Have you noticed “Help Wanted” signs popping up around your city?
As you drive down the streets of Boise, you’ll see businesses offering $13/hour or $15/hour for jobs that used to pay just $7/hour or $10/hour. Many also add that they’re “hiring all positions.”
If you’re headed to a restaurant, it’s not a bad idea to call first. Restaurants and service businesses constantly have signs taped to their doors announcing modified hours.
Today there are 10.9 million job openings in the US and according to the Bureau of Labor Statistics, 4 million Americans are quitting their jobs every month. A Bankrate survey found that as of August 2021, 55% of Americans expect to look for a new job over the next year.
These resignations amount to a seismic shift that Texas A&M professor Anthony Klotz calls the “Great Resignation”.
What’s caused the shift? What can you do to get these workers back? How can you adapt your business so you can function without as much labor?
Table of Contents
- Economic and Existential Factors Are Driving Resignations
- Zoomers Are Leading the Great Resignation
- Physiological Needs: A Living Wage is Nonnegotiable
- Safety Needs: Physical, Economic, and Psychological Safety Are Vital
- Need for Belonging: Challenging Times Call for Higher Levels of Support
- Esteem Needs: Workers Need Respect (and Help Facing Disrespect)
- Self-Actualization Needs: Meaning and Flexibility are Important Too
Economic and Existential Factors Are Driving Resignations
According to Anthony Klotz, you can boil the causes of the Great Resignation down to two factors affecting workers:
- The costs of staying at a job are rising. People are burned out. They don’t want to get sick. They don’t want their unvaccinated children to get sick. They’re tired of being disrespected and abused.
- The costs of quitting have decreased. People have cash cushions from a year spent mostly at home. They’ve also discovered jobs in new markets that offer higher pay and more flexibility.
Some more existential factors are also at play. People have found a new way of working and living. Many enjoy the flexibility of working remotely. They like the independence of choosing when and where to work. They also appreciate the ability to spend more time with their families.
Not shockingly, financial security is a good predictor in determining whether someone will change positions. Only 44% of people making over $80k plan to look for a new job, while 72% of those making below 30k are looking to make a switch.
So what does all this mean for your workers – and your potential new hires? Are the costs of working for you fairly high? Are the costs of quitting fairly low? Have you created opportunities for autonomy? How well do positions at your company pay?
Zoomers Are Leading the Great Resignation
Statistics show that Gen Z “Zoomers” are leading the Great Resignation. In 2021, Zoomers are adults aged 24 and younger. By 2025, Gen Z will make up 30% of the US workforce, so it’s a vital cohort to work successfully with.
Maslow’s hierarchy of needs can be a helpful way to think about what Gen Z workers need and want. Maslow posits that humans have the following needs.
- Physiological Needs: air, water, food, shelter, sleep, clothing, reproduction
- Safety Needs: personal security, employment, resources, health, property
- Love and Belonging: friendship, intimacy, family, sense of connection
- Esteem: respect, self-esteem, status, recognition, strength, freedom
- Self Actualization: desire to become the most that one can be
Next, we’ll break down how your organization can provide for each need in the hierarchy, starting with physiological needs.
Physiological Needs: A Living Wage is Nonnegotiable
The days of paying $7/hour are gone. To provide for Gen Z’s physiological needs, you need to pay at least $13-20/hour.
Consider this: The average rent in Boise has risen 15% annually over the last 7 years and a stunning 50% in the last year. If the amount you pay your employees hasn’t mirrored this trajectory, then you’re not paying workers as well as you did in the past.
To afford a 1-bedroom apartment, which typically requires a renter earn 3x their monthly rent, today’s Gen Z worker needs to choose between:
- working 40 hours per week at $26/hour
- working 80 hours per week at $13/hour
- living with their parents or in someone else’s house
- exploring an alternative lifestyle, #vanlife
(To get a sense of what salary your employees may need to survive, you can catch up on rent increases in your city at zumper.com/rent-research.)
For many businesses, the increase in labor costs coincides with increases in commercial property leases, supplies, and other costs. For many businesses, it’s not sustainable.
To make higher pay work for your business, you likely need to increase your workers’ productivity.
