The Big Quit

The COVID-19 economy has been a wild ride, a roller coaster of recession and rebound in a compressed time period. But although reports suggest the economy is almost back to normal, there could be a big roadblock to full recovery: mass resignations.

A record number of people quit their jobs in April 2021, according to the U.S. Bureau of Labor Statistics. Almost 4 million employees turned in resignations—the highest level since the Bureau started tracking quits in December 2000, and research suggests that the wave of resignations will continue to build.

Data from Microsoft’s Work Trend Index and Prudential’s Pulse of the American Worker survey show that up to 40 percent of U.S. workers plan to quit their jobs, with some industries already feeling the effects. Hospitality and retail, two of the industries most affected by the pandemic, are struggling to return to pre-pandemic employment rates. In hospitality, the 5.4 percent quit rate is more than double the average across all other industries, and 42 percent of retail workers say they’re considering or planning to leave retail altogether.

The hospitality and retail industries illustrate a key demographic in the big quit: workers who are not shopping for higher pay in a similar position, but who are planning to opt-out of their industry entirely. And they’re not coming back: According to a survey from JobList, more than 50 percent of former hospitality workers say that no pay increase or incentive could lure them back to their old restaurant, bar, or hotel job.

But labor shortages are not limited to the lower end of the wage spectrum or hourly workers: According to data from Visier, managerial resignation rates also rose during the pandemic, especially in health care and high-tech industries. Mid-career workers, ages 30 to 45, are the most likely to walk away from current positions.

Businesses are desperate for employees, says Sheldon Schur, CEO at Brilliant, an award-winning consulting firm. “Hiring has been on the rise since the beginning of the year, with a bigger acceleration in the last three months,” he notes. “As an employer, you cannot hide your head in the sand and think that none of your workers are part of those 40 percent who plan to quit—because they are. You have to adapt to that and understand what it means.”

The Foremost Factors

According to Prudential’s research, two crucial issues are driving workers to quit: a lack of potential for career growth within their current company or industry and the dramatic mindset changes created by the pandemic. When workers were sent home, remote work took away the distractions, good and bad, of office environments, casting the actual daily work of positions in harsh relief. For many, the stark distillation of an entire career down to a few distinct tasks and skills brought a wave of clarity that instigated change. For those with jobs that don’t translate to remote positions—such as retail, hospitality, and other service-based positions—the perspective of time away from demanding, unstable, and often risky work made returning to those jobs unthinkable.

“There’s been a huge change in the cultural dynamic of what people are willing to do,” says Devin Wells, senior talent acquisition lead at the Georgia Nut Company. “More people are examining their work-life balance; more people want to work from home. The working atmosphere has changed, and companies and firms are going to have to change as well.”

A few additional factors come into play, such as the impact of higher unemployment benefits, the huge number of women leaving the workforce, and the ongoing health and safety concerns of returning to the workplace. There’s also an increasingly vocal contingent of workers demanding to work from home: A May 2021 survey for Bloomberg News found that 39 percent of respondents would consider quitting if their employers weren’t flexible about remote work—and that figure jumped to 49 percent among millennials and Gen Z.

“Basically, you have three categories of people: those who want to stay fully remote, those who want to return fully to the office, and those who want a hybrid work situation,” says Andrea Herran, founder and CEO of Focus HR Consulting. “How employers negotiate with all three of these groups will require a lot of flexibility and adaptability.”

And, of course, for many workers it’s likely that their decision was made from a unique combination of reasons. That’s exactly what makes it so difficult for employers to respond: While the big quit might be a mass event, each individual resignation is a risky personal decision.

What Workers Want

Given the wide variety of personal reasons driving these resignations, as well as the number of workers who flatly say they won’t return to their industry for any amount of money, employers will need to approach this challenge with creativity and open ears. Herran believes the future of the workplace is what she calls “personalized employment,” providing targeted incentives and greater flexibility to woo workers.

“Organizations that don’t adapt to more individualized employment situations will bear the brunt of this mass exodus,” Herran says. Schur agrees: “You have to stay close to the individuals. Do your frontline managers understand how each of their staff members lives and how they feel about the company and their personal goals in coming back to work?”

