Few current trends in the world of work have attracted attention — and speculation — quite like the “Great Resignation.”
The COVID-19 pandemic triggered the most singularly significant shift in workplace dynamics in recent memory, and the subsequent exodus of employees has shaken every industry in virtually every region.
But what’s really driving this shift?
Although the underlying causes of the Great Resignation are numerous and complex, recent data indicates that workplace culture is among the most substantial factors. Millions of employees across every economic sector are turning their backs on toxic work environments and seeking better opportunities.
The question is what can employers do to mitigate the impact of this trend and keep employee turnover at manageable levels.
The Great Resignation: Behind the Numbers
MIT’s Sloan School of Management partnered with Revelio Labs to analyze more than 34 million online employee profiles to determine the true extent of shifts in the workplace. The data reveals that the impact of the Great Resignation is being felt across all industries and economic sectors.
According to the report, more than 24 million Americans left their jobs between April and September 2021, an unprecedented high. This has reconfigured a strongly candidate-driven recruitment landscape.
However, while every major economic sector saw employees leave, some industries were hit significantly harder than others. Public-facing roles, in particular, saw heavy losses. The apparel retail sector, for example, suffered employee attrition rates of almost 20%, along with fast-food and specialty retail (11%), casual restaurants (10%), and general and grocery retail (9%).
Data via MIT Sloan
Of course, not all companies are the same. The study showed a broad range of attrition within specific companies in various industries. For example, in the aerospace and defense sector, SpaceX had employee attrition rates of more than 21%, compared to 6.2% at Boeing. In financial services, Goldman Sachs’ attrition rate was more than 15%, compared to HSBC’s 5.1%.
Thus far, much of the discussion surrounding these resignations has focused on pay. Faced with increasingly stressful work environments, many workers are leaving lower-paying roles to pursue jobs with better compensation.
In a bid to attract and retain workers, some companies, including major fast-food outlets Chipotle and McDonald’s, have increased pay. Others have introduced signing bonuses, tuition support, and retirement contributions to differentiate themselves in an increasingly competitive recruitment landscape.
Data from Indeed, the recruitment platform, indicates that between July 2020 and July 2021, searches for vacancies advertising such incentives increased by 134 percent. This suggests that many workers are keenly aware of and capitalizing upon their newfound power in today’s candidate-driven labor market.
Increased pay and bonus incentives have contributed to employees’ decisions to leave their employers, but MIT Sloan’s data suggests that the biggest factor by far, is the toxicity of many employees’ working conditions.
Employees are Opting Out of Toxic Workplace Cultures
Researchers analyzed more than 170 data points on corporate culture among MIT Sloan’s list of Culture 500 companies to evaluate how company culture impacted employee attrition. These data points were then contextualized in comparison to levels of base compensation to determine their overall impact.
The greatest indicator of employees’ likelihood of quitting their jobs was toxic workplace culture. It’s 10 times more likely to cause employee attrition than how much they get paid.
Data via MIT Sloan
While no two corporate cultures are exactly alike, researchers found a lot of overlapping attributes for what employees consider toxic workplaces. Exclusionary attitudes toward diversity and equity, managerial disrespect, and unethical organizational behavior were all cited as contributing factors. Data from Gallup indicates that managerial disrespect is an especially powerful predictor of employee attrition, and correlates strongly with the likelihood that employees have experienced harassment or discrimination in the workplace.
MIT Sloan’s research focused primarily on companies in North America, but the findings mirror those found in other regions. Data from Breathe, a human resources software company based in England, revealed that almost one-third of employees in the United Kingdom left their jobs due to toxic workplace cultures in the year from March 2020-2021.
Not Just a Blue-Collar Problem
Attrition hasn’t just been a problem for industries on the lower end of the wage scale. Recruiters in white-collar sectors have also reported difficulties in attracting and retaining talent. Data from Harvard Business Review suggests that from 2020–21, the global healthcare and technology sectors experienced higher-than-average turnover rates, recording increases in employee attrition of 3.6% and 4.5%, respectively.
While COVID may have intensified the pressures facing healthcare workers, the industry was already facing major problems with burnout, misaligned incentives, and retention before the emergence of COVID-19. Nursing, in particular, has suffered an exodus of experienced practitioners. An increasing number are pursuing significantly more lucrative contracts as traveling nurses, a trend that some analysts believe is likely to intensify and fundamentally reshape the nursing profession in years to come.
The Impact on Sales, Marketing, and Recruitment
Employee attrition may be more visible in other economic sectors, but recent shifts in the labor market have been felt keenly in the sales, marketing, and recruitment industries.
One of the most immediate impacts on sales recruitment has been the sudden increase in demand for experienced sales professionals. According to data from ZipRecruiter, the number of sales vacancies advertised on the platform as of July 2021 stood at more than 700,000 — an increase of 65% over the previous year.
While some sales professionals are doubtlessly pursuing new opportunities due to the changing labor market, heightened demand for sales reps raises important questions about perceptions of the sales industry. The Wall Street Journal reported that many potential newcomers to sales are turned off by perceptions that the industry relies on toxic high-pressure tactics.
These perceptions, combined with genuine staffing shortages exacerbated by the pandemic, have forced many sales leaders to reevaluate how they hire, train, and retain their best reps.
