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Words to the Wise: The Great Re-Engagement

(October 2023)

The term "Great Resignation" was coined by Professor Anthony Klotz of Texas A&M University, in May 2021, when he predicted a sustained mass exodus because of the COVID-19 pandemic and the resulting reassessment of work–life priorities. If there was debate prior to the pandemic regarding priorities, those got reordered very quickly under very extreme pressure that elevated health and family concerns over having a job. Since it became the organizational buzzword of 2021, everyone’s come up with their own favorite variation - Great resignation; Great attrition; Great reassessment; Great renegotiation; Great reset; Great rethink, etc.

The pressures and the concerns for work-life balance were there before 2020. It’s just that the pandemic forced a real-time recalibration among employees.

Surveys from before the pandemic showed that an overwhelming majority of knowledge workers would like to work from home and would even be willing to quit a job to work remotely. Not surprising given the greater demand and opportunities for these workers. In late 2021 a McKinsey survey showed that 40% of employees who had quit their jobs did so without having a new job to go to.

Studies show that the “big quit” was being driven mainly by members of Generation Z and millennials. And that resignation rates were highest among mid-career employees, and in sectors like technology, healthcare, manufacturing, leisure and hospitality and retail trade — where demand is high and employment has been growing.

For the past two years, we’ve been narrowly focused on this turnover phenomenon. But stepping back and looking at it from a broader perspective, we see that from 2009 to 2019, the average monthly quit rate increased by 0.10 percentage points each year (Chart 1 - BLS / HBR March 2022). It suggests that attrition rates are now back in line with the pre-pandemic trend, which is likely to continue for the foreseeable future.

Chart 1 (BLS / HBR, March 2022)

It’s time for the “Great Rethink”. So now that we have leadership’s attention, let’s see if we can achieve a similar level of hyper-focus on doing the things in our control that will absolutely increase employee engagement levels and reduce voluntary attrition rates across the board.

Much of the discussion about the Great Resignation has focused on employee dissatisfaction with wages. Compensation, however, ranks 16th among all factors with respect to predicting employee turnover. This result is consistent with a large body of evidence that shows pay has only a moderate impact on employee turnover.

An MIT Sloan School of Management study found that corporate culture is a much more reliable predictor of industry-adjusted attrition than how employees assess their compensation. Chart 2 below displays the five predictors of relative attrition. To give a sense of their relative importance, each element is benchmarked relative to the predictive power of compensation. A toxic corporate culture, for example, is 10.4 times more powerful than compensation in predicting a company’s attrition rate compared with its industry.

Chart 2 (MIT Sloan School of Management, January 2022)

How do we use this information to counter voluntary turnover? Like many things in organizations, the answer is not complex. We know what we should do. We must commit to doing it and have the organizational focus and will to follow through. We must commit to the “Great Re-Engagement”.

Employees want to be engaged. Employees want to be valued. They expect their employer to know their wants and needs just as much, if not more, than they as employees are expected to know the wants and needs of the customer. Simple truth – you cannot have exceptional customer experience without exceptional employee experience.

A 2021 McKinsey study showed that resignation factors such as compensation, work–life balance, and poor physical and emotional health did matter to employees—just not as much as employers thought they did. The top three factors employees cited as reasons for quitting were that they didn’t feel valued by their organizations (54 percent) or their managers (52 percent) or because they didn’t feel a sense of belonging at work (51 percent). According to research, 70% of the variance in team engagement is determined solely by the manager.

Guess what. Employees have been saying pretty much the same thing for over 40 years.

Chart 3 (Drivers of sustained employee engagement, 2014 Towers Watson Global Workforce Study)

Over four decades of global research findings consistently emphasize three primary drivers of employee engagement. If an organization does nothing more than focus on these, employee engagement will increase. And your organization will achieve a “Great Re-Engagement”.

  1. Create the right work environment and culture (values aligned with the employees’, organization’s reputation and connection with the community, work-life balance – with a focus on the quality of the work life)

  2. Build a strong, aligned, and effective leadership team (leaders’ actions match their words, they role model the norms and behaviors for success, communications are aligned top to bottom)

  3. Support employee & career development (organization focus on personal and professional development, facilitates career visibility and mobility, development focus on supporting employee success in current roles and employee readiness for future roles – even GenZ & Millennials care about this)


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