It was the best of times, it was the worst of times—it was the spring of hope, it was the winter of despair. A spot-on summary of the job market the first half of 2022.
On one hand, recent data shows a labor market where unemployment remains low and the economy continues to add jobs. On the other, the latest jobs report adds evidence that the Great Resignation is not a short-term phenomenon, but rather an indication that talent shortages and high levels of turnover could last long term.
According to BLS data, more than 4 million people have left their jobs each month in the U.S. so far this year. Recent research from McKinsey and Company reveals this record-breaking trend won’t stop anytime soon. About 40% of workers are considering quitting their current jobs in the next 3-to-6 months—adding to the quitting trend that just won’t quit.
From hiring bonuses to wage increases—businesses are pulling out all the stops when it comes to hiring the help they need. But it’s still not enough. The Bureau of Labor Statistics shows the average annual turnover rate is 57 percent across all industries. But for those in the hospitality, restaurant and retail industries—upwards of 70 to 100 percent has been all too common.
According to Gartner, voluntary turnover will continue to be the highest cost and challenge employers face with projected expenses in the billions of dollars. Noting that the pace of employee turnover is forecast to be 50–75% higher than companies have experienced previously, the issue is compounded by it taking 18% longer to fill roles than pre-pandemic. Tough numbers to swallow.
As companies continue to experience the intense pressure and stress associated with increasingly high turnover rates, leaders are spending more and more time racking their brains trying to determine how to build retention rates while maintaining productivity. And while people keep quitting at record levels, organizations are still trying to attract and retain them in the same old ways.
With twice as many jobs available than people to fill them, Rick Marino, Managing Director for the Stores Consulting Group, says employees still have the upper hand. “Workers have three options: they can flee (quit), flow (tolerate) or fight for additional pay and benefits. With 7 in 10 employees reporting they’ll flee this year, it’s crucial for companies to leverage new workforce strategies that can fill these gaps.”
To close the gap, McKinsey and Company says employers should try to win back nontraditional workers in different ways. But how? Aaron DeSmet, Senior Partner at McKinsey said, “Even when employers successfully woo workers from rivals, they are just reshuffling talent and contributing to wage escalation while failing to solve the underlying structural imbalance. It turns out that many workers we have surveyed want more than the usual compensation and job advancement carrots.”
With the pandemic pushing more people to reevaluate what they want from a job—and from life—it has created a large pool of talent who are shunning the traditionalist path. DeSmet said employers should continue to value their traditional employees, but they also need to look beyond them to the workers who want flexible arrangements. “These people are out there, in greater numbers than before, and they can be tapped with the right strategies,” he said.
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