“I think more companies will recognize that it is a highly competitive market and that the folks they’re interviewing probably have several offers,” says Charles Knauft, director of sales development at ZoomInfo. “I think we’ll see a lead open up for the companies that are willing to say, ‘Hey, we’re not just going to throw you in the deep end and hope things work out. We’re going to invest in you to make sure that you’re successful here.’”
Like their counterparts in sales, advertising and marketing professionals also routinely experience toxicity in the workplace. In April 2021, Nikhil Narayanan, a senior creative director at Ogilvy, and Jay Morzaria, a creative associate at Spring Marketing Capital, launched a campaign on social media to raise awareness of the deaths of two people exposed to COVID-19 by their agencies’ insistence on in-office work.
The campaign, which called on advertising and marketing organizations to #detoxwork, gained enormous visibility and support from other marketers and advertising specialists, many of whom shared their own experiences of toxicity in their industries.
Given the economic challenges facing businesses in every sector, it’s never been more important for companies to invest in their go-to-market motions. But how do sales, marketing, and talent acquisition leaders reconcile the ambitious, target-driven nature of their industries with the very real need for a more human-centric approach to work?
“Our research identified four steps — offering lateral career opportunities, remote work, social events, and more predictable schedules — that may boost retention in the short term,” wrote Donald Sull and Ben Zweig, authors of the MIT Sloan report. “Leaders who are serious about winning the war for talent during the Great Resignation and beyond, however, must do more. They should understand and address the elements of their culture that are causing employees to disengage and leave. And above all else, they must root out issues that contribute to a toxic culture.”
Culture is a Crucial Competitive Advantage
Many companies confuse culture with perks. Part of the reason this may be challenging for many is that culture is inherently subjective — what one person believes to be supportive might be exclusionary or toxic to someone else.
Culture isn’t about tapped kegs or climbing walls — it’s about providing a solid basis of support so that employees can be themselves and do their best work. According to Sarah Kalloch, executive director of the social enterprise nonprofit Good Jobs Institute, healthy, inclusive cultures begin with a fundamental foundation of respect.
“Good culture is sometimes boiled down to ‘You’ve got a ping pong table and some free sushi.’ That’s not what [a healthy culture] looks like necessarily for frontline workers. Are you showing your teams respect at every juncture? Is the hiring process respectful? Are you meeting your team’s basic needs? For us, culture is about work design and how you treat people,” Kalloch says.
The Good Jobs Institute works with business leaders to develop meaningful employment opportunities by creating more supportive cultures via training initiatives. The organization encourages business leaders to rethink how they evaluate and enable employee success, which often focuses on seeing employees as the investment they are, rather than a resource to be managed.
Although a majority of the Good Jobs Institute’s clients are primarily service-based, the organization has seen increased interest in its training from companies in other sectors that seek to leverage strong, inclusive cultures as a competitive advantage in an enduringly tight labor market.
“Over the past five years, we have worked with more than 20 companies in the service sector,” Kalloch says. “Many of them have made the choice to increase wages, increase benefits, stabilize schedules, build stronger career paths, and really drive investment in people, because they see it as the way that they’re going to win with their customers. We’re also starting to work more with investors often in the private equity space and investors who see good jobs as a real value creation mechanism.”
It’s no secret that happy employees are productive employees. Numerous studies have shown a strong correlation between employee happiness and increased productivity, improved retention, and higher revenues — a benefit particularly evident among sales professionals.
In spite of these recognized benefits, a study conducted by researchers at Duke University found that, while 90% of executives surveyed believed culture was important at their companies, only 15% agreed that their corporate cultures aligned with their expectations of what it should be. This represents a significant opportunity, but also highlights the necessity that corporate leaders engage with their workforces honestly and with an open mind.
Culture Doesn’t Just Happen
More companies than ever before are seeing culture as not only a powerful attraction and retention tool, but a crucial competitive advantage. However, many companies have yet to fully grasp that, for better or worse, there is no going back to the way things were — and rightly so.
“Where people have gotten the flexibility to be able to choose how they integrate their work with the rest of their life, they are not willing to give that up,” Jamie Kohn, a human resources research director at Gartner, told the Society of Human Resources Management. “Job seekers have so many options right now that they don’t have to make the trade-offs and sacrifices they used to make and are proving unwilling to do so.”
The pandemic didn’t just change how we work. It allowed millions of workers, in every industry and economic sector, to reevaluate how work aligned with the rest of their lives. Flexible working arrangements, which remain highly popular, have revealed new ways of working that prioritize greater meaning and purpose in our personal lives. They can and should be seen as a real advantage, rather than a liability to be managed.
Healthy, inclusive corporate cultures give employees the support they need to thrive, especially in today’s increasingly precarious economic environment. But culture isn’t accidental — it’s the result of deliberate, intentional actions modeled by leadership, and a direct reflection of an organization’s stated values.
“I think there are a lot of disconnects in the labor market that are going to continue,” Kalloch says. “We’re seeing some positive actions by companies to raise wages, to try to stabilize and provide more adequate hours, to increase benefits, to create equity for workers. My hope is that it is going to become the status quo, but I think there’s still a lot of work to do there. What’s encouraging about our work is, we show that you can invest in people in a way that’s truly sustainable for your business and drives great customer service and drives great operations.”