Great Resignation or Not, Money Won’t Fix All Your Talent Problems

When real estate marketplace Zillow announced it wouldn’t tie employee compensation to location, Chief People Officer Dan Spaulding declared the move a competitive advantage for the company in the short term and a likely norm in the long term. Either way, it signals the lengths to which many organizations are going to retain and attract talent.

Headlines about the Great Resignation abound, in the U.S. at least, but turnover risk varies widely among functions, industries and locations, and it’s certainly not all about money. The tumult in labor markets today is partly a phenomenon unique to the times: 65% of employees say the pandemic has made them rethink the place that work should have in their lives.

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Whether you are experiencing the Great Resignation firsthand or not, it’s important to understand the push and pull on your talent today. 

“Whether you face an attrition crisis or are planning your postpandemic workforce strategy, you need to know when and how to repair, humanize, outcompete or double-down on recruiting efforts,” says Alexia Cambon, Director, Research, Gartner. “You can’t do that if you don’t understand what’s driving employees to quit in the first place.”

The talent pipeline is creaking

In a September 2021 Gartner poll of executive leaders, 60% described themselves as significantly concerned about employee turnover, but that doesn’t begin to capture the extent of today’s talent challenge.

• Remote and hybrid working setups have expanded the options for employees beyond basic economic incentives to move jobs. Brian Kropp, Gartner Distinguished VP, predicts that companies will need to plan for a year-over-year turnover rate that is 50% to 75% higher than they are accustomed.
• Time to fill a role has increased by 18% since before the pandemic. 
• About half of people who get a job offer are considering at least two other offers at the same time.
• The lack of critical skills, evident even before the pandemic, isn’t going away. The total number of skills required for a single job is increasing 6% annually. Building critical skills and competencies is a top priority for 59% of HR leaders in 2022, and 40% say they can’t build skill development solutions fast enough to meet evolving needs.

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Why are employees quitting?

What employees expect from their employers and from work itself has fundamentally shifted in the pandemic era, and compensation can’t make up for a bad work experience.

To understand the “why” behind an employee’s decision to leave, consider the analogy of why people decide to move residences: 

1. My house is no longer fit to live in (the plumbing is broken; the roof is leaking).
2. My house may be fit to live in, but it no longer meets my needs (we need an extra bedroom).
3. Other houses look better (like that house we drive by every morning).
4. I don’t want to live in a house anymore (I want to live on a boat).

The corollary for employees is a) whether what triggered the urge to leave is the organization (“my house is the problem”) or the external environment (“the housing market presents opportunity”), and b) whether the reason for leaving is primarily related to their work experience (life inside the house) or their personal life (life outside the house). 

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By listening to how your employees are articulating their concerns and categorizing them within this framework, you can begin to tailor your response to attrition.

How to address drivers of attrition

Understanding where employees fall in the above framework's quadrants can help you adopt the most effective strategy to mitigate turnover. 

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Humanize your employee value proposition

Inject flexibility and humanity into the employee value proposition (EVP) to appeal to those employees who believe your organization no longer meets their needs.

U.K. supermarket Morrisons is among those experimenting with a four-day work week as a way to provide more flexibility to current and prospective employees, for example. Numerous companies are now offering education benefits or making extensive commitments to employee well-being. Others are ensuring their EVP extends to organizational engagement in social justice and environmental causes.

Double-down on recruiting efforts

Some employees simply don’t want to continue working in the same role, field, industry or even at all: 56% of employees have applied to jobs outside their existing career path in the past year. Sixty-two percent say the pandemic made them long for substantial change in their lives. Many are rethinking their career paths entirely. 

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The drivers of attrition for those who simply want a different life experience (to move from a house to a boat, say) are mostly beyond the control of employers, so concentrate instead on recruiting for and backfilling these positions, refocusing workforce planning and creating pipelines of talent to reduce the time it takes to acquire new employees.

Fix what’s broken

If employees believe their current organization is failing to recognize their value, make career paths more visible to them, and make sure employees feel you are investing in them. Forty-one percent of employees considering a new position look outside their organization first, so provide a platform for employees to communicate their career aspirations and connect them to the skills, opportunities and experiences they need to pursue their next career move without switching companies.

Selectively outcompete

There is no shortage of options today for employees who suspect there is more opportunity elsewhere. Searching and applying for a new job has never been easier, job openings generally abound and many organizations are enticing talent with increased compensation. 

Related webinar: How Fairness Improves Performance and Employee Experience

You can’t match every superior offering, but you can selectively outcompete to retain critical talent. It probably won’t be enough simply to match compensation. For long-term success and retention, you may need to combine pay with flexibility and other benefits, including career pathing and skills development opportunities.