The Great Solution to the Great Resignation
“Many of us leading companies have been very focused on getting through the pandemic, and maybe we haven’t been taking as much time and care around our employees and our talent and their development.” – Rob Falzon, Vice Chair of Prudent Financial
In the wake of the pandemic, major changes have disrupted the global workforce. Most notably, resignation has become a significant trend. Across the world, organizations are facing extraordinary turnover rates, so much so that this phenomenon has been dubbed the “Great Resignation.”
And yet, the show must go on.
How do organizations survive the Great Resignation? Is this truly a pandemic-driven exodus from the workforce? What is the root of the problem? And what is the solution?
In this guide, we’ll explore at the great problem driving the Great Resignation and propose a path to the great solution: succession planning and talent development.
What is “The Great Resignation”?
In 2021, the U.S. Bureau of Labor Statistics reported that more than 4 million workers were leaving their jobs each month.1 Consequently, a record breaking 10.9 million job openings were reported at the end of July.2 In fact, resigning from a job has become so prevalent that career experts now describe it as a “movement” rather than a “trend.”3 Dubbed “The Great Resignation,” this phenomenon continues to gain momentum.
A survey by Joblist revealed that more than two-thirds of employees intended to leave their jobs within the next year (74% of full-time employees and 51% of part-time workers).4 This isn’t entirely unusual. The annual turnover rate in the U.S. has been steadily increasing each year since 2010. In 2018, the turnover rate stood at 27%, increasing to 36% in 2019.5 By 2020, the turnover rate had surged to 57%6 — an astounding 88% increase since 2010.7
But who are these people that are resigning? And where are the resignations coming from?
Figure 1. Number of US job openings 2001 — 2021.8
Who is Resigning?
As we consider the Great Resignation, it’s worth investigating who is resigning. Harvard Business Review (HBR) conducted an in-depth analysis to explore this very question. In a survey of more than 9 million employee records from more than 4,000 companies, HBR found that employees between 30-45 years old had the highest resignation rates, with an average increase of more than 20% between 2020 and 2021. Interestingly, the study found that during the Great Resignation turnover decreased among workers aged 20 to 25, even though this group typically contributes to higher turnover rates within organizations. Similarly, resignation rates declined for those aged 60 to 70. Career experts believe this trend may be driven by greater financial uncertainty and reduced demand for both entry-level and senior workers. With fewer opportunities available, employees in the 20-25 and 60-70 age groups may have opted to remain in their roles because they had fewer alternatives elsewhere.9
Where are the Resignations Coming From?
At the beginning of the pandemic, turnover rates varied greatly between different organizations and industries. For example, turnover declined in both the manufacturing and finance sectors. In contrast, turnover in the healthcare sector increased by 3.6%, while resignations in the tech industry rose by 4.5%.10 This imbalance is likely due to the added pressure the pandemic placed on health and tech industries. The healthcare system has faced immense demand from hospitalizations, testing, and vaccinations. Similarly, the global shift to remote work has intensified workloads in the tech industry, leading to increased pressure and burnout.
Figure 2. Bar graph of industries with highest percentages of worker resignations.11
As the pandemic wore on, the distribution of resignations across industries shifted significantly. As case incidence and severity declined, testing and vaccination efforts became more efficient, and healthcare systems began adapting to new norms. In the tech sector, new products and services designed to support remote work have been launched, and organizations have strengthened virtual workplace environments. As a result, the strain on healthcare and tech industries has decreased, and the resignation rates among other industries has surpassed them. Professional and business services, for example, now have the third highest resignation rates at 3.3%.12 This shift is likely driven by the numerous new opportunities created through remote work. In contrast, leisure and hospitality — as well as trade, transportation, and utilities — still have a higher turnover rate. This can be attributed to the persistent strain the pandemic has placed on these sectors. In many cases, jobs in these industries are becoming obsolete, either temporarily or permanently.13 However, the pandemic has also spurred the creation of new job opportunities. For example, in China, the e-commerce, delivery, and social media sectors added more than 5.1 million jobs in the first half of 2020.14 This highlights that turnover does not always result in unemployment, and the “Great Resignation” may more aptly be termed the “Great Reshuffle.”
