The Great Recalibration: Employers Confronting the Great Resignation of 2021
Anyone driving around town in recent months would have seen numerous “Now Hiring” posters in windows, “Sign-On Bonus” banners on buildings, or “Interviewing Today” yard signs near the road. Ads for open positions have been occupying coveted airtime on television and radio. With the number of job openings in the United States increasing to 11 million in October 2021 (the most recent month of data), employers are struggling for applicants and are getting creative. I even recently received a handwritten note in my home mailbox from a company hiring in my area. (Nice touch!)
However, filling positions only helps address the worker shortage if the employer can ultimately retain those employees. Unfortunately in 2021, around 3% of the workforce was leaving their job every month. In October 2021, for instance, that amounted to approximately 4.2 million workers giving their notice. In business and human resource circles, this trend has been dubbed “The Great Resignation of 2021.”
Interestingly, in a study published by Ian Cook in the Harvard Business Review, the highest resignation rates in 2021 were among mid-career employees (between 30 and 45 years old), increasing more than 20% from 2020. Typically, employers can expect higher turnover rates for younger employees, but the mass departure of such mid-career employees is particularly detrimental to employers due to the loss of experience, institutional knowledge, and investment.
Numerous theories have been proposed for the mass exodus. Perhaps the pandemic increased work-related stress, and employees experienced burn-out and needed a change. Perhaps living during a public health emergency forced employees to confront and shift their priorities. Perhaps the increased use of and familiarity with remote work and meeting software freed workers from their assumed geographic limitations. Despite the numerous reasons for leaving, one thing is certain: the employer/employee dynamic has changed, possibly forever. In order to be successful in both hiring and retention going forward, employers should address the Great Resignation by conducting a recalibration of their own values, work culture, and business needs, and balancing related risks.
Wage Adjustments– Numerous employers across the country have raised starting wages for entry-level positions just to elicit applications. Some have offered significant sign-on bonuses, and others have modified their payroll practices to same-day pay to cater to certain applicants. While the economy and job market may demand these adjustments, employers should not consider or implement them in a vacuum. Employers should not be so focused on filling open positions that they overlook wage-related legal risks or the effect of such changes on current employees.
First, individualized wage negotiations may be necessary when hiring. However, employers should generally set wages within the context of a broader organizational wage plan in order to avoid unintentionally creating business-wide wage gaps or discrepancies. Pay discrepancies between employees in the same or similar positions can expose an employer to potential discrimination claims if either employee is in a class that is protected by applicable law. Thus, when increasing starting pay for a position, an employer should review current pay of employees in the same or similar positions to ensure either consistency in rate or that an objective non-discriminatory factor justifies any difference in pay, such as, but not limited to, tenure, experience, or education.
Additionally, increasing the starting pay for a position or offering a sign-on bonus to new hires may have an adverse effect on employee morale if that change is not also accompanied by an equivalent change or benefit for current employees. As such, where they have the means, some employers are offering retention or appreciation bonuses or implementing raises across the board to ensure their current workers feel valued and are not enticed away by a competitor’s promise of higher wages and/or sign-on bonuses.
Remote Work Arrangements– Prior to the pandemic, remote work seemed like a concept reserved only for truly progressive companies or start-ups. However, government mandates forced many employers to confront the practice head-on. While many businesses required a return to in-person work when the mandates ceased, others found some benefit in maintaining such an arrangement, even if only for a portion of the time. While remote or hybrid work may not be feasible for all positions, when appropriate, and when administered using clear guidelines and expectations, it can be a successful tool for recruitment and retention.
Remote work or hybrid arrangements do require trust and clear boundaries. Acknowledging that trust in your employees can make them feel valued and appreciated. Further, such an arrangement may be considered a coveted benefit to the employee without much additional investment by the employer, depending on current technological capabilities. For instance, remote or hybrid work might decrease stress by allowing an employee to avoid a long or taxing commute (especially during winter months) or work alongside a pet. It may also permit the employee some flexibility to attend outside or family commitments, or support other family members if a presence at home during the day is necessary.
However, before offering or implementing remote or hybrid work, employers should develop a policy setting the eligibility factors and guidelines. The policy should explain expectations for work completion, communication, time-keeping, and performance management. Further, if the business has highly confidential information or trade secrets, the policy should clearly establish what additional safeguards must taken to ensure the confidential data is protected. Finally, the policy should clarify how the arrangement can be modified and/or terminated based on business need and performance.
By clearly delineating expectations and eligibility factors on the front-end, a policy regarding remote work can help the employer (i) be consistent in the decision of whether to offer the arrangement, (ii) hold the remote/hybrid employee accountable, and (iii) reduce the risk of certain liability.
Work Culture Assessments– Employers trying to attract applicants and retain employees should honestly assess whether their work cultures impede or support their goals. Employers should consider employee feedback obtained from exit interviews and engagement surveys. Additionally, employers should also consider whether their current policies and procedures reflect the intended culture.
Employee Handbooks are a fabulous tool to communicate and cultivate company culture when the policies are implemented and enforced in practice; however, antiquated or unenforced policies can cause employee confusion and frustration, drive good employees to leave, and/or expose an employer to legal liability. Thus, employers should take this opportunity to work with legal counsel to update their policies and procedures to ensure they not only comply with applicable law and mitigate risk, but also that they support the desired company culture.
Once the policies and procedures are updated, employees should be trained on them. A separate training should be held for managers and supervisors to ensure they are equipped with the skills and understanding to manage, as well as committed to supporting the culture and upholding the policies.
While we may not have been able to avoid the Great Resignation of 2021, employers can learn and grow from it. By taking this opportunity to recalibrate, employers can start 2022 in place that maximizes their ability to attract and retain valued workers.
Lindsay Raymond of Danbrook Adams Raymond PLC is a business owner and an experienced employment law attorney who counsels employers on workplace compliance. You can reach her at email@example.com.