What the Great Resignation Taught Us: Three Key Strategies for Retention

The pandemic-era buzz phrase, the Great Resignation, followed the 2021 job exit of 47 million Americans and 50 million more in 2022. While the number of “quits” hit historic highs in September 2021, this outcome was brewing for a couple of decades. According to Great Resignation skeptics and Harvard Business Review contributors Joseph Fuller and William Kerr, it’s an exaggeration that the age of quitting “upended” employee and labor market relationships. Rather than a shocking turn of events, Fuller and Kerr assert the Great Resignation was the continuation of a trend — citing average quit rates rising annually between 2009 and 2019. 

“In 2021, as stimulus checks were sent out and some of the uncertainty abated, a record number of workers quit their jobs, creating the so-called ‘Great Resignation.’ But that number included many workers who might otherwise have quit in 2020 had there been no pandemic,” Fuller and Kerr said. “We’re now back in line with the pre-pandemic trend, which is one that American employers are likely to be contending with for years to come.”

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Lessons from the Great Resignation

While the quit rate is back to pre-pandemic levels, according to August and October 2023 Job Openings and Labor Turnover Survey data, the employee frustration, disengagement and discontent that led to the Great Resignation are still here. And unfortunately, the lessons stemming from these Great Resignation learnings have been largely ignored. 

According to Forbes contributor John M. Bremen, “… while employees today may be more likely to stay with their employer because of increased risks in the economy, they will be more engaged and productive if they feel valued and are treated fairly.”

If the Great Resignation really is the “Great Discontent,” as Gallup reports, how can organizations contend with the residue of discontent that has led to “quiet quitting”? The term, which became trendy after a Tik Tok post went viral in 2021, captures the concept of “just doing your job and no more.” 

Focusing on the top reason Gallup found for employees leaving their roles during the Great Resignation - not seeing opportunities for development - is a great place to start. But focusing on development alone is missing a key driver. According to LinkedIn, the number one reason people are leaving their jobs in 2023 is for higher paying jobs. To effectively address these key drivers for resignation, organizations must integrate development opportunities with compensation. 

This post highlights three top strategies to help employees feel valued and part of the organization’s success — so they don’t leave to find opportunities for career and pay growth elsewhere.

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Three Key Strategies for Engaging Employees in the Organization’s Success

July 2021 Gallup data linked employee resignations to a lack of engagement and a general state of discontent. Studies continually show that employee discontent isn’t a new problem, but it rose dramatically through the pandemic. Experts posit many reasons for this disengagement, with post-pandemic rethinking of work-life balance, long-term fatigue or malaise caused by lack of purpose, and missing recognition at work leading the charge. Studies bear out these disengagement drivers, making it clear that seeing individual employees for their strengths and helping them embrace their purpose — on a personal and organizational level — is vital to solving the disengagement equation.

As Gallup’s research supports, engaging dissatisfied workers should be an organizational priority, because lack of employee engagement leads to a toxic, circular pattern that prevents a company from moving forward productively. “Considering that most of the currently employed are not engaged, each new hire is liable to land on a less-than-engaging team and will probably exit much sooner than desired,” the Gallup report asserts. “That’s a self-defeating cycle, but it can be interrupted…”

Strategy #1: Connect Talent and Compensation Strategies

At Acera Partners, there’s a reason talent and compensation strategies are inextricably tied to our value proposition. For too long, talent management and compensation programs have existed in two separate silos within the HR function or between HR and finance. At best, this organizational breach is responsible for confusion, frustration and worker demotivation. At worst, it leads to strategies working at cross-purposes, along with a loss of key talent and significant profit.

According to Deloitte, “Compensation can be a powerful tool to properly align employees with the achievement of the company’s objectives.” In other words, linking an employee’s pay to their impact on business creates transparency, a key to engaging employees. Pay is a significant part of why employees come to and stay with your organization. Yet most organizations do not approach compensation strategically. It is a check-the-box activity, even though employee pay is the leading cost for most companies. 

