The great resignation or the great re-alignment?

The term ‘the great resignation’ was coined by Professor Andrew Klotz who predicted that, following the pandemic, more than 40 per cent of the global workforce would start to retire early or resign¹.

Some Australian employers are already starting to experience a labour shortage, however it is expected more organisations will see the impact of this through the second quarter of 2022. According to Aon’s 2021 Global Risk Management Report, attracting and retaining talent is now among the top five risks facing Australian employers, rising from seventh place in 2019. While it’s still unclear how severe the trend may be in Australia, what we anticipate is at least a reframing of the traditional employer-employee relationship.

What’s behind the drive to change jobs or leave the workforce?

COVID-19 has altered how employees view their relationship to work. People are starting to place a higher value on intangible aspects of total reward, such as a supportive culture, flexible work arrangements and projects that align with their personal values.

An already limited supply of skilled workers was further constricted by border closures so now even if just a small percentage of employees were to retire or change employers, the impact on the labour market would be significant, giving workers more bargaining power.

Employees expect more than just a good salary. Since COVID-19, work-life balance and flexible arrangements are more highly valued, as are inclusivity, health and wellbeing programs, employee benefits, financial education and access to learning and development opportunities.

We’ve identified the top six areas employers should consider when competing for talent in a heated market.

1. Employee Value Proposition (EVP)

Despite a shortage of qualified candidates, most job advertisements still read like a list of demands. What’s absent are authentic statements that explain how the employer supports and nurtures people.

Now is the time to review and share your EVP with employees and job seekers. Start by explaining your organisation’s back-to-work strategy and being honest about any missteps and lessons learned during the pandemic. If your return-to-work strategy includes in-office, remote workers, and hybrid workers, be careful not to create second class citizens among those who choose not to be in the office.

It is also the perfect time to learn which benefits your employees value most and to update remuneration packages to reflect your brand values. Consider ways to differentiate your EVP, whether it’s extra or subsidised leave, mentor programs or levers to help employees maintain a healthy lifestyle.

Lastly, review your talent acquisition and onboarding processes. Applicants are tired of applying for jobs with employers who never respond or unnecessarily delay the hiring process, so don’t overlook these important areas that can impact future hiring outcomes.

2. Pay strategy

Pay remains a key consideration, even for employees who receive a wide range of benefits. So, find out which rewards people value and promote them heavily to attract and retain talent.

If you need to make counter offers to keep people on board, be aware that this can cause internal pay inequities. If your first instinct is to re-set salary levels, ensure pay increases are sustainable in the long term and account for pre-COVID expenses, such as travel and entertainment, to rise again. Look for creative ways to offset labour cost increases with enhanced productivity or higher revenue.

3. Diversity, equity and inclusion (DE&I)

Your DE&I strategy should be part of your organisational DNA, not just window dressing.

Diversity is critical for innovation and peak financial performance². The broader the representation of different genders, cultural backgrounds, ages and abilities among your employees, the more your organisation will benefit from wide-ranging views to inform and enrich traditional approaches to problem solving. Those employers who embrace diversity will be better placed to innovate and thrive in a dynamic environment.

Increasingly, job seekers are looking for companies whose values align with their own, so your DE&I practices should be more than a mission statement on a website.

4. Mental health and wellbeing

Burnout is another key reason many employees are looking for change².

Eighty-five per cent of organisations around the world planned to increase spending on health and wellbeing in 2021³. Now that 88 per cent of employers have done so, only 39 per cent of their employees are aware of the wellbeing support being provided⁴.

Clearly explain what you are doing to support employees’ mental health and wellbeing and encourage colleagues to use the services on offer. Be aware that, with wellbeing initiatives becoming more common, employers who take an ad-hoc approach or provide little more than an Employee Assistance Program may appear uncompetitive. Those who genuinely prioritise wellbeing continually measure, integrate, improve and discuss their programs to ensure services are widely used.

5. Development and career pathing

Lack of opportunity is another reason employees are looking for change².

Career trajectories are no longer vertical, so employees appreciate employers that help them navigate their career. Modern assessment tools can help employees work through complex choices and build skills that align with their interests, strengths, goals and values. This builds engagement and motivates employees to go above and beyond for your organisation.

Employers should also help people grow by giving them insight into their strengths and weaknesses so they develop into the kind of self-aware leaders that will be critical for the future workplace.

Appreciate that while not everyone wants to be the boss everyone needs to feel engaged in their work. Employees may want to try different roles across your organisation without taking on extra responsibilities, so treat this career approach as valid.

6. Transparency and corporate governance

With the merging of work and personal spheres during COVID-19, employees increasingly want to work for ethical people and organisations whose values match their own. Therefore, employers that act transparently, demonstrate that they care about local communities and take genuine steps to address challenges such as systemic racism, human trafficking and climate change, will be positioned well to attract and retain talent.

Footnotes

1. news.com.au/finance/work/at-work/the-great-resignation-why-australians-are-looking-to-quit-their-jobs/news-story/99d05f2f903caf7fa624a27e706d8c66
2. hbr.org/2018/01/how-and-where-diversity-drives-financial-performance
3. www.hrdive.com/news/monster-95-of-workers-surveyed-considering-changing-jobs/603091/
4. Aon’s 2020 Medical Health Trends Report
5. Aon’s 2020 Rising Resilient Report