How to Reverse the "Great Resignation" Trend
By Mark Richards
Boy, being a CEO in the 21st Century hasn’t been all that fun. First, we dealt with the “Great Recession.” Now we lead through the “Great Resignation.” According to the US Department of Labor, more employees are leaving jobs now than in the last twenty years. However, if you’ve been present during the previous two years and been even somewhat introspective about what is occurring, you shouldn’t be surprised. More importantly, you should already have in place initiatives to keep your employees engaged.
The pandemic isolated people for the better part of two years. Many communities and businesses compounded the adverse effects of the pandemic by putting further restrictions on citizens and employees. When you speak to people, they talk about the “lost years” and what they couldn’t do. Many families were isolated, and members died without loved ones in the room, causing anticipatory and dysfunctional grief. As a result, employees lost connections that gave order and meaning to life. Employee uncertainty was compounded by employers shutting down offices and sending people home to work. Research repeatedly shows that routines play an important role in mental health. Sleep patterns change, moods shift, and productivity falls when routines change. Worse, it disrupted the work routine, and the employee-employer bond severely weakened, which is what you see happening right now.
Don’t be drawn into the “work from home” trend. Employee turnover, declines in productivity, lower employee engagement scores, and ultimately a decline in customer satisfaction will offset any proposed fixed cost savings your CFO suggests will occur from this strategy. If you haven’t already done so, here are three things you need to focus on as a CEO to win the “war for talent” and not fall victim to the “Great Resignation” trend.
- Stop promoting remote work. It is unhealthy. Employees need connections and routines. So, by all means, keep the flexible start time, but bring people into the office. Please remove the masks as the data doesn’t support wearing them, and the loss of visible cues is debilitating. Employees need to separate home life from work. Remote work prevents employees from making this distinction and undermines employee well-being. Employees learn from each other. Remote work curtails employee learning. Employees want to be part of something bigger than themselves. They desire continuous improvement opportunities and work connections. Remote work destroys all of these positive touchpoints.
- Restart employee leadership development programming. Your top 20-25% of employee headcount is the organization’s brain trust. As a CEO, you must constantly invest in this talent pool to keep them engaged. These employees are the first to leave a “remote work” organization. Restart special assignments. There is no shortage of business issues to assign your best performers. Future leaders (also called HIPOTS) thrive on high-impact, high-visibility projects that solve big problems. Connect them and supervise the process. Consider matching HIPOTS with senior executives for discreet transactions like an M&A deal or debt refinancing. Many companies are evaluating new supply chain arrangements and entering into new markets. Both are perfect assignments for sprinkling in some HIPOTS with departmental experts. By all means, put the HIPOTS in front of the board of directors when reporting out on these projects. Constructing a mentee-mentor program, though time-consuming, goes a long way to increasing HIPOT engagement and retention, so do the math and see if the cost is worth the benefit. Bring back or implement employee assessments. HIPOTS love hearing strength-based feedback and increasing self-awareness, though success here is a function of readiness.
- Create an inclusive work environment. Human resources with senior management should build a compelling value statement to attract talent, especially millennials. Employees want to be part of something and will seek a purpose-driven company. The starting point is a well-defined, frequently communicated mission, vision, and values. Additional social programming that will drive productivity and retention includes wellness, onsite health clinics, exercise facilities, affinity groups, child care, and community activism takes time to establish and is well worth the investment. Employers immediately reap retention and engagement benefits when new programs are released. Employees will stick around to learn more and not miss participating in something new and exciting.
As CEO at Appvion in Appleton, WI, we implemented many of these programs over five years, collected data, measured results, and reported them to the board directors. Over three years, the wellness, health clinic, and exercise facility combined to reduce the company’s self-insurance health costs. The wellness success stories drove workplace engagement and productivity. The affinity group supported women because it created value and goodwill at Appvion. Today, it could be easily scaled to include other groups if meaningful and valued. Over time, trust levels increased as senior management regularly met with the affinity group. Community activism focused on specific areas employees felt important. Volunteerism is a powerful social program that invests employees in the community, offers leadership development, and positively reflects on the company. These types of social programming drive employee engagement, retention, and productivity. Management teams and board directors who support such programming and measure it see robust ROI.
No employee engagement and retention program is complete without measurements to define success. So here are the key metrics to install.
Voluntary Employee Turnover
An engaged employee is less likely to leave voluntarily. Employee turnover is costly for any organization. Lower turnover leads to less disruption, greater productivity, and more cohesion. The more satisfied an employee is, the less likely they will resign.
A reasonable employee retention rate cuts down on the costs of onboarding a new employee. It also increases productivity. The longer someone is with an organization, the better their understanding of how things work. Therefore, longer service employees typically equate with greater productivity.
Absenteeism is an indicator of many things, including poor working conditions, weak leadership, or work-life balance—absenteeism is inversely correlated with employee satisfaction. Absenteeism unbalances an organization and disrupts the workflow. As a result, it causes more workplace stress and leads to higher job dissatisfaction.
Employee Net Promotor Score (NPS)
The employee engagement or pulse survey includes questions about the likelihood an employee will recommend the company as a place to work. You design the question as a forced ranking, with ten highly recommended. The NPS score is determined by tallying the percentage of “promoters” (all 9-10 scores) and deducting the percentage of “detractors” (all 0-6 scores).
Highly engaged employees are more effective than less engaged employees, so performance metrics are relevant when measuring employee engagement. Consider four categories of employee performance metrics:
- Work quality metrics include the number of errors, NPS (see above), or 360 survey feedback.
- Work quantity metrics include sales or profit per employee, units produced, or dwell time in an operation.
- Work efficiency metrics include on-time delivery, first-pass good, lost time incident rates, and other measures of efficient processing.
- Organizational performance metrics include sales or profit per employee, days sales outstanding, workplace grievances, and human capital ROI (see below).
Engagement impacts employer goodwill. What stakeholders say about the company online provides essential feedback when evaluating engagement and retention. In addition, potential employees will view online ratings before seeking employment. Glassdoor is a popular employer review site and a leading authority reviewing workplace satisfaction. Consequently, employee engagement and retention impact internal efficiency and are critical to winning the war for talent.
Many companies correlate and document higher engagement scores with improved sales and profits. Best Buy is one example. They have shown that a mere 0.1% improvement in worker engagement leads to a $100,000 or more increase in profit. In addition, Gallup has directly correlated in its polling engagement scores with improvement in financial metrics like sales per employee
Be proactive, implement these initiatives, and let the “Great Resignation” trend impact others. Then, install all or a subset of the metrics to measure success. If you need help defining the metric formulas, reach out to me. Remember, employees, are quitting because they have lost their connection to the employer. They lack routine and fear they are missing out on something. CEOs can make a positive difference by bringing employees back to work and implementing several engaging programs. It is simple because humans are creatures of habit, so don’t overcomplicate this fix. Retain your employees by giving them the routine, connection, and purpose they lost during the pandemic.
Mark Richards is the retired Chairman and CEO of Appvion, Inc., headquartered in Appleton, WI.Mark is now President of Meade Street Advisors, LLC, a boutique consulting business focused on board governance, strategic planning, and executive coaching, headquartered in Fort Lauderdale, FL.