The Great Reshuffle
The question arises: does the Great Resignation have a counterpart? Where are all these people who are leaving their jobs going? Is there a “Great Recruiting” effort going on behind the scenes? Is the Great Resignation really just a Great Reshuffle? The answer is both yes and no. Studies have shown that in addition to people leaving their jobs, there are also a record-breaking number vacant positions. This disparity may be explained by the uneven distribution of the “reshuffle.” As noted earlier, the pandemic has created new job opportunities while rendering others obsolete, contributing to the simultaneous rise in resignations and vacancies.
Kevin Harrington, CEO of Joblist, is a proponent of this theory. He attributes the Great Reshuffle to the greater bargaining power employees have attained, driven by the rise of remote work and expanded global job opportunities. Harrington states, “With a record number of job openings and the rise of remote work, barriers to job switching are now lower than ever … Employees are taking advantage and demanding higher pay, better benefits, increased flexibility, and more to join and then stay. For 2022, employers need to listen to the market and adapt quickly in order to remain competitive.”15
The Great Problem Behind the Great Resignation
Understanding the Great Resignation might seem like understanding the root cause of the problem. However, when analyzing economic trends, team dynamics, or other systemic issues, it’s common to mistake the catalyst for the cause. Could there be more driving the Great Resignation than meets the eye? Perhaps the pandemic was just the straw that broke the camel’s back.
To uncover deeper insights, SIGMA’s consultants conducted a thorough investigation. By examining possible biases and anomalies in the data, we performed a root-cause analysis on recent trends in resignation. What we found was remarkable.
Unpacking the Data: What’s Behind the Numbers?
The Great Resignation may not be as great as it seems. Analysts have commented that reported job figures are likely inflated by a self-selected sample. Employees who participate in these surveys are often those who are dissatisfied with their current roles and actively seeking new employment.16 Additionally, turnover rates vary significantly by industry. For example, evidence suggests that most white-collar organizations have turnover rates below 15%.17
This raises an important question: why are blue-collar jobs experiencing significantly more turnover than white-collar roles? To explore this discrepancy, SIGMA’s consultants conducted a detailed analysis to uncover the root cause of resignations. The findings shed new light on what’s driving these trends.
Why Employees Resign: Key Drivers Behind the Great Resignation
Why do people leave their jobs? In most cases, it’s because they believe better opportunities await them elsewhere. Often, this belief is driven by a desire for professional development and increased compensation. Interestingly however, most resignations are not primarily about salary. Instead, they stem from dissatisfaction with the workplace environment.
Fun Fact: The Great Resignation is also known as the “Big Quit”
“Very few people are quitting due to salary alone. Usually it’s more about working conditions (e.g., work/life balance, not liking their managers, not feeling accomplished in their jobs, etc.).” 18 – Jack Gold, President, J. Gold Associates
If workplace conditions are the culprit for the “Big Quit,” this might explain the discrepancy between resignation rates between blue-collar and white-collar jobs. Often, blue-collar jobs offer fewer opportunities for personal and professional development, and the working conditions are often more difficult or dangerous. It’s easy to see why these jobs may have been disproportionately exacerbated by the pressures of the pandemic, leading to higher turnover in these industries.
This discrepancy also supports the idea that COVID-19 wasn’t the sole cause of the Great Resignation but rather a catalyst that exposed existing systemic issues in workplace systems, protocols, environments, and relationships.
To dig deeper, SIGMA examined the workplace drivers behind resignation trends. The findings from the Work Institute’s 2021 Mid-Year Retention Report revealed that “career reasons” were the top driver of resignations, with more than one in five employees leaving their jobs to pursue advancement and professional development elsewhere. This trend is 17.2% higher than in 2020 and 7.6% higher than in 2019.19
Additionally, a separate survey of 18,000 conducted by Gartner, a technological research firm, identified the top drivers attracting employees to new jobs. These included compensation (48%), work-life balance (42%), location (33%), stability (31%), and respect (29%).20
How Progress and Growth Impact Employee Retention
A sense of progress and accomplishment plays a significant role in employee retention. Studies show that people who feel they are accomplishing something in their work generally have a high job satisfaction, and are less likely to leave.21 In contrast, low-skilled, low-paying jobs often take the earliest and greatest hit among resignations.22 A survey by employee management platform provider, Lattice, confirmed these results. In Lattice’s survey, 43% of respondents indicated that they left their jobs because they felt their career path had been stalled, and 38% of Gen Z workers — those born after 1997 — stated that they were looking for jobs with greater transparency around career progression and development opportunities.23
These findings underscore the importance of personal and professional growth in the workplace. Resignations are largely driven by “career reasons,” with the pandemic acting as a catalyst that brought these underlying issues to a tipping point.
