How The Great Resignation Will Lead to the Great Culture Revolution
*Editorial Note- This article is sponsored
If you haven’t heard the term Great Resignation yet, you soon will. The Great Resignation is not a future utopia, probability, or myth—it’s reality. In this article, I will explain the Great Resignation with stats from credible sources such as Gallup, McKinsey, Korn Ferry, and TIME and how to prevent it with strong People & Culture leadership and “Culture-Actualization” Let’s explore what’s next in this revolution of work.
The World Economic Forum (WEC) coined the term “The Great Reset” in June of 2020, as they announced a Twin Summit to be held in January of 2021 under the same name. While the scope of these discussions were around reshaping the world in a way more conducive to sustainability, the term quickly found its way into the corporate world as well. As Covid dramatically accelerated the ongoing transformation of doing work in the 21st century, The Great Reset inspired the term “The Great Resignation,” a reference to a sharp increase in attrition across organizations.
The Rise in Attrition
Gallup, a prominent American analytics and advisory firm, first revealed research that showed that 48 per cent of employees in America are exploring options and willing to change their jobs. Management consulting company Korn Ferry corroborated this with their own data showing 45 per cent of workers are ready to leave their job without another one lined up. And LinkedIn’s CEO, Ryan Rolansky stated that he is seeing a 54 per cent increase year over year in job transitions across the platform. Overall, CNBC reported that 11 million Americans changed their jobs between April and June 2021, while similar reports show this also trending globally.
Rolansky’s data has an interesting distribution across generations. Gen Z’s job transition is up 80 per cent year over year, Millennials are up 50 per cent, Gen X is at a 31 per cent increase, while Boomers are only seeing a five per cent lift. This data appears to suggest that our younger generations feel more empowered to change their jobs when the environment no longer fits their needs, while older generations still abide by strong ties to company loyalty. Some interpret this with a tone of resentment to the younger generation, some see this as how human needs are evolving, we obviously see it as the latter.
The Cost of Employee Turnover
Employee engagement is a term coined in 1990, introduced by Kahn in his article Psychological Conditions of Personal Engagement and Disengagement at Work. In a 2012 article for Forbes magazine, Kevin Krause defined engagement as the emotional commitment the employee has to the organization and its goals. Gallup took this concept and has been one of the pioneers of employee engagement, coupling it with the strengths-based ecosystem they have pioneered.
Disengagement and attrition are very costly. In fact:
- The lost productivity of actively disengaged employees is equal to 18 per cent of their annual salary. Assuming an average salary of $50,000, this equates to $9000 dollars of loss per employee.
- For a company of 10,000 employees with an average salary of $50,000 each, disengagement costs $60.3 million a year.
- Replacing workers costs up to twice the employee’s annual salary when factoring in the costs to recruit, onboard, and train. This means many companies face a $100,000 price tag to replace each employee that leaves.
Covid reminded us of our impermanence. It highlighted how our lives can change in a day and how fragile the global ecosystem can actually be. It could be argued that Covid created a global existential crisis where many of us started to reflect on who we are and what we truly want to do in life. With this new found clarity, more employees protested the dehumanization of the workplace and decided to shift to work with organizations that have great workplace cultures and who treat them humanely. As Gallup so aptly states: “The great resignation is not an industry, role or pay issue. It’s a workplace issue.”
Great Attrition or Great Attraction?
According to McKinsey & Company, while some companies will lose their talent, some will attract it. Building a great workplace culture is not a new trend but, as more employees demand better work environments, the intention behind culture will accelerate.
Culture is a competitive advantage in the 21st century. No longer a “side of desk” item left to HR, culture transformation is on the executive agenda. As part of our focus groups with executives, we at the Maslow Centre found that, while everyone acknowledges the importance of culture, executives lack the framework and understanding to actually lead culture and culture transformation. Without developing these critical competencies at the senior level, organizations will have a harder time both attracting and retaining talent. Used intentionally, the Great Resignation opens up a pool of candidates ready to thrust a company forward—if that company can create the culture that candidates want to work in.
The Role of Human Resources
I frequently mention that Human Resources (HR)’s transformation to People & Culture (P&C) is not just a name change, but rather a philosophy change. That is, if the transformation is properly managed. P&C leaders are continuing to experience an increase in influence and power, and have a very important role to play.
In the 2008 economic crisis, CFOs were the right hand to CEOs. In this pandemic, the CHROs have taken that role, in what is not a power struggle but rather a power shift. The more the executive team works cohesively, the more successful culture initiatives are.
The Maslow Centre has noted the People and Culture (P&C) leader’s role is evolving 3 ways:
- P&C Leaders as Executive Coaches: P&C leaders need to build their relationships with the executive team and establish themselves as a trusted coach. They, formally or informally, coach the executives to positively role model culture transformation. The Maslow Centre has found that getting external support while building internal capacity is a key strategy on this topic.
- P&C Leaders as Strategists: With several People & Culture initiatives in organizations, leaders are feeling overwhelmed trying to balance their operations and people-focused mandates. We found that when the People and Culture Strategy is clear, concise and holistic, leaders don’t feel as fragmented, and they better understand how people initiatives are interrelated. Therefore, P&C leaders need to become great strategists, connecting all the dots with holistic frameworks.
- P&C Leaders as Culture Experts: P&C leaders need to be at the forefront in knowledge, skills, and abilities relating to culture management, but many don’t know where to start. The Maslow Centre’s ICF accredited Culture Coaching Certificate Program was developed to map the missing skill sets that leaders need to fulfill this role.
Culture Actualization
I have been advocating and championing the humanizing of the workplace since well before the pandemic. At the Maslow Centre, we started by researching how Maslow’s hierarchy of needs relate to organizational culture and employee experience. Our early findings helped us develop a framework on how human needs show up in the workplace. Since then, we started to envision a movement of building a human needs focused ecosystem, one that equips leaders to build literacy and comfort to understand their employee and customer needs.
During our research (and leaning on the understanding of employee engagement discussed earlier), we noticed that bringing human needs at the centre of culture is what realizes the culture’s potential. This activation of culture is a central component to driving success, and the term “culture actualization” was born. The arrival of Covid has solidified our data-backed belief that employees require their needs to be met, and that organizations require engaged employees to achieve true success. The Maslow Centre’s framework can be used both as an assessment tool that can identify gaps, as well as a tool for building your People and Culture strategy.
You can learn more about our research findings and its practical applications through these links:
If you want to become a people-focused, high-performing organization, reach out to us at www.maslowleadership.com so we can contribute to your journey. Our expertise on Culture Actualization and the workplace Hierarchy of Needs can inform your culture strategy, helping you hone in on the areas that have the most impact.
References:
Timothy Tiryaki is a Professional Certified Coach (PCC) and a PhD Candidate doing his research on wise leadership. He has a particular passion for building cultures of coaching for 21st century organizations. Timothy is the Founder of Maslow Centre for Executive Leadership and he has worked with clients such as MEC, Telus, Aviso Wealth, and Doctors of BC.
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