How Small Businesses Can Win ‘The Great Resignation’

It’s a tough time to be an employer. In the wake of Covid-19, millions of workers have reassessed their professional wants, needs, goals, and priorities. That factor, combined with massive job losses early in the pandemic and a faster-than-expected economic recovery, has caused a historically unprecedented shuffling of the workforce that has been dubbed “the Great Resignation.” While that shuffle has created vast amounts of opportunity for job seekers looking to change their careers and circumstances, it has created a job market where employers face tougher competition for talent than ever before. 

How can small businesses remain competitive in this brave new world and still win the best new hires while keeping their existing talent? In this white paper, we will explore that question and provide business owners with tips they can use to navigate the Great Resignation with agility and success.

The Great Resignation Explained

While most people have at least heard of the Great Resignation at this point, the trend is still new enough that its complete history or future implications might be slightly foggy for some. Before we delve into the tactics that small and medium businesses (SMBs) can use to stay competitive at this uncertain time, let’s take a look at three of the most frequently asked questions about the Great Resignation.

What is The Great Resignation?

The Great Resignation, alternatively known by names like “The Big Quit,” “the Extraordinary Exodus,” or “the Great Reshuffle” – is a global economic trend that has seen millions of workers voluntarily resign from their jobs to seek out other opportunities.

What are the causes of The Great Resignation?

Anthony Klotz, an associate professor of management at Texas A&M University, coined the term “the Great Resignation” in May 2020 before the trend started. As part of his job, Klotz researches the ways employees quit their jobs and how employers respond to those voluntary exits. Unemployment rates in the United States were still astronomically high in May 2020 – 13.3 percent, down slightly from the previous month’s pandemic-era high of 14.8 percent – and few would have predicted voluntary exits from jobs. But Klotz guessed that, once businesses were allowed to return to their normal operations, there would be a trend of workers quitting their jobs. 

Specifically, Klotz pointed to four trends, all related to the pandemic, that would eventually bring about a deluge of resignations. Those four trends were:

1. A backlog of resignations from workers who wanted to leave their jobs but were choosing to stay for the time being because the pandemic had made everything – including the rest of the job market – so uncertain.
2. Widespread burnout throughout the workforce.
3. A trend of people reassessing their priorities, values, and desires for work, work-life balance, and more.
4. The pandemic-motivated shift to remote work and the reluctance of countless Americans to give up the flexibility and safety of temporary work-from-home arrangements to return to the office. 

Because of these factors, Klotz was less bullish than other employment experts about the workforce and the job market springing back to normal post-pandemic. For his part, Klotz believed that a taper-off of Covid-19 – whether brought on by vaccination, herd immunity, or a waning of the virus – would not bring about the pre-pandemic economy that many others were predicting.

Klotz’s predictions proved to be remarkably accurate. Throughout 2021, as vaccination rates rose and Covid-19 cases declined, the economy began a return to normal but never quite got there. On paper, things look the same as before the pandemic disrupted one of the most robust economies in American history. The unemployment rate for June 2022 was 3.6 percent, nearly back down to the near-historic low of 3.5 percent that existed in the months leading up to the March 2020 explosion of the pandemic. 

Low unemployment rates or not, though, the Great Resignation proved to be accurate. In the second half of 2021, 20 million Americans quit their jobs, including 4.5 million resignations in November 2021 alone.

How has The Great Resignation impacted small businesses?

The Great Resignation has not just been a problem for SMBs. On the contrary, this trend has affected businesses of every size, in every industry, spanning every geographical radius in the U.S. – not to mention other parts of the world. However, because small businesses often have fewer resources to compete for top talent, the impact of the Great Resignation may have been particularly challenging for SMBs.

First, because SMBs have fewer employees than large organizations such as Walmart or Google, even a single person quitting a job can have a profound and palpable impact. Those impacts range from restaurants cutting their hours due to short-staffing to longer lead times for services like new home construction.

Second, SMBs don’t always have the profit margins to raise wages dramatically or to implement similarly aggressive strategies aimed at competitive recruitment or employee retention. This issue can prolong short-staffing issues at companies or make it worse. In turn, short-staffing can exacerbate employee burnout, another common reason for voluntary exits.

Third, and finally, many small businesses have operations that require many employees to work in person. Food and beverage, hospitality, retail, construction, and other skilled trades: these industries and many others are dominated by SMBs rely on in-person work. SMBs operating in these spaces don’t always have the flexibility with their business models to offer remote work opportunities for employees, which can drive candidates or existing employees to look elsewhere.

How SMBS Can Win The Great Resignation

Now that we understand the science of the Great Resignation let’s take a closer look at how SMBs can shield themselves from the harsher impacts that some businesses have faced.

Offer Competitive Wages

As mentioned above, raising wages is one of the first options that most employers consider when they feel they are at risk of losing top talent. While not every voluntary resignation is motivated by a search for more money, many workers are taking the Great Resignation as an opportunity to improve their work circumstances. As it exists right now, the job market is what experts call a “job seeker’s market.” 