To increase productivity, you can:
- Provide training in leadership, interdepartmental expertise, time management, teamwork, and emotional intelligence. A Harvard study showed that soft skill training delivers a 250% return on investment for businesses.
- Develop a supportive company culture that improves employees’ mindsets.
- Incorporate new technology to reduce work. You can acquire robots for tasks like product assembly, packaging, and quality inspection. Even cooking.
- Increase prices and train employees on ways to increase tip income.
- Update your business model. For example, you can convert a restaurant into a ghost kitchen or a virtual restaurant.
- Hire remote employees or outsourcers who don’t require office space.
- Offer employees an ownership stake or results-based incentives to increase their commitment and accountability.
These changes won’t just improve productivity. They’ll help you retain talent by removing repetitive tasks and making work more engaging.
The approach you take will depend on your industry and resources. Deliberate Directions and other business consultants can help you explore options and navigate effective solutions. (Schedule a Compass Call to talk strategy with us.)
While clean air and water are generally available throughout the US, and Gen Z has a smart, sustainable solution for affordable clothing, the compensation you pay Gen Z workers directly affects their other physiological needs:
- The quality of food they can afford
- Their ability to pay rent
- The amount of sleep they can get
- Whether they have time to form and maintain relationships
In sum, you can find numerous ways to increase productivity and profits, but you must pay workers adequately.
Safety Needs: Physical, Economic, and Psychological Safety Are Vital
Verywell Mind conducted a survey on American mental health. They found that currently Gen Z is the most stressed generation.
The study recorded the percentage of Zoomers who reported feeling stress symptoms on more than half the days over the previous two weeks. The study found that Zoomers were frequently experiencing:
- Tiredness (52%)
- Trouble sleeping (52%)
- Feelings of hopelessness (47%)
- Trouble concentrating (43%)
For Zoomers, COVID-19 and healthcare are the biggest issues facing the world today. Over half say they’re very concerned about spreading COVID to a family member.
Fortunately, as an employer, you can implement policies to manage this top concern.
First, attend to physical safety. Follow all new guidelines set by OSHA and the CDC. Make sure to post signs indicating whether you’re in a high-transmission area so that customers can follow appropriate safety etiquette.
If customers can’t or won’t follow CDC guidelines, supply staff with high-filtration masks (KF94s or KN95s) to compensate. In most states, you can also require that employees get vaccinated. This is shown to cut an employee’s chance of COVID death elevenfold and to reduce their chance of transmitting the virus to a coworker or customer.
Second, help your employees see a pathway to economic security. 73% of Americans rank finances as the top stress in their life. To address this, show your workers what advancement opportunities you offer. Be clear about what they need to do to advance in your organization. Also be clear about what an employee needs to do to stay in their position.
Third, focus on the psychological aspects of safety. Maslow says that people seek a sense of order, predictability and control. Business Insider recommends offering stress management training, work/life balance coaching, and ongoing conversations about mental health. You can teach employees how to manage triggers or even offer free classes in meditation or yoga.
If providing for your workforce’s safety, security and mental health seems like a lot of work – it is! But putting in the effort will help keep your business open, enhance employee wellbeing, and allow your employees to focus on their work.
Need for Belonging: Challenging Times Call for Higher Levels of Support
Ross Seychell, Chief People Officer at the HR software company Personio, says that the pandemic put an acute focus on how companies have handled people’s health and happiness. He adds that from employees, “I’m hearing it a lot: ‘I’m going to go somewhere I’m valued’.”
Search social media for #quitmyjob. It will quickly become apparent that the majority of people quitting just don’t feel any sense of belonging or connection with their employer or the people at their workplace.
A good place to start is with simple acknowledgment. A Yale study examined the way hospital cleaners felt based on the way staff interacted with them. When staff didn’t acknowledge the cleaners, the lower ranking employees reported feeling invisible. However, when doctors greeted the cleaners or held the door, the cleaners reported a burst of energy.
After acknowledgement, meeting times are wonderful opportunities to serve employees’ needs for connection. Both creating opportunities for employees to talk and listening attentively are powerful ways to build this connection. On-on-one meetings, icebreaker activities, and team building events can all help.