The Key to Retention: Investing in Employees
A common theme among the “career reasons” driving resignations is the desire to find an organization that demonstrates a genuine investment in its people. When employers offer competitive compensation, work-life balance, and remote/online opportunities — identified by Gartner as the top three drivers of attraction to a new job24 — they show that they value their employees and are willing to support them. Similarly, providing transparency around career paths and development opportunities shows a long-term commitment to fostering personal and professional growth.
Identifying the root of the problem points directly to the solution. How do organizations demonstrate to their people that they are valued? How do organizations invest in the personal and professional development of their employees? In the next section, this guide will explore how building strong leadership pipelines can help organizations retain top talent and prepare for future success.
The Growing Demand for Flexibility and Remote Work
A significant shift in workplace priorities has emerged since the beginning of the pandemic: employees now place a higher value on flexibility, particularly the ability to work remotely. A survey by Joblist indicated that 61% of employees were interested in remote work opportunities in 2022. And of those currently working remotely at least part time, 45% stated that they would leave their role if their employer required full-time, in-person work.25
While the desire for remote work may seem distinct from the pursuit of personal and professional development, these priorities stem from a common motivation: the need to feel valued and supported by employers. For many, remote work is more than a logistical preference; it’s a pathway to greater productivity and personal growth. By providing the flexibility to work in an environment that suits their individual needs, remote work enables employees to create conditions where they can thrive personally and professionally.
The Great Solution to the Great Resignation
In today’s workplace, jobs are about so much more than simply earning a paycheck. Employees are seeking growth and development opportunities, and they’re looking for employers who can provide them. Unfortunately, the majority of organizations fall short in this area. Most organizations lack a structured leadership development program, leaving them unprepared for future talent needs.
Recent studies by Deloitte indicate that more than 85% of business and HR leaders admit their leadership pipelines are not equipped for the future.26 That makes sense, as a true leadership pipeline goes beyond a surface-level talent program; it requires a robust succession planning process. The costs associated with unplanned succession — lost knowledge, missed opportunities, client delays — have been estimated at more than 10 times the salary of an executive.27 Most organizations are aware of this risk, yet less than 1 in 4 have a formal succession plan in place.28
Unplanned succession, in other words, is resignation. And so, the Great Solution to the Great Recession is to build a proper leadership pipeline. A robust leadership pipeline offers various benefits:
- First, a robust leadership pipeline demonstrates to employees that the organization is committed to their growth and success. This commitment to investment helps reduce turnover, as employees feel valued and see opportunities for advancement within the organization.
- Second, a strong leadership pipeline ensures preparedness for inevitable transitions. A proper leadership pipeline prepares multiple leaders for each critical role. When employees do leave, the organization is equipped with qualified internal candidates to step into critical roles. This approach avoids disruption and ensures continuity. Moreover, having multiple successors for each position is essential; when one leader steps up, another vacancy is created. That’s why leadership development is about more than filling individual roles. It’s about cultivating a network of internal talent that supports the entire organization’s long-term success.
- Finally, leadership development not only supports the retention of top performers, but also enhances an organization’s ability to attract exceptional talent. A survey conducted by Prudential Financial revealed that more than one in five participants identified a lack of growth opportunities as the second most common reason for seeking new jobs.29 By prioritizing employee growth and career development, organizations can differentiate themselves in the competitive job market and transform the challenges of the Great Resignation into opportunities for strategic recruitment.
Get Started With SIGMA
If you would like to begin building your leadership pipeline, explore SIGMA’s succession planning services. We offer customized consulting and leadership coaching services, along with our succession planning solution, the Succession Planning Sprint. With just a four-hour session involving your leadership team, our consultants will create a tailored 12-month succession plan, delivered within 30 days.
If you have any questions or are interested in learning more, please don’t hesitate to contact us. Complete the form below or book a call with us online. We’re always happy to chat.
