Charlottesville
December 16, 2021
I have been trying to understand why so many folks have quit their jobs over the past year. This article from Korn Ferry provides one of the most cogent arguments I have read. I thought it was worth sharing. My summary of the article is that people have quit their jobs because the free market is working.
For the past year, companies have scrambled to understand why they were losing so many employees. Could the pandemic have chased millions out of the corporate ranks and into consulting or freelancing gigs? Did some people simply retire early or live off government stimulus money?
It looks as if the answer may be the most straightforward one. While there’s no official survey of the 39 million instances this year in which a US worker said “I quit” (and some people may have quit more than once), experts are increasingly convinced that the overwhelming majority did not give up their employee status, or if they did it wasn’t for very long. They most likely took a role somewhere else that either paid them more immediately or offered a better opportunity of advancement. “We call it the Great Resignation but it’s also known as the Great Reshuffle,” says Christian Hasenoehrl, a Korn Ferry senior client partner and global leader for consumer and industrial accounts.
In October, for example, the quit rate for the durable goods sector was 2.5%, a significant jump from 1.6% in October 2020. That implies that there were nearly 195,000 resignations in the industries responsible for making washing machines, furniture, cars, and other big-ticket items. One might think that those industries are shedding jobs. But durable goods employment rose by 5,000 workers in October and has increased by 205,000 jobs over the past year. Many of the people who quit, whether in the last month or any time this year, most likely took a new but similar job. Other sectors show a similar pattern.
To be sure, some people have quit to go solo. Recent figures show that through September 2021 Americans filed a total of more than 4 million applications to start new businesses, compared with more than 3 million applications during the same time period last year. In some cases, people made that switch because they didn’t want to return to working in an office full time. But that doesn’t explain away much of the quitting, experts say, because surveys show that less than half of US companies have yet to bring back employees to offices full time.
Millions of front-line workers are jumping between restaurants, warehouses, hotels, and other employers as they chase significant hourly increases, signing bonuses, and offers of career development. And professionals are doing the same thing. “We’ve seen trading up,” says Andy De Marco, Korn Ferry’s vice president for Human Resources in the Americas. People newly hired by firms in the spring are now turning around and quitting for even better opportunities, he says.
All this reshuffling potentially spells trouble for companies that are focusing only on filling open roles rather than reevaluating what will keep employees engaged and productive. At least while unemployment remains at or near historical lows, there’s not much stopping these employees from moving again. “Retention is the single biggest issue for our clients,” says Elise Freedman, a Korn Ferry senior client partner and leader of the Workplace Transformation practice.
Salary certainly plays a role when it comes to resignations, but experts say more workers want to play a more active role in career development. Hasenoehrl says some firms have created learning centers, courses, and other tools so workers can self-direct themselves on a career path. That, however, might not be enough. “Career development is not transparent at many companies,” he says.