In the thick of pandemic shutdowns, companies and firms who quickly pivoted to remote work arrangements were the ones to thrive. In the post-pandemic world, an effective transition to personalized employment will play the same role.

To claim and keep the talent they need, leaders must focus on the issues most often cited by workers:

• Adequate compensation, including benefits.
• The need for flexibility in work hours and location, including options for remote work and/or a hybrid work schedule.
• Sensitivity to mental and physical health concerns, including burnout, exhaustion, and increased risk of exposure to COVID-19 and its variants.
• Career growth opportunities and options for continuing education and training.
• An increased focus on quality of life, including adequate holiday time, and real help with childcare logistics.
• Good work conditions and company culture.

Of course, employers cannot meet every need or anticipate each unique situation. What they can do is focus on results. “When you’re paying people a salary, you’re not paying them for their time,” Herran says. “You’re paying for their expertise, their knowledge, and their ability to achieve a result.” If companies and firms focus on the results while offering more flexibility and creativity in how people achieve them, there’s room for unique solutions that meet individual needs while also attaining organizational goals.

Small businesses and businesses that rely on hourly and/or in-person employees face unique challenges in fending off the big quit as they often lack either the resources or the flexibility to meet worker demands. However, small businesses have the advantage of being able to provide flexibility and personalization faster than their larger counterparts—an advantage they need.

“Small businesses are now reporting that their biggest business problem is not finding new customers or making new sales, it’s finding employees,” says Derek Sasveld, senior investment strategist at BMO Global Asset Management.

For hourly workers and positions in which remote work is not an option, employers can focus on creating short-term incentives and improving the overall satisfaction of a given position. “We try to be as flexible as possible with scheduling, but there’s not much we can do in terms of flexibility from an hourly worker standpoint,” Wells says. “So, we’ve developed internal incentives for short-term goals and rolled out a plan to revamp our whole employee experience.”

The Brand of a Business

Employers expect job candidates to come in with a pitch for themselves as workers, but today’s employees expect the same from potential workplaces. “What’s your message? Why should people come in and join your company? Present your pitch on social media, on your website, on LinkedIn, and with your team,” Schur says.

Consistent branding will help get candidates in the door, while a good hiring strategy will get them on the payroll. “A hiring strategy should tell you what kind of people you’re looking to bring in while also ensuring that it’s a good place for them to work,” Herran says.

After all, bringing in the wrong people or promising a culture or benefits you can’t deliver will only lead to more resignations. “What the candidate sees during the interview process and what they see on day 30 or day 90 should all connect,” Schur says.

A strong hiring strategy also means moving quickly when you find the right candidate: When it’s a good fit, there’s no time to waste. “You can’t take 10 days to interview candidates,” Schur explains. “Our strategy internally is 48 hours from the first interview to making an offer. We know that if we wait, the best people are going to get another offer.”

CPAs can help their business clients understand and respond to the big quit by being a source of helpful and relevant information and identifying a financial path toward making necessary changes. After all, the financial risks of inadequate staffing and ongoing turnover can quickly outweigh the price tag of new incentives or workplace changes.

“There’s always something that can be done to improve on whatever perceived shortcomings exist,” Herran says. “You can always take a step in the right direction.”

Clients will need accurate numbers and excellent forecasting to build effective strategies, and they will need industry-specific advice and sound financial insights to identify and execute the right moves. “You cannot wait to make this a priority,” Schur says. “The most important thing I do every day is help bring the right talent on board.”

All in all, workers finally feeling able to ask for what they really want is a boon for companies and firms willing to make creative changes quickly. Employers who take worker demands seriously can develop a huge strategic advantage over those who dismiss the big quit as a trend and refuse to adapt. “It’s an unusual wrinkle that we’ve had this short, severe shock to the economy,” Sasveld says. “There’s much more uncertainty, but overall it’s still a pretty positive picture.”

Annie Mueller is an experienced Puerto Rico-based financial writer. She is a frequent contributor to various industry publications.