By aligning an organization’s compensation strategy with its objectives, companies can turn their highest cost into a return on investment. This involves identifying critical roles and skills that drive the business and paying for skills and performance, rather than tenure and experience. 

Strategy #2: Overhaul Job Architecture

There are countless reasons legacy job architecture fails. While we say the proverbial “corporate ladder climb” is yesterday’s news, many organizations are stuck in their old ways.

Effective job architecture isn’t about traditional career advancement. The conventional career ladder that sets a path from accountant to senior accountant to accounting manager, and so on, needs to be turned on its side. This elemental change creates opportunities for people to grow “sideways” rather than up — through growth, purpose and renewed engagement. 

According to Deloitte, re-engineering job architecture is about setting employees on an interest-driven path. “Imagine taking a guided career journey, matched to your interests, and being provided a transparent career path, allowing for skill development and mobility within and across career paths.” When an employee can connect many occupational pathways to their strengths, passions and skills, they are more likely to stay and thrive. By establishing frameworks for internal growth for employees, organizations experience higher employee retention and avoid significant expenses associated with recruiting and onboarding new, untested candidates. 

Strategy #3: Adopt a Skills-Based Culture

According to the World Economic Forum, “There is a massive skills gap among workforces where traditional assessments have been poor to match talent to jobs.” 

Compounding this problem is the pressing disruption of AI, which is creating entirely new jobs and new career fields. This makes traditional methods of upskilling your current workforce or hiring talent from the outside obsolete. In other words, there’s no question about whether there is a skills crisis. The only question is what to do about it.

The first thing many experts recommend is shifting organizational structure from a job to skills focus. Developing a “skills economy” requires a transformational change in how companies (and employees) look at labor. Identifying skills an organization needs now, soon, and in the future is essential for clear and proactive decision-making. Yet according to Mercer, only two in five HR leaders know what skills their workforce has today. But before you can develop the skills of your workforce for the future, you need to know what skills are in the organization today. Designing skill development programs based on this gap is a critical first step.

The good news is that employees are embracing the learning revolution. Boston Consulting Group (BCG) data shows 68% of workers are aware of upcoming disruptions in their fields and are willing to reskill to remain competitively employed. The challenge facing businesses, though, is how best to transform workforces into learning laboratories. 

Even when organizations invest in skill building, these efforts are rarely tied to current and future skill gaps — or to the company's overall business strategy. According to BCG's research, only 24% of companies make a clear connection between corporate strategy and reskilling efforts. For learning laboratories to drive the business objectives, skill development needs to align directly with the corporate strategy. 

At Acera, we’re not only helping organizations build a skills economy; we’re establishing pay strategies that recognize and reward skill development. This includes creating compensation plans that motivate employees to continually enhance their capabilities and align career progression with the organization's evolving needs. By integrating talent strategies with forward-looking compensation strategies, organizations foster a culture of growth and agility.

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Systemic Change for a Better Workplace

While academics and finance professionals continue to disagree over whether the so-called Great Resignation yielded any genuine systemic change, one thing has become clear: Organizations must reconfigure their talent management strategies. By adopting skills-centered cultures, establishing employee-focused career paths, and tying talent management to aligned compensation strategies, companies can engage employees in the organization’s success — and develop necessary resilience for coming workforce transformations. 

According to Mercer and other industry leaders, these essential changes begin with listening to workers — and moving beyond the bargaining table. “Getting ready for change by adapting company culture and reconfiguring the way the organization works should be a top priority for every business,” assert Mercer authors Cynthia Cottrell and Anne Le Blanc. “Start with listening to your people and turning their insights into action to truly understand the employee experience.”

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Agile Talent for a Brighter Future

Today’s workforce demands more from their employers, and future-proofed businesses must internalize the value of work-life harmony, career-long learning, and purpose-driven career trajectories. To learn more about integrating people and pay strategies for an agile future, connect with Acera Partners today. And follow us on LinkedIn for new blog post alerts!