One of the best ways to improve your connection with employees is to refine the quality of questions you ask. For that, we recommend “130+ One on One Meeting Questions Great Managers Ask”, which is freely available online. Pick a meeting model that works for you, then make the most of your time together.
Michael Grothaus, an Apple sales associate, praised Tim Cook’s leadership, specifically citing the humanity Cook conveyed when talking to rank-and-file employees. Grothaus writes, “When he answered me he spoke to me as if I were the most important person at Apple. Indeed, he addressed me as if I were Steve Jobs himself. […] That’s the day I began to feel like more than just a replaceable part.”
It’s impossible to talk about employee belonging and connection without addressing the harassment and violence many employees experienced at protests, heard about from friends, witnessed in public, and saw documented in thousands of videos. Racial trauma has been so intense that an Edelman survey showed that more than half of people of color say they will not work for a company that fails to speak out about racial injustice.
With an international inquiry concluding that police killings of Black Americans amount to crimes against humanity, many Black employees and their allies feel that if a company cares about their safety, the company has a civic responsibility to condemn police brutality. With a majority of Black Americans reporting that they’ve experienced discrimination, there is also a demand for change in the workplace.
MIT professors Enrica N. Ruggs and Derek R. Avery argue that the extent of this racial trauma has made it critical for leaders to engage with racism. They note that employees “may see the choice to stay silent on issues of police violence as signaling a lack of concern about Black people generally.” They advise businesses to:
- acknowledge the problem and the pain employees feel
- educate themselves on systemic racism
- offer institutional support, for example by creating spaces for open dialogue
- direct corporate giving to charities working to improve racial justice
Serving your employees’ need for a sense of belonging won’t just help you with employee retention. It can also improve employee performance, and in turn, all kinds of metrics at your organization.
There’s an old business saying: “Treat your employees well and they will take care of your customers.” This is borne out by research. Companies on lists of the best places to work also tend to appear on lists of companies with best customer service.
Esteem Needs: Workers Need Respect (and Help Facing Disrespect)
Esteem needs begin with the need for respect.
It’s easy enough to show an employee respect. But what do you do when a customer pulls a gun on an employee to demand a burrito?
UC Berkeley confirmed that customer abuse is driving resignations among restaurant workers. Employees cited “concerns of hostility and harassment from customers” as the third most significant reason for leaving their jobs, after “low wages and tips” and “concerns about COVID-19 safety.”
If workplace violence hasn’t been a problem for you, count yourself lucky. Airlines alone have banned thousands of customers since the start of the pandemic. In July 2020, a survey of 1,800 McDonalds workers showed that 44% had experienced verbal or physical assault from customers, a percentage that likely has climbed as the pandemic has dragged on.
There are no easy answers. Training, close communication, and ongoing support are essential.
- Train employees on safe approaches to deescalate situations.
- Teach employees how to handle complaints, similar to the Starbucks LATTE method.
- Implement best practices for addressing customers who refuse to show their vaccine passports or properly wear a mask.
- Tell employees about the crime prevention strategies you’ve implemented for their safety, and teach them about the steps they need to perform.
- Teach resilience to help your employees be emotionally aware, retain optimism, exercise self control, and maintain self belief.
- When possible, hire trained security professionals to enforce pandemic rules so your other employees can focus on their jobs without fear of assault.
It’s also important to train managers at your organization so that they can be the leaders your employees need. Managers should be trained on how to conduct regular one-on-one meetings, give effective feedback, nurture each employee’s growth, and communicate effectively both verbally and nonverbally. Manager with leadership capabilities can help your employees through even the most difficult circumstances.
An employee’s esteem needs don’t just stop at respect. Employees also crave self-esteem, status, recognition, strength and freedom.
You can support these needs by following the principles of employee engagement, by enhancing communication, cultivating purpose and passion, and developing employees’ skills and strengths within your organization.
