toward work. It had both positive and negative effects, opening our eyes to new possibilities in how we work and bringing new stressors that tested our resilience. Here are three ways the new normal impacted employees:
1. New expectations about flexibility and autonomy
Many employees now expect greater flexibility in when and where they fulfill their job responsibilities. According to a recent global survey by Future Forum, 76% of workers want more flexibility about where they work, and 93% want greater flexibility in when they work.
2. Greater life-work integration
More and more people are reporting that work won’t take precedence in their lives anymore. In fact, a survey by the Achievers Workforce Institute found that 25% of employees would leave their jobs for better work-life balance. However, workers don't want flexibility for the sake of it— behind the need for flexibility is the desire to recalibrate our relationship between our lives and work.
3. Higher rates of burnout
The new normal has been particularly taxing on parents and caregivers who had to juggle home and work responsibilities around the clock. In fact, according to a 2021 study, more than 10 million workers are experiencing some form of burnout. Clearly, the pandemic has disrupted work as we know it. Rather than simply trying to return to what used to be normal, it’s important for employers to consider the ways that work has been forever changed — and understand the new needs and desires employees are bringing to the table.
What factors are causing so many employees to quit?
Although the new normal has impacted employees in many ways, these only partly explain why workers are leaving their jobs in record numbers. Experts point to a range of additional factors pushing people away from their current workplace — or out of the workforce entirely:
1. Early retirement
After the pandemic hit, many aging workers decided to call it quits — for good. The New York Times reported that 1.6% more people ages 65 to 74 were retired in March 2021 than the year prior. A number of factors could be the cause, from a rise in home values to a reluctance to work in person.
2. Fear of COVID-19
Many people are still taking precautions around COVID-19 and want to keep clear of jobs that require in-person work. This partly explains the shortage of workers at bars, restaurants, and theme parks.
3. Low wages
Many employees are quitting for higher salaries in order to support their families. With inflation at historic levels, employers are pushing back on their annual 2 to 3% raises for salaries that better match the market conditions.
4. Desire for hybrid work
While there are certainly workers who would rather not return to the office, the fact is that most want to go back — at least some of the time. A study by McKinsey found that 75% of workers prefer a hybrid model.
Many employees moved out of the state or across the country when the shutdown occurred, without promises from their employers that they could keep their job when the pandemic ended. As offices reopened, some have chosen to simply quit rather than move back.
For employers, the message is clear. In order to boost attraction and retention of employees, you need to make proactive changes that align with employees’ desires and increase well-being at work.
How can you improve employee engagement and retention?
The first step in preventing turnover is simple — listen to employees. While exit interviews are an important step in understanding why employees are leaving, it's better to learn this information before they give their two weeks’ notice. Consider rolling out a quarterly engagement survey to gauge how employees are feeling and how the organization can better support them. By cultivating a culture of constant feedback, you can hold onto the employees you haven’t lost yet — and save the costs of finding replacements.
Overhauling your benefits package is another effective way to raise employee retention. Better benefits and compensation are common reasons employees look for new work, which means updating yours should be a top priority.
Luckily, doing so is simpler than you’d think. Here are a few five-star benefits to consider:
1. DashPass for Employees
DoorDash for Business found that 78% of employees believe food benefits would positively impact their company culture, and 63% of recruiters believe a food offering could help them close more candidates. By rolling out DashPass, a program that offers free delivery and reduced service fees on eligible DoorDash orders, you can show current and prospective employees that you care — while enjoying a significant return on investment.
2. Employee Gift Cards
Another simple way to increase employee happiness? Showing gratitude. 82% of employees agreed they’d be more satisfied at work if their company offered free food vouchers, making DoorDash gift cards the perfect way to demonstrate your appreciation. Buy gift cards individually or in bulk, and schedule them to be sent out on birthdays, work anniversaries, or any other day of the year — just to show you care.
3. Expensed Meals
Are your employees scattered between home and the office? Expensed Meals lets you cater to both. After you set a budget and ordering hours, employees can order a meal from one of 450,000+ restaurants nationwide and recharge during a busy workday.
Complacency isn’t an option in the Great Resignation era. Moving forward, companies must commit to meeting evolving employee needs every single day — prioritizing retention by cultivating cultures of constant feedback, updating corporate policies, and revamping benefits packages to stay competitive in a crowded market.
Of course, some turnover will always be inevitable. But with the right strategies in place, you can keep employee retention as high as possible — helping workers stay happy and healthy in any environment.
Hungry for more tips on supporting your team through the coming months? Download our guide, The Future of the “Office” to improve your company culture and employee satisfaction in the new era of work.