Over 50 million workers quit their jobs in 2022, forcing employers to spend another year scrambling for talent in a tight labor market. So far, 2023 is not telling the same story.
The unemployment rate remains historically low, at just 3.7% in May, according to the Bureau of Labor Statistics, revealing that the available labor pool is still relatively small. However, fewer people are quitting their jobs this year, with the resignation rate falling by 5%, according to the ADP Research Institute. The number of U.S. job openings dropped by 20% compared to 2022 as the national economy teeters on the edge of a recession, pushing companies to lay off workers and cut down on hiring.
This may mean that the Great Resignation is finally cooling down after two long years, leaving employers with more than a few valuable lessons on employee engagement and retention, says Melanie Steinbach, the chief people officer of MasterClass at Work, a personal learning and development platform.
“We saw a lot of employees make different decisions about what they wanted their work-life to be, whether they wanted it to fit into their family lives more or restart their careers on a different path,” she says. “The Great Resignation was more of a realignment of values than just resignations. [Employers] must continue to understand what employees value, and then deliver on that.”
Steinbach advises employers to take advantage of the Great Resignation slowing down and use this time to invest in their current employees. The last thing employers want to do is take their talent for granted and find themselves in trouble the next time the pendulum swings more favorably in the workers’ direction, she says.
EBN spoke with Steinbach to gain further insight into the possible end of the Great Resignation and how employers can respond effectively.
Why are we seeing the pendulum swing away from the Great Resignation?
When there is economic uncertainty, people tend to stay put in their roles. The devil you know is better than the one you don’t. People just stop believing that the grass is greener somewhere else, and they seek comfort and stability and known quantities amidst a lot of unknowns in the world.
From the employer’s perspective, this uncertainty has caused employers to slow down hiring plans and to really think about how they can get the work ahead of them done with the employees they have. This means employers should be looking to invest in those employees in a much greater way, doing a lot more development and career coaching internally, rather than mass amounts of external hiring.
Is this purely a good thing for employers?
A more stable employee base is always a benefit to employers. It’s difficult for an employer to be managing an employee base that is in a significant amount of flux. There have been companies in growth mode that tracked the percentage of their workforce that were “new enrolled,” which is defined as anyone who had been in their role for less than six months. How fast can you achieve some of your business objectives when the people responsible for achieving those objectives are still learning their expectations?
We tend to underestimate how hard it is to learn a new company culture, and we tend to historically overvalue technical skills and undervalue soft skills — those soft skills can include knowing how to get work done within a particular environment. The slowdown of the Great Resignation means companies can focus their efforts on investing in soft skills and invest in a workforce that moves more quickly towards a company’s business objectives.
Does the shift bode well for employees in any way?
Most employees that I speak to say that the main thing that they want is to continue growing. I really believe that people come to work because they want to do a good job, and they want the company to help them do a good job. By companies slowing down hiring, they can focus on developing their employees’ careers and get serious about their learning, professional development and personal growth. Employees who understand the environment that they’re operating in have a better chance of being successful with the next adaptive challenges we’re going to face.
How can employers and other benefit leaders best respond to this shift in the talent market?
The ROI on delivering growth opportunities to your existing employees is much higher than constantly having to replace employees with new ones — even if they have slightly better technical skills. They’re still going to lack some of the more adaptive and complex leadership skills that we really see differentiating the great from the good today.
Additionally, employers can work on connections, be it connections to the company, to other employees or to the work at hand. That doesn’t have to be achieved exclusively by bringing people back into an office, but be mindful about building connections and communicating with employees. We don’t want the next trend to be the “Great Disconnection.”