Think about this concept as the housing market. In real estate, fluctuations sometimes bring about “seller’s markets” and “buyer’s markets.” A seller’s market is where, because of a variety of market forces – such as low supply, high demand, and low interest rates – a seller can command a higher price for their home than they would during a cooler housing market. Sellers often take advantage of this situation to sell their homes for big profits. It’s a similar case with a job seeker’s market, where some workers will take low-unemployment-rate periods as an opportunity to sell their skills to the highest bidder. 

By offering competitive wages, employers can put themselves in a better position to “win” the top talent shopping around for higher salaries. Don’t forget your existing employees, though. A long-time employee who feels undervalued may see the Great Resignation as an opportunity to get the big pay bump they haven’t been able to get in their current job. During this era, employers have often had to give aggressive across-the-board raises to keep their employees’ eyes from wandering.

Develop New-Age Benefits Packages

Benefits and wages go hand-in-hand, especially when some of the benefits that employers typically offer – health insurance, retirement planning, childcare, parental leave, paid time off – can add up to be as valuable to employees as thousands of dollars in wages. Employers looking to be competitive during the Great Resignation can start by improving their benefits in these categories, but they shouldn’t stop there. In the past decade or so, employers have become more creative with benefits, adding perks like free meals and snacks at the office, take your dog to work day, paid volunteer work, electric car incentives, and other cool benefits to their offerings.

A new-age benefits package doesn’t just have to be the fun stuff, either. It can also mean offering resources for counseling and other mental health services, covering fertility treatments for parents struggling to conceive, figuring out home loan assistance programs to help employees buy homes in a challenging real estate market, or reimbursing tuition costs. These benefits don’t necessarily have the “fun” or “playful” vibe of an in-office chef, but they’ll mean a lot to the average candidate.

Explore Flexible Workplace Models

One of the most significant changes brought about by the Covid-19 pandemic – at least in how it pertains to the workforce – is the skyrocketing growth of work-from-home and other flexible work models. Before the pandemic, working remotely from home was a niche employment arrangement. According to the New York Times, just four percent of employed people in the U.S. worked remotely in 2019. But in that same article, New York Times journalist Emma Goldberg notes that Covid-19 at least temporarily sent some 50 million Americans into a remote work situation. That grand “experiment,” as Goldberg calls it, changed the conversation around work-from-home and made flexible workplace models one of the aspects most job seekers desire.

Consider this statistic: According to an “American Opportunity Survey” conducted in the spring of 2022 by leading consulting company McKinsey & Company and top market research firm Ipsos, 58% of Americans now work from home at least one day a week, and 35% work from home all five days each week. Those numbers aren’t coming from a small sample size, either. On the contrary, the American Opportunity Survey queried 25,000 American workers across all industries, job sectors, and geographies. The findings show that, while remote work was once a minority option, it is now available to most American workers.

That shift has happened so fast – a 54 percentage point shift in the space of just three years – that some companies might still be questioning how they can embrace it or whether they even should. Much has been made over the years about the importance of a central workspace, where employees can collaborate, form bonds that lead to strong company culture, and have a presence in a city or town that is concentrated rather than scattered. However, the fact is that flexible work arrangements are something that many job seekers now expect. Perhaps more important than that, they’re something that essentially proved to be successful during that aforementioned 50-million-person experiment. To compete for top talent, employers must at least offer the option of remote work.

Implement Health & Wellness Focused Cultures

Covid-19, for many Americans, was a wake-up call on the topic of health and wellness. Not only did the presence of a potentially deadly viral pandemic have people thinking more seriously about what they were doing to stay healthy, but it also sent many people in search of ways to fill their time while they were cut off from friends, colleagues, and family members. For many of us, that push led to fitness. Home gym equipment, bicycles, and online yoga classes all saw significant sales increases during Covid lockdowns. For some, getting outside in any way possible was both a mental balm and a physical motivator. For others, the inability to go to the gym meant getting creative about at-home fitness.

Even before Covid-19, employer benefits geared toward health and wellness were rising. It wasn’t uncommon, for instance, for employers to invest in on-premises gyms or to offer programs that covered registration expenses for any employee wishing to run a 5K or a marathon or to compete in any similar type of extramural physical endeavor. 

Employees coming back to work post-pandemic want a wellness-focused culture. They want the option to move around throughout the day because they had that option at home. They want the flexibility to cut out for a few hours and go for a run or swing by the gym, rather than having to find time for those things in the morning or evening. They want access to healthier snacks and meals at work rather than the junk-food-filled vending machines they dealt with before the pandemic. They want to know that their employer has their back if they need to access mental health resources for themselves or their families.

These benefits are valuable to job seekers but can also create value for employers. Healthy employees are happier, more energetic, less stressed, more creative, and more productive. In addition, a culture grounded in health and wellness offers opportunities for employee bonding in and outside of work, tied to activities like running groups or yoga classes rather than the latest office project. So, while a robust health and wellness program will take time and money for any employer to establish, it will also likely pay significant dividends in the future.

