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R.I.P. Great Resignation (2020-2023)

By July 6, 2023April 2nd, 2024No Comments

We have seen many trends come and go over the last few years, and most of them stemmed from the COVID-19 pandemic. One of the trends that may have a lasting impact is The Great Resignation, a surge in people voluntarily leaving their jobs starting in the fall of 2020.

In April of 2023, the Great Resignation was officially declared over. The number and rate of resignations had returned to the level expected had the pandemic not occurred.

For a while, the Great Resignation was the elephant in every room. It was bigger than AI, machine learning, and blockchain put together. Now that it is over, it seems far in the past. But if we don’t stop to examine how it impacted people and teams, and to look at its long lasting effects, talent management in the future will be that much more of a challenge.

Understanding the Great Resignation

Anthony Klotz, Professor of Business Administration at Texas A&M University, coined the term ‘Great Resignation’ in May of 2021 to describe the sharp increase in employees voluntarily leaving their jobs.

Starting in September of 2020, employees began to move in noticeably large numbers. 3 percent of the U.S. workforce would exit their jobs monthly for the next 2 years. 17 percent of the U.S. workforce voluntarily quit their jobs in 2021, followed by 18 percent in 2022. 

47 million people changed their jobs in 2021; 50 million changed jobs in 2022. Those numbers are staggering, and the trend became a hugely disruptive force for people and companies.

Despite anecdotes to the contrary, people were leaving jobs for other jobs. Even if they took a break in between, people left one job for another. They did not leave their jobs to become painters or poets or live off the grid.

These unprecedented changes reverberated across industries, but while they were unprecedented, they may not have been unexpected. From 2009 to 2019, the average monthly quit rate increased by 0.10 percentage points each year. The economy was growing post recession, allowing an increasing number of people to leave positions in pursuit of new jobs.

And then, of course, COVID-19 hit – bringing with it some disparities in the trend:

  • College Education: 62 percent of workers with at least a bachelor’s degree found that their work could be done from home compared with 23 percent of those without a four-year college degree. The working from home movement was based on the nature of the job each person had; you can’t stock supermarket shelves, etc. from home.
  • Care Responsibilities: Family care obligations often fall disproportionately on women, and so industries like hospitality, where women represent the majority of hourly workers, experienced a higher quitting rate. 
  • Worker Age and Health: During the Great Recession (2008-2009), workers 55 years and older re-entered the workforce, increasing their presence by 1 percent. COVID brought the opposite. The Great Resignation saw a 1.9 percent decline among older workers. 

When it comes to overall employment and employee decision making, we can’t ignore the role of Federal stimulus checks. There were three rounds of direct relief payments. The third round was part of the American Rescue Plan (March 2021). It provided up to $1,400 for eligible individuals or $2,800 for married couples filing jointly, plus $1,400 for each qualifying dependent. Whether it was economically justified or not, those funds impacted people’s decisions about going back to work. Since September of 2020, the transition from unemployment to employment has been lower than the historical average.

What do we know about the people who resigned?

Most people wanted to work remotely (or at least flexibly) after 2020, and for some that desire was motivating enough to get them to change jobs. According to a survey run by Harvard Business Review in the summer of 2021, 36 percent of workers said they were willing to look for a new position if they were not given a hybrid or remote work option. Interestingly, 6 percent were willing to leave their job even without a new position. 

In addition to incentives to quit, employers were tempting employees away from their current positions. According to the Economic Policy Institute’s analysis of Bureau of Labor Statistics data in November of 2021, hiring rates were exceeding quit rates across many sectors. High wage growth was likely attracting new applicants to open positions, and it was easier to switch because people weren’t expected to move geographically.

Sometimes the change itself was enough incentive to drive a resignation. Professor Klotz pointed out that leaving a job could seem cool or feel empowering.  As he said, “Many of us felt a bit powerless over the years of the pandemic, and even the years prior to it. Resigning from your job can be an empowering moment.”

Empowerment, yes, but was it a good idea?

Not everyone that quit their job is happy about it. ‘Boomerangs’ accounted for 4.5 percent of all new hires among companies on LinkedIn in 2021. That is a noticeable increase from the 3.9 percent reported in 2019. These people left a job only to realize it was a mistake and go back.

90 percent of Gen Z Resigners regret their decision to quit, and now say that their mental health is suffering as a result, according to a recent Paychex survey. And this isn’t a Gen Z problem; nearly three quarters of people felt surprised or experienced regret after switching jobs.

But people who stayed put aren’t necessarily any happier. 23 percent of workers who kept the same job through the pandemic report being less satisfied with their position than they were before the coronavirus outbreak.

This was a very difficult period for many workers, personally and professionally, and it can be no surprise that job satisfaction has suffered, whether people changed jobs or not.

The Great Resignation’s Aftermath

Many employees took the opportunity to trade up their careers, pushing into higher paying positions than they held in the past based on high levels of demand from employers.

Professor Klotz warns that if employees feel the company is under investing in them, they may engage in bad behavior. That could mean everything from lowering their effort (like quiet quitting) to treating customers or co-workers poorly. As a procurement professional, I realize this could also mean a surge in maverick or non-compliant spending. Whether employees are just frustrated or deliberately doing the wrong thing, we should be on the lookout for upticks.

There has been plenty of advice already provided about what companies and managers should learn from this time of frequent departures and arrivals. Worklife.news recommends better hiring and interviewing etiquette, investments in retention and training, and monitoring for employee stress and burnout.

More specifically to procurement and supply chain, each pundit has their own point of view. Sam Berndt, Director of Research at Gartner Supply Chain, points out that Chief Procurement Officers are always worried about talent, but don’t seem to be doing the right things. 52 percent of procurement leaders have seen their headcounts drop significantly over the past few years, and they haven’t always lost the people they would have preferred. This can lead to a perceived (rather than an actual) skills gap, where in house talent is simply not the right fit for the work that needs to be done. 

Anthony DiRomualdo from The Hackett Group offered some thoughtful advice as well, focused specifically on procurement. There has always been too much focus on productivity in procurement. Teams should be incentivized to work smarter, not harder. He agreed with Gartner’s Berndt that existing gaps can be addressed through training as well as recruitment. And finally, a tough piece of advice, but one that is absolutely on the mark: if there are “superstars” working in procurement, make it possible for them to ascend through the ranks, even if they have to leave procurement to do so.

Trends are interesting because they connect large groups of people in the same currents. The Great Resignation was no exception. As unique as each of us is, we will often respond to major forces in the same way – in this case by taking a chance and switching jobs for any number of reasons. 

Time will be the best judge of the Great Resignation. Careers will be won and lost, regrets experiences, and triumphs too. Then again, if it hadn’t been for the pandemic, some other force might have caused a large percentage of the people who made a change to make the same decision… they just wouldn’t have done it together.

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