The Great Attrition is making hiring difficult. Find out why!
Changes in the hiring and staffing landscape have been challenging for major organizations. Many employees are switching jobs, and industries, moving to nontraditional roles or starting their own businesses.
The 'Great Attrition' trend has been prevalent in workspaces globally. In the US alone, under great attrition, a vast number of workers quit their jobs voluntarily in September 2022. The figure was reported to be nearing 4.1 million workers according to the Job Openings and Labor Turnover Survey (JOLTS) released by the US Department of Labor's Bureau of Labor Statistics.
What is ''the great attrition''?
A sense of belongingness and being valued at work are essential for employees in any organization. When deprived of this primary want, they lack fulfillment and satisfaction. The mismatch between what an employee wants and what employers think their employees want causes a gap in expectations and reality, resulting in attrition.
Attrition is generally considered unhealthy as it scars the organization's goodwill, yet sometimes it is good for the organization's health. There can be varied reasons why any particular person or an organization does not suit each other. Causes can include career goals, personal development about shifts in skills and talents, compatibility, and not being an appropriate match.
Some common reasons for people leaving their jobs abruptly are:
- Restructuring the company.
- Better pay packages offered by other companies.
- Career Development.
- Corporate downfall.
- Acquisition or merger.
- Work environment.
- Mental Health Issues.
- Inappropriate/ failing Leadership.
- Family Circumstances.
- Health Issues.
- Geographical Reasons.
- Converting to an entrepreneur to start their venture.
The issue remains challenging for HR leaders globally. Many companies are straining to solve the issue, and many continue to suffer because they fail to counter the specific causes of attrition at work.
Recruiting talent remains a fierce competition. The barriers to switching employers have significantly decreased for certain categories of workers. In the United States alone, the number of open jobs reached 11.3 million at the end of May, up significantly from 9.3 million in April 2021. While employers still have trouble filling these positions, the voluntary quit rate is 25 percent higher than before the pandemic.
Many people are open to freelancing or having multiple jobs to have more fulfillment and match their rising financial aspirations. People are quitting their current jobs to pursue their passion. There needs to be a much more suitable fulfillment of the company's talent demands and employees' expectations.
While employers want to stick with the traditional approach of hiring and filling their talent pools, employees, on the other hand, want to pursue new fields and explore all that they can to find their passion.
All such factors, like exploring new avenues, lead to high attrition among the existing workforce, making it difficult for companies to fill their talent pools. Hence the demand for openings is rising while the supply is getting shorter.
To combat such a challenge, corporates are choosing an option to attract skilled workers from their rivals tactfully. They are simply reshuffling talent across the industry/sector, leading to wage hikes while finding no solutions to fill this existing employment gap.
However, employers should look for a holistic approach across industries/sectors to attract and retain a diverse talent pool that aids them in deploying the right talent for the right task at times of need.
Reshuffling talent is simply not the solution. Why?
A McKinsey survey revealed that most workers with demographic similarities showcased similar expectations. Moreover, job flexibility, mental health support facilities and policies, meaningful work and career advancement, decent promotions, and pay hikes were highly valued attractions.
Corporations should attract talent by creating creative and lucrative offers, showcasing different dimensions of their employee value proposition to various workers across industries/sectors.
Rising trends in the employment market are an opportunity for corporates to put on their thinking caps to frame irresistible creative offers.
A survey revealed that two out of five employees are considering resigning in the next few months, nearly amounting to 40% of the employee base.
These trends are making the employment landscape in the US more complex than ever.
We must look closely at these trends and analyze what steps Human Resources can take to counter the great attrition.
3 Categories of Attrition
Let's look at the three categories of attrition emerging as trends:
Reshuffling refers to employees hopping from one industry to another. It results in a talent gap between some sectors and a surplus in some. Some organizations struggle to attract appropriate talent, while some lose vital employees to vacate essential positions for a long time, unable to match the right talent.
Reinventing refers to situations where a traditional employee opts for some non-tradition job, gig, freelancing work, part-time job, or starting a start-up. Those who quit traditional jobs mostly look for something new to pursue, one's passion, or a new industry or sector.
Very few people, as close to 47%, wanted to return to the workforce, while only 29% wanted to return to traditional jobs, as per the McKinsey report.
Reassessing refers to exiting the workforce due to specific personal reasons of care for the infants and toddlers or elders in the family. It can also stretch to some physical or mental health phenomena. Sometimes certain conditions force an employee to quit to cope with the stressful demands of the family or self-health, leading to a shortage in the available talent pool.
Now, let us look at what McKinsey's survey says about global attrition and the vulnerability of employees leaving their jobs.
Most survey respondents talked about their willingness to switch for a better pay scale, enhanced work satisfaction, a better work environment, and health conditions. Almost one-third workforce believed that they could find a better or a similar job once they quit. It gave them the confidence to leave even when they didn't have any offers.
The above graph explains the majority of people who quit their jobs in the past two years and chose a new industry or venture never returned to that particular industry for some reason or the other.
Now, let’s take a look at industry-wise statistics of people who quit their jobs, between April 2020 and 2022-
The graph above showcases an industry-wise comparison between the percentage of employees who quit their jobs in the past two years to never return to the same industry. It also includes those who shifted to a new position in the same industry.
Some industries, such as tourism, hospitality, and travel, were hit hard during the pandemic to see a global downfall. Almost 55% of employees who quit their jobs never returned to the workforce, either in the same sector or the same industry.
Job hopping has become an easy option due to the flexibility of working from anywhere in the globe and hence joining organizations over different geographies has become easy without relocating.
But what exactly are the driving forces for retention? And what are the factors that help organizations retain their employees?
Here are some revelations from the survey that will help you to understand the push and pull for employees while deciding to quit or stay.
How can Organizations attract and retain talent?
Organizations need to focus on attracting the appropriate talent pools. Rising inflation pushes some employees to opt for traditional jobs, yet with the rising number of job openings, organizations are insufficient to fill the demand gap.
Some of the actions companies can take to fill this workforce demand gap are:
Sharpening their saw
This means developing the skills of their existing workforce. Assuring them with the best competitive pay packages and perks, a better work environment, and supporting top management, making them feel a sense of belongingness and support for better health services.
Creating a non-traditional value proposition
Providing flexibility in working hours, support for mental and physical health, strong corporate culture, and varied professional opportunities for growth.
Creating a comprehensive talent source
Creating lucrative offers can bring non-traditional workers back into the workforce. Better understanding the categories of employees they face and customizing the offers per their needs will help them change the game in their favor, and most prominent brands play it strategically.
Creating a culture everyone wants to stick to
Some big brands, like Google, Apple, LinkedIn, and Infosys, are already following this approach by adding more value and meaning to employee-employer relations, knowing their needs, and planning the terms accordingly to their policies. They win the hearts of their employees by providing facilities at the campus, making them feel they belong to the organization, and providing some of the best work cultures across the globe. Even traditionalists will stick to such culture and will not hop between industries for slightly higher pay.
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1. What are the different types of attrition?
Ans. There are three main types of attrition.
- Involuntary Attrition: When the company decides to part with an employee
- Voluntary Attrition: When an employee chooses to part with a company
- Retirement Attrition: When the employee has to leave due to reaching certain age as per company policy.
2. What happens when the attrition rate goes high?
Ans. High attrition rates indicate that employee turnover is high, which is a sign of mismanagement within the organization.
3. What is the number one reason for 'employees' exit?
Ans. Feeling dissatisfied and disrespectful.