Amid all the headlines about millions of workers quitting their jobs during the Great Resignation, it is easy to miss the signal in the noise.
Yes, a record 47.4 million Americans quit their jobs last year—more than a quarter of the total workforce. And, yes, the understandable first response from employers has been to throw money at the problem in the form of higher compensation. To many, this is merely the supply and demand dynamic of a temporarily tight labor market created by a rapidly recovering economy.
But all the noise surrounding the Great Resignation tends to drown out the vastly more instructive signal that workers are sending. What employers perceive as the Great Resignation is viewed by workers as the Great Transition.
People of varying backgrounds, places and circumstances are looking for something different than what they have now. Those who are quitting are finding new jobs they perceive as more attractive. This Great Transition is a key attribute of a new dynamic, an environment shaped by constant and rapid change, where there will never be a new normal.
Here is why: Not only are workers more valuable today, as indicated by rising wages, they are going to be even more valuable tomorrow. Far from being a temporary condition, the labor shortage is likely to be long term. According to a July 2021 forecast from the Congressional Budget Office, the American workforce will grow by just 4% during the entire 2020s. That is just half the growth rate of the 2000s (9.2%) and only one seventh of the growth rate during the 1970s (30.2%).
Workers are willing to take bigger risks and more likely to move to another company. Just when a strong economy requires more workers, there are fewer workers entering the workforce. This shift has given workers a greater sense of agency.
The answer to attracting and retaining workers for employers must be a cultural solution, as well as a financial one. Demographic trends are making workers more scarce just as demand for their services is increasing. As workers realize they are more valuable, what workers want and what they value will have a greater influence on the strategic direction of institutions than ever before.
In order to attract and retain prized workers, employers will have to engage in their own Great Transition—one that is more responsive to workers’ priorities and values. As newly empowered stakeholders, workers will have more to say about the future of their organizations. In this environment, managers have to ask whether the customer is always right, or should workers have a say too? Meeting investor expectations is still important, but employee expectations will also need to be considered.
A recent multi-region McKinsey survey of managers and workers reveals that there is a significant disconnect between how management and employees currently view this new dynamic. Managers perceive workers’ desire for more money, greater development opportunities, and remote work options, as well as competitor recruitment and pandemic health complications, all as more important factors to change jobs than workers do. Workers say their departures are more influenced by whether they are valued by the organization, have a sense of purpose, work with caring and trusting colleagues, and can have a flexible schedule at work.
This disconnect is particularly acute in the tightest part of the labor market: younger employees starting their careers. A November Ernst & Young survey found that 63% of Gen Z employees feel it is “very or extremely important to work for an employer that shares their values.” Only 32% said making a lot of money in their career is a priority. This is not just an American phenomenon. A 2021 Deloitte survey of 8,200 Gen Z workers in 45 countries found that nearly half (49%) make decisions about where to work based on personal ethics. In this environment, Gen Z concerns regarding diversity, inclusion, and sustainability must also become the concerns of the organizations for which they work.
As workers realize they have agency, that they can act and they can make a difference, more of them will act—making it more likely that they will make a difference. In turn, this changes the direction of companies, professions, and governments all over the world. The transformation will not happen overnight; but because demographics are destiny and economic trends create political trends, it is inevitable.
Workers are sending the signal loud and clear. The smartest employers will tune out the noise and understand what the signal means.