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2 Cook, I. (2021). Who is driving the Great Resignation? Harvard Business Review. Retrieved from https://hbr.org/2021/09/who-is-driving-the-great-resignation.
3 Fox, M. (2021). The ‘Great Resignation’ is altering the workforce dynamic — maybe for good. CNBC. Retrieved from https://www.cnbc.com/2021/11/01/great-resignation-may-be-altering-workforce-dynamic-for-good.html.
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14 Pickert, R. (2021). U.S. job openings rose to a record 10.9 million in July. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2021-09-08/u-s-job-openings-rose-to-a-record-10-9-million-in-july.
15 Mearian, L. (2022). No end in sight for the Great Resignation; workers keep quitting for better pay, benefits. Computerworld. Retrieved from https://www.computerworld.com/article/3646390/no-end-in-sight-for-the-great-resignation-workers-keep-quitting-for-better-pay-benefits.html.
16 Mearian, L. (2022). No end in sight for the Great Resignation; workers keep quitting for better pay, benefits. Computerworld. Retrieved from https://www.computerworld.com/article/3646390/no-end-in-sight-for-the-great-resignation-workers-keep-quitting-for-better-pay-benefits.html.
17 Mearian, L. (2022). No end in sight for the Great Resignation; workers keep quitting for better pay, benefits. Computerworld. Retrieved from https://www.computerworld.com/article/3646390/no-end-in-sight-for-the-great-resignation-workers-keep-quitting-for-better-pay-benefits.html.
18 Mearian, L. (2022). No end in sight for the Great Resignation; workers keep quitting for better pay, benefits. Computerworld. Retrieved from https://www.computerworld.com/article/3646390/no-end-in-sight-for-the-great-resignation-workers-keep-quitting-for-better-pay-benefits.html.
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20 Mearian, L. (2022). No end in sight for the Great Resignation; workers keep quitting for better pay, benefits. Computerworld. Retrieved from https://www.computerworld.com/article/3646390/no-end-in-sight-for-the-great-resignation-workers-keep-quitting-for-better-pay-benefits.html.
21 Mearian, L. (2022). No end in sight for the Great Resignation; workers keep quitting for better pay, benefits. Computerworld. Retrieved from https://www.computerworld.com/article/3646390/no-end-in-sight-for-the-great-resignation-workers-keep-quitting-for-better-pay-benefits.html.
22 Mearian, L. (2022). No end in sight for the Great Resignation; workers keep quitting for better pay, benefits. Computerworld. Retrieved from https://www.computerworld.com/article/3646390/no-end-in-sight-for-the-great-resignation-workers-keep-quitting-for-better-pay-benefits.html.
23 Mearian, L. (2022). No end in sight for the Great Resignation; workers keep quitting for better pay, benefits. Computerworld. Retrieved from https://www.computerworld.com/article/3646390/no-end-in-sight-for-the-great-resignation-workers-keep-quitting-for-better-pay-benefits.html.
24 Mearian, L. (2022). No end in sight for the Great Resignation; workers keep quitting for better pay, benefits. Computerworld. Retrieved from https://www.computerworld.com/article/3646390/no-end-in-sight-for-the-great-resignation-workers-keep-quitting-for-better-pay-benefits.html.
25 Mearian, L. (2022). No end in sight for the Great Resignation; workers keep quitting for better pay, benefits. Computerworld. Retrieved from https://www.computerworld.com/article/3646390/no-end-in-sight-for-the-great-resignation-workers-keep-quitting-for-better-pay-benefits.html.
26 Wood, J. (2015). 4 dangerous leadership development traps and how to avoid them. SAP. Retrieved from https://blogs.sap.com/2015/10/13/4-dangerous-leadership-development-traps-and-how-to-avoid-them/.
27 Harrell, E. (2016). Succession planning: What the research says. Harvard Business Review. https://hbr.org/2016/12/succession-planning-what-the-research-says.
28 Cloud, J., Matza, R., Plaut, T., Rosone, B. 2015. Business succession planning: Cultivating enduring value. Deloitte. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/deloitte-private/us-dges-business-succession-planning-collection.pdf.
29 Newman, R. (2021). Maybe bad bosses are causing the worker shortage. Yahoo! finance. Retrieved from https://finance.yahoo.com/news/maybe-bad-bosses-are-causing-the-worker-shortage-205009054.html.