The pandemic has caused employees to reevaluate their work priorities — and turn in their two-week notice.
Known as the “Great Resignation,” a record four million people quit their jobs in April 2021 alone. The desire for things like flexibility and new career paths contribute largely to this mass exodus. However, the issue goes even deeper as employees struggle with disengagement and financial stress.
We’ve identified top three reasons as to why Americans are steadily tendering their resignations, as well as potential solutions. Employers must step up with customized employee retention strategies that address employee concerns and keep their overall well-being top of mind.
1. Employees don’t feel engaged by employers.
The lack of employee engagement is one of the main causes of the Great Resignation. Employees are quick to ditch jobs where their work engagement (and subsequent company loyalty) is low.
We think employee engagement as a combination of employees feeling valued – for their work, for their opinions, and for their humanity. Over time, the group of employees that continue to feel valued and thus stay define the culture of the organization.
Job discontentment, burnout, poor recognition and compensation, and isolation are all common contributors to the lack of engagement. And employers are also failing to properly communicate expectations or provide support for their employees, creating a larger divide.
Poor engagement fuels employee turnover. Gallup research shows that 74% of actively disengaged employees say they’re considering or watching for other opportunities. Fifty-five percent of employees who marked “Not Engaged” are also actively or passively on the job hunt.
Proactive efforts to increase employee engagement not only save organizations turnover costs — it can help retain your best employees.
According to Gallup, it takes more than a 20% pay raise to lure most employees away from a manager who engages them.
Solution: Adapt to the changing needs of your workforce and engage them on a local management level such as through scheduled weekly 1:1s. Be transparent with why decisions are being made and demonstrate to employees how their roles fit with the overall company picture. Follow the 12 essential elements of engagement.
It’s also essential to listen to what employees are saying to effectively engage them and enable them to feel valued. Using precise diagnostic tools like a financial well-being survey, for example, can help you understand where your employees are struggling and what solutions would be appropriate for your specific organization.
2. They are escaping low-wage, stressful jobs.
According to Bankrate, 53% of workers left their job in search of higher-paying opportunities, and positions where they don’t feel overworked and underappreciated.
Nowhere is this more apparent than in the hospitality industry. Restaurant and hotel workers led the charge for spring resignations. Often lacking benefits like healthcare, these workers only recently started making an average of $15 per hour.
Low wages, combined with stressful jobs, long hours, and little work-life balance, fail to generate satisfied employees.
According to Michelle Singletary, personal finance columnist for the Washington Post, many employees, especially service workers, realized that they didn’t like their jobs and weren’t making a lot of money during the pandemic.
“And with so much competition, even if they wanted to stay in a similar job, they can look elsewhere for employers who are paying more,” she says.
Solution: Revisit your compensation strategies and consider creating an overall rewards program. Hiring bonuses are a start, but not sustainable for the employee’s future. Strategies must be tied to employee behaviors and perceptions.
Prove that you are invested in their individual success and resilience through things like workplace emergency savings programs.
According to a survey completed during the EBRI 2021 Financial Wellbeing Symposium, other companies are realizing the need for these programs. Among those offering the benefit, emergency funds are most likely to be the top priority for 35% of employers since COVID-19 began.
3. Employees struggle with financial stress.
Payment isn’t the only problem with the workplace structure. Employees are worn out from other financial worries and need relief. This stress can serve as a catalyst for quitting a job — especially if that job doesn’t offer financial security or support.
According to PWC, 63% of employees say that their financial stress has increased since the start of the pandemic, even for those working remotely. Many are struggling to cover monthly household expenses like
- Housing and food costs
- Student loan and car debt
- Rising health insurance rates
Not only does financial stress lower productivity at work, but employees notice if your company isn’t supportive of their financial plights. PwC discovered that 72% of employees say that they would be attracted to another company that cares more about their financial well-being than their current company.
This employee turnover is costly. When just one employee leaves your company, you can expect to pay roughly $12,000 in overtime and agency costs, as well as hiring, onboarding, and retraining costs.
Solution: Personalize incentives and benefits to match your employees’ individual financial needs and situations. Traditional options like the 401(k) are helpful for the long-term, but most are focused on more immediate financial needs. Workplace emergency savings foundation and other such programs can help you engage especially your frontline employees that haven’t been able to sustainable participate in retirement savings.
And reward employee savings behavior through customizable, quarterly contributions into employer-sponsored savings accounts. This approach reinforces resilient savings behavior AND proves to employees that you’re invested in their financial success.
Improve employee retention with customized strategies
The Great Resignation shows no signs of slowing down. According to a recent Monster.com survey, 95% of employees are now considering changing jobs.
Work with your HR team to build hybrid-work models, enforce supportive leadership, and go beyond obvious strategies like retirement offerings to more effectively retain your talent.
At Sunny Day Fund, we offer a customizable employer-rewarded savings program to help you engage and retain your employees. Reach out to us at email@example.com and ask about our workplace emergency savings plans and other solutions.