2020 was indeed a year of uncertainties. There was a rise in resignation rates in the US due to fears induced by the pandemic. But one year later, in 2021, the world saw its largest wave of resignations. According to the US Labour Department, 24 million workers quit their jobs from April 2021 to September 2021 with 2.5 million workers quitting in November 2021 alone. The total resignations in 2021 in the US alone amounted to 75.5 million. This is what went on to be termed as the Great Resignation by American psychologist, Antony Klotz, while some called it ‘The Big Quit’.

A similar phenomenon has been observed in China since April 2021 and is being referred to as Tang Ping (lying flat). It is a lifestyle choice and a sign of dissent against overwork by the younger generation who prefer being content with more attainable achievements and taking out time to unwind rather than burning themselves out from the pressure of work.

The Indian Scenario

India too witnessed a rise in resignation rates in 2021 predominantly in the IT sector as employees quit in search of better job opportunities. The voluntary attrition rate of Infosys, the country’s second-largest IT firm, has risen to 25.5% in the quarter ending in December from 20.1% in the September quarter and 11% year-on-year. Another IT giant, Wipro’s attrition rate rose to 22.7% in the third quarter from 20.5% in the second quarter.

This also led to a hiring override with top-five IT companies hiring 1.7 lakh people in the first 9 months of 2021.Microsoft’s 2021 Work Trend Index projects that 62 per cent of India’s workforce has the intention of switching jobs this year, compared to an average of 41 per cent globally. In India, the workforce was not only changing jobs, it was also switching to careers outside their industry. A September 2021 study by Amazon India showed that nearly 51 per cent of job-seekers were looking for opportunities in industries where they had little or no experience.

Causes and Effects

The Great Resignation is being majorly driven by toxic work cultures and the desire for a better job. An MIT Sloan study highlighted how toxic culture in the workplace was a major reason why many employees decided to quit in 2021. Contrary to the belief that most employees quit over salary dissatisfaction, the study suggested that the problem is much more complex than it seems. The MIT analysis found that a toxic corporate culture is a higher predictor of attrition and over ten times more important than salary in predicting turnover.

As expected, companies that report higher employee satisfaction are better at retaining their employees. The research indicated that more than 40 per cent of all employees were thinking about leaving their jobs at the beginning of 2021. According to the same study, more-innovative companies, including SpaceX, Tesla, Nvidia and Netflix are experiencing higher attrition rates than their more conventional competitors. Exhaustion and stagnancy caused by similar working patterns especially in a work from home setup have caused job seekers to look for newer challenges. More and more employees are quitting their existing jobs in search of better opportunities, not just in terms of salary but also in terms of new challenges.

In light of the Great Resignation wave, employers have started offering better benefits and higher remuneration to their employees. As per a report from the Conference Board, hiring bonus doubled between March 2020 and October 2021. According to another research, people now value the flexibility to work from home as much as they would value a 10% salary hike. As a result, companies are now offering flexible work weeks with many giving their employees the opportunity to shift completely to work from home.

What comes with the Great Resignation is great vacancies. In the US, around 4.4% of positions are open in education, over 6% and 8% in retail and healthcare respectively, all of them totalling almost one and a half million vacant positions. A 2020 survey of 300 global companies by the World Economic Forum indicated that 43% of the businesses struggling with hiring, expect to turn towards automation and outsourcing, thus reducing the requirement for larger workforces and combating labour shortages.

Freelancing and the Great Resignation

The Great Resignation has also led to a rise in freelancing. According to Statista, 67.6 million Americans were freelancing compared to 57.3 million in 2017. This suggests that people quitting their jobs are shifting to freelancing. According to an MBO study, 82% of freelancers are happier working independently. This shift makes sense because freelancing offers higher freedom and diverse opportunities. Moreover, it provides a greater earning potential since the freelancer can work with many companies. After all, getting out of bed whenever you want and working on your schedule is a benefit that not many traditional jobs offer.

The Way Ahead

With the growing number of resignations across the globe becoming a major concern, most companies have started offering better benefits to their employees. What employees want is not just higher pay packages but also the flexibility to work from home. Thus, many employers are trying to introduce more flexible and shorter workweeks and also the opportunity to work in the remote mode. In a constantly changing work culture, it is crucial that people are appreciated frequently. The role of employee engagement cannot be undermined. Employee contributions must be recognised and growth opportunities must be provided equitably. Also, the significance of learning and development for employee retention cannot be overstated. It is necessary for firms to partner with the right learning partners to upskill employees with the skills required to stay relevant in a particular business or industry.

Above all, companies need to promote a healthy work culture with the inclusion of fun activities, happy hours and excursions. Employees today seek not a job to which they have to adjust their life but a job that fits into their lives, a job that doesn’t require them to wait till retirement to enjoy life. The bottom line of the Big Quit is not just paying scale hikes or promotions as in the traditional sense. As people are looking to lead a better-quality life, employees experience a greater sense of accomplishment when companies invest in making them better, smarter, future-ready and also give them the chance to balance work with what they value the most.

By Madhvi Chauhan