These principles are powerful. McKinsey asked employees to identify what incentives were the most motivational to them. Employees rated three nonfinancial incentives as more effective motivators than any of the the top three financial incentives they identified. Those three nonfinancial incentives were:
- Praise and commendation from immediate manager
- Attention from leaders
- Opportunities to lead projects or task forces
Start by showing an interest in each employees’ work. Praise them for what they’re doing well. When an opportunity arises, delegate an important task. If you can, give an employee freedom to pursue their creative ideas.
Self-Actualization Needs: Meaning and Flexibility are Important Too
Self actualization is about becoming the best version of yourself that you can be. For employees, that can encompass professional achievement, lifestyle changes, and a reevaluation of life purpose.
The pandemic was a springboard for professional achievement and exploration. Layoffs in March and April 2020 left millions sitting at home unemployed. Many decided to learn new skills. In fact, in just a 5-month period starting in March 2020, 18 million users registered for the online learning platform Coursera.
It’s good to encourage your employees to continue pursuing the interests they’ve developed outside of their job description. With so many workers quitting their jobs to work on something “new”, consider engaging your employees by inviting them to put their new skills to work on a project at your company. This just might be the key to retaining some workers who are anxious to apply the new skills they’re so excited about.
The pandemic also proved to people that they didn’t have to obey the rules and routines of their previous lives. Many workers found that they could work from anywhere, largely following their preferred work schedule too. If they needed to take time in the middle of the day to tend to their family, destress, or change their environment, they could.
This flexibility is important to many workers. A Morning Consult survey showed that 39% of workers would consider quitting if they couldn’t work remotely. Another survey showed that the majority of people working remotely prefer to continue working remotely after the pandemic subsides.
Still, work from home has created obstacles. Many found the boundary between work and home disappearing, leading to overwork and burnout. Others found that only engaging with coworkers over Zoom led to loneliness, depression, and damaged relationships.
If your employees are productively working from home, then there is little reason to force a full-time return to the office. Many workplaces are allowing workers to work from home at least part time, while still providing office space to those who would like to come into a corporate office more frequently.
McKinsey recommends that businesses reevaluate their office needs. If the main purpose of your office is now to collaborate, and individuals rarely choose to come in for quiet work, now is likely a good time to rightsize your office space with generous collaborative spaces and relatively few cubicles or personal offices.
Finally, the pandemic has led people to reevaluate their purpose, what they spend their time thinking about, and what they give to the world. Faced with mass suffering, people have found that some old preoccupations are no longer a concern. Instead, they care more about relationships, contribution, and spiritual wellbeing.
Gallup found that it takes “next to nothing” for an employer to hire away an employee from a job the employee is disengaged in. However, if the employee is engaged, it would take a 20% pay raise for the employee to leave the job they like.
For this reason, employers who make work meaningful for employees should have an easier time retaining talent. Ryan Roslansky, CEO of LinkedIn, shared: “It’s clear that this #GreatReshuffle conversation is not just about how we work, but why we work. It’s about employers too, as they innovate to attract and retain talent with a new level of focus on employee fulfillment — which, ultimately, will help drive better business outcomes.”
Finding purpose doesn’t have to be complicated. Nicholas Pearce, a clinical professor at Northwestern University’s Kellogg School of Management, encourages people to draw inspiration from their own experiences, “The most painful experiences can often signal where our purpose lies. The pain we experience can not only produce empathy but also give us clarity regarding where we can make our best and highest contributions to alleviate human suffering.”
Authentic inspirations are often the best avenues for finding purpose that will motivate you and your employees. Pearce gives the example of a small business owner who could not open during the pandemic and turned to a food pantry for survival. After reopening her business, she shared her story and invited customers to contribute perishable foods. She became the largest donation center in her area. Out of her pain, she created a legacy that will serve others.
The Great Resignation was caused by a variety of trends that were accelerated by the pandemic. Whether you agree with them or not, workers feel that they can and should expect more from their employers.
To get the “great resigners” back, you may need to address a range of concerns. Every worker may have their own unique needs and expectations for their employer. Start by considering a classic model like Maslow’s hierarchy of needs, then make sure you optimize every position in your organization to fulfill these needs.
Any great economic challenge is also a massive opportunity.
Look around, there are great workers everywhere looking for new opportunities. Can you create a position that will inspire them?