By Anna Mylona and Linda Stokes
In 2022, as the world emerged from the constraints of the Covid-19 pandemic only to run into the shock of the war in Ukraine, a new phrase entered the vocabulary of business, namely the ‘Great Resignation’. Broadly speaking, it seemed that a relatively large percentage of employees had used the time granted to them via ‘lockdowns’ and ‘homeworking’ to evaluate their working life and decide that ‘change’ was needed. This was a change which expressed itself in a higher-than-normal wave of resignations and career switches during the year.
A new trend or a temporary blip?
Whilst there may have been a temptation to suggest that the ‘Great Resignation’ was merely a knee jerk reaction to an extremely unusual set of circumstances recent research from Gallup and McKinsey suggests otherwise. Gallup’s ‘State of the Global Workplace Report’ for 2022 found that, at 14 per cent, Europe has a much worse average employee level of engagement with the workplace than any other region in the world. Put simply, Europeans are more unhappy at work than any other people in the world despite often having better legal protections and compensation packages. Echoing this disillusionment is McKinsey’s recent survey of over 16,000 employees across 9 European countries which found that more than a third of respondents expected to resign their current positions within the next three to six months! If this is indeed a mere ‘blip’ it appears to be a long lasting one.
A cause for concern?
Most certainly! The same Gallup research estimated that the cost of replacing an existing employee can amount to between one-and-a-half and two times the salary of that employee. That is a significant burden on a business. However, also consider that, if most of the workforce currently employed in a business is not engaged with it, each new employee is liable to be surrounded by an uninspiring team and may well exit rather quickly creating yet another significant cost. Both Gallup and McKinsey identified that the companies which were able to buck this trend were those which had found ways to engage their workforce. The issue of how to keep current employees happy whilst also attracting the best talent in the marketplace has never been so pressing. To properly address it businesses need to understand:
- Why employees choose to leave
- What attracts employees and what motivates them to stay in situ.
Clearly, there is an intersection between the two areas which shall be explored.
Why do employees leave?
Pooling the available research findings it would seem that the dominant reasons in Europe for resigning a post fall into the following general categories:
- Inadequate compensation package
- Lack of opportunity for career development and advancement
- Burnout – often exacerbated by the prevalence of modern technology breaking down the home life/work life barrier.
- Poor leadership and uncaring colleagues
- Disillusionment or a feeling of worthlessness.
Obviously, the issue of compensation packages is nothing new, people have always sought to change jobs, either because they feel underpaid for the work that they do or, because they have a need to increase their income level for other reasons (such as starting a family). However, points 2 to 5 suggest that the average worker now seeks far more from their employer than just a fair salary. They want to feel valued, inspired and encouraged to develop themselves to their true potential whilst simultaneously being allowed to maintain a healthy work-life balance.
If a business wants to retain its existing employees and attract new talent concrete steps must be taken to address these issues. In a world where the slightest error can, courtesy of social media, reach an audience of millions within seconds, becoming an ‘employer of choice’ means that it is necessary to ‘walk the walk’ and not just ‘talk the talk’!
Becoming an employer of choice
Becoming an employer of choice means making your business a great place to work in the eyes of your employees. Manage that and the world will soon know about it through their social and business interactions. Achieving this happy state is more complex as it means addressing the reasons for failure but in the experience of our firm, it is worth the effort. Moving onto this elevated plane requires that a business offers the following:
- Competitive salaries and benefits packages. Note that in isolation this is insufficient, however, without it your business will never step onto the playing field at all. Equally, the importance of the benefits package should not be underestimated and (with a few caveats regarding equal worth/value) it can be tailored to suit individual needs. For example, our staff value free parking near the office, other organisations might find that staff would value an on-site creche or discount membership at a local gym
- Inspirational management. Good managers and good management mean encouraging open communication, feedback and collaboration. Every team member must feel that they and their opinions are valued no matter what position they hold within the business and whatever their background. The business culture must value diversity, equity, equality and inclusion and managers must know their workers and lead by example. The remaining points tend to naturally flow from a competent management team
- Opportunities for professional development and career advancement. Employees want to expand their skill sets and build their knowledge base and, properly managed, the benefits of them doing so are not just personal to them. Creating a culture of continuous learning ensures that the business stays on top of (and sometimes gets ahead of) key trends and technologies relevant to them. However, such a culture does not just ‘happen’. To be successful management needs to establish a performance assessment and development framework that both it and the employee buys into. Within our firm this is manifested in our ‘Performance Acceleration Framework’ system which involves everyone within the firm and is constantly revised to ensure that it remains relevant
- Care for the mental and physical wellbeing of staff. It is vitally important that employees are able to maintain a healthy work-life balance to avoid burn-out. The ways that management can assist with this are numerous. For example, our firm practises a ‘mentor’ system whereby employees have a dedicated person they can discuss problems and aspirations with. Flexible work patterns can also be a valuable aid to those with, for example, caring responsibilities outside of the workplace. It is important to make the actual work environment as healthy as possible. High levels of natural light, greenery, pleasant furnishings, on site healthy food cafeterias and gyms are all proven to promote staff wellbeing. Perhaps most importantly of all, however, is that management must acknowledge that their employees have a private life and are not on call 24/7!
- A feeling of worth. Businesses can battle the slide into disillusionment by demonstrating that they and their employees maintain high ethical standards and a sense of corporate social responsibility. Sponsorship of charitable initiatives and volunteer programmes can be an extremely effective way of generating team spirit and building a real sense of self-worth. Simple initiatives such as sponsoring community events, hosting regular blood drives, and collecting aid in the face of tragedies, such as the recent earthquakes in Turkey and Syria create a common bond with colleagues and foster feelings of pride in the organisation. Publicly recognising the contributions of the individuals concerned be it in an internal newsletter or in external media again contributes to a belief in self.
Of course, whilst implementing some of the above largely relies on attitude, it would be naïve to suggest that becoming a great place to work is ‘cost free’. But is the cost worthwhile?
Employer of choice – a cost effective way to go?
The evidence would suggest that the answer to this is an overwhelming ‘yes’. A variety of surveys of the marketplace have found that becoming an ‘employer of choice’ gives businesses a real financial advantage over their competitors. Companies with a good reputation spend less on recruitment because good talent seeks them out and also because existing employees are more likely to refer suitable candidates. Happy, motivated employees serve as positive ambassadors for their company and discourage growth of a bullying culture.
However the benefits extend well beyond this. Good employers experience reduced levels of absenteeism and staff turnover. Their employees are also likely to prove loyal and therefore the risk of theft or of data abuse (such as the sale of trade secrets) is reduced. The positive attitude of employees should also result in an improved customer experience, higher levels of customer retention and boosting of the company reputation. All of this, of course, feeds through to higher revenue and increased profits. So the real question to ask is not “Can we afford to do it?” but rather “Can we afford not to?”
Anna Mylona is head of human capital at Elias Neocleous & Co LLC and Linda Stokes is publications’ editor at Elias Neocleous & Co LLC