Foster Long-Term Relationships

If there’s one thing calling employees back to the office, it’s likely camaraderie. While businesses found ways to maintain staff communication, connectivity, and culture during the pandemic – with vital assistance from tech platforms like Zoom – there’s no doubt that seeing someone every day in person is different from seeing them every day on the screen. While some workers are content with the at-home model, others miss the friendships they forged with their colleagues in the office and want that facet back. Employers wishing to “win” the Great Resignation should put a premium on workplace relationships, whether that means opening up the office again to those who want to return or finding opportunities beyond the office for everyone to get together and bond.

Small Business Considerations

As you work to adopt some or all of the practices listed above in your own business, remember that specific small business considerations may be less pressing for large organizations. Paying attention to these considerations up front may save you from troubles down the road.

Budget

A top consideration, of course, is the money side of things. Raising wages and offering more competitive benefits are easy to mention on paper but harder to do in practice when budgetary constraints are involved. Ultimately, every business needs to balance its own financial capabilities with its wants and needs. You shouldn’t pay more than you can afford just to win a talented candidate or keep a treasured employee, but you also shouldn’t let talented people slip through your fingers by being stingy with money. Finding the “happy medium” will keep your business financially secure while also allowing you to offer competitive salary-and-benefits packages that attract or retain talented workers.

Existing Workplace Dynamic and Culture

Another important aspect worth considering when adopting any of the strategies listed above is how they might impact your existing workplace culture. If you have a very vibrant office-bound culture – and you know that your current employees are more than happy to be in the office – it might suddenly hinder what you’ve built to shift over to a flexible, partially remote system. On the other hand, adding more group get-togethers or building a fitness and wellness program could elevate your vibrant culture to the next level. Again, the important thing is to strike the right balance and make the right choices for your business. What works for another company might not always be the best fit for you, but seriously considering some of the options provided might help you find creative ways to shake up your hiring game.

Long-Term Company Vision

Finally, spare some thought for your organization’s five-year or ten-year plan. Where do you picture the business being in terms of employee numbers? Geographic epicenter? Employer branding? Company culture? If you envision an extensive, tight-knit office community, perhaps it doesn’t make sense to embrace remote work fully.

On the other hand, if you picture the company going national or even global, being more flexible with work arrangements could save you a fortune in office rent costs and help you expand your applicant pool by removing geographic boundaries. Once again, every employer is different, so it makes sense that the strategies that will work for each employer are different as well. Looking forward to your company’s future – with or without a crystal ball – might help give you some clarity about the tactics that make the most sense for the organization in the here and the now.

Conclusion

At this point, no one really knows how long the Great Resignation will last. March 2022 saw another 4.5 million resignations, just edging the November 2021 one-month record. In other words, the trend of workers leaving their jobs has carried over into 2022. In the meantime, millions upon millions of job opportunities remain up for grabs in the U.S., extending a historic job seeker’s market and creating innumerable opportunities for current job seekers and dissatisfied professionals alike.

The good news is that the Great Resignation is also a terrific opportunity for employers. While this job market has rightfully been labeled in favor of the candidates, it has also created an opening for businesses in all sectors to scoop up some of the finest talent available. Workers who may have stayed in their jobs for years longer under normal circumstances have gotten the itch to see what else is out there, thanks to Covid-19 and everything it did to change the conversation around work. That means employers have ample chances to recruit and hire exceptional employees who might just be game-changers. 

As we have mentioned in this white paper several times, the key is striking the right balance. Employers need to think not just about the job seekers they are trying to recruit but also about the existing employees they wish to retain. They need to think not just about the next 2-3 months but about the future, and the long-tail impacts all of this workforce upheaval could have. They need to think not just about what the technology has rendered possible, and not just about what the trends say, but about the feedback from their own employees.

In short, now is a difficult time to be an employer. The Great Resignation has created the job seeker’s market to end all job seeker’s markets, and there is no telling when the tables might turn. But by staying smart and thoughtful and taking the advice provided in this white paper to heart, SMBs across the workforce can find ways not only to survive the Great Resignation but to come out of it with their heads held high as victors.

CRAIG KESSLER INTRO

When a Texas A&M professor predicted the Great Resignation in the spring of 2020, not even he knew just how right he’d prove to be. But if the past year has revealed anything, it’s that the workforce – and the entire way we as a society view the concept of “work” – has changed forever. Tens of millions of workers leaving their jobs send a clear message: things need to change.

While many employers are losing during the Great Resignation, though – losing workers, productivity, and business – the truth is that there is ample opportunity to win. In the latest white paper from backgroundchecks.com, we explore the causes and effects of the Great Resignation and use that knowledge as a springboard to understand the strategies employers need to establish right now to come out on top in this brave new world of hiring and retention.