CFOs and the Great Resignation

As the Harvard Business Review reported in September 2021: “According to the U.S. Bureau of Labor Statistics, 4 million Americans quit their jobs in July 2021. Resignations peaked in April and have remained abnormally high for the last several months, with a record-breaking 10.9 million open jobs at the end of July.” Popularized as the Great Resignation of 2021, this trend has created challenges for CFOs who are directly or indirectly trying to attract and retain talent across all levels of a business. At the same time, this moment can also create significant opportunities for a CFO looking to relocate, move positions, or consider a move to fractional or consulting work. 

Regardless of the position in which you find yourself or your business, understanding what is driving the resignation trend can go a long way to helping a CFO address current and future labor needs or help optimize a new opportunity that presents itself. As Kellogg’s “The Insightful Leader” notes: This moment creates “a whole lot of opportunities for negotiation. Maybe you quit your job and now have a new offer to consider. Or perhaps the pandemic made you re-evaluate your quality of life, and you want to propose a more flexible schedule to your boss.”

In this blog, I break down some of what the data tells us about the Great Migration so that you can make informed decisions that optimize opportunities. As the HBR study revealed, two critical conclusions are taken away from the data collected from more than 4,000 companies across a wide swath of business sectors.

Mid-career employees are especially volatile

Between 2020 and 2021, employees between the ages of 30 and 45 have shown the most significant increase in resignation rates, with an average increase across sectors of over 20 percent. As you might expect, this reverses the usual pattern that sees higher resignation rates for younger workers (ages 20 to 25). Of course, younger workers are likely facing financial uncertainties or high student debt, which directly impacts their openness to a career move during such unprecedented times. Interestingly, both the 25 to 30 and 45+ cohorts also saw slightly higher resignation rates in 2021. 

Studies suggest several factors that might help explain these numbers:

1. Employers have trended away from hiring employees with little or no experience. The shift to remote work has highlighted the need for experienced staff who are already trained in many basic business processes and can work more effectively without in-person supervision or guidance. Accordingly, the market for mid-career/experienced workers has flourished, giving this cohort more opportunities, selection, and leverage when negotiating new positions.
2. The current wave of resignations might be the result of a back pressure created by the pandemic. Mid-career employees considering a move pre-pandemic likely put their transition plans on hold during the past 18 months, as hiring stalled and financial pressures increased. As businesses slowly move past the pandemic and hiring refires, the number of opportunities increases, and transition plans are revived.
3. Numerous studies have shown that the pandemic has pushed mid-career professionals to a breaking point. From work-from-home to longer hours to higher workloads, the expectations that came with pandemic work has triggered a seismic rethinking of work-life integration. Many of these workers seek new or, more importantly, more balanced and personally fulfilling work. 

Not all sectors are created equally

Interestingly, not all business sectors have been impacted equally by the Great Resignation. A few, like manufacturing and finance, saw a decrease in resignation numbers. Others, like health care (3.6 percent) and technology (4.5 percent) were hit by significant increases. The HBR suggests that “in general … resignation rates were higher among employees who worked in fields that had experienced extreme increases in demand due to the pandemic, likely leading to increased workloads and burnout.”

Conclusion

In a future blog, I will discuss how a CFO might strategize to turn the challenges raised by this trend into business opportunities, but for now, I recommend three steps for a CFO looking to understand this trend better:

1. Admit the Great Resignation is a real thing and that no business, however successful, will be immune to its direct or indirect impacts.
2. Quantify your data to get a clear sense of the scope of your business’s situation and the potential short- and long-term impacts on your strategic business plans and key metrics. What skill sets are nearing short supply? Can current resources be redeployed to cover shortages in the short term? And so on.
3. Do a root-cause analysis to understand better why employees are leaving your company. As the HBR notes: “Exploring metrics such as compensation, time between promotions, size of pay increases, tenure, performance, and training opportunities can help to identify trends and blind spots within your organization.”

And as always, never hesitate to contact me directly if your business can benefit from an experienced fractional CFO in collecting and analyzing this data or developing a tactical plan to ensure a stable workforce as your business pulls out of the pandemic.