The Breakthrough Co - Active Leaders

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The Myth of the Great Resignation

The Great Resignation is an excuse. The idea that people are leaving their jobs en masse makes it sound like there’s a cultural movement underway among a large segment of the population who don’t want to work anymore.

The whole story is more like The Great Switcheroo. People are resigning to go somewhere else. They don’t want to work here anymore. If they were just resigning from the workforce, employers could bemoan the changing times and culture.

How do you keep great people? Bottom line is you can’t. They’ve got their own lives, loves, families, ambitions, drivers. They’re only ever on loan, and people are free to call in the loan anytime they like.

But on the lines above the bottom line are a couple important entries. One is…

The Money

Someone else is prepared to pay them way more than you do. They see more value in them than you do. That’s the market at work, and markets might be stupid or irrational, but they’re never wrong. It’s tough when someone is being offered crazy money: you feel kind of embarrassed and a bit small because you don’t think you can afford that kind of money. You can wish them well and let them go, or you can think about how you can offer a package that includes more of the non-cash things they might want like time off, flexibility, training, or development. You might redefine their role to reduce the low value stuff they do and focus them on higher value stuff – after all, the other employer can see something you’re missing. You might include promotion, more responsibility, perhaps even a management component if they aren’t already in that role.

The other line is definitely in your wheelhouse.

The Managers

There’s an old saying "People don’t leave jobs; they leave managers." According to Gallup, the quality of the manager is a factor in 70% of resignations. Now that does predate today’s massive wage inflation so it’s probably lower now, but it’s still going to be a significant factor when people aren’t switching for a big pay increase.

Another study says that high-performing managers are four times more likely to retain employees than low-performing managers.

An old economist friend of mine used to say all the action is at the margins. The Great Switcheroo is one story – in general labour is valuable and scarce so people are prepared to pay more for it. And pay they do – recruitment adds 50% to a salary cost based on advertising etc. And you’ll pay that too if and when you get a replacement.

The other story is at the margin: the switcher who can justify leaving on the basis of a better offer, but if they had a high performing manager they would stay. That’s the cost of poor management.

The Investment

The investment you make in training your managers has to be considered in those terms: take the salaries of all your replacement staff over the last twelve months. The equivalent of 50% of that represents your actual cost of recruitment and replacement. Let’s say only half the people who left did so because of their manager, or that of all the reasons given for leaving, half related to their manager. In short, 25% of the total replacement salary costs can be attributed to poor management. How much was that management training programme again?

The Bigger Loss

There’s another dimension to this: it sucks to lose a good employee, but it double sucks to lose a good manager, or even a slightly better than average manager. The upheaval caused by a manager’s absence ripples right through a team, even if there is someone in acting role. Loss of focus, accountability, and engagement leads to poor results and disaffection, resulting in more switching.

Maybe we should think a little less about how we keep good staff and a little more about how we keep good managers. Maybe we should think strategically about leverage – how much impact a good manager can have retaining staff, without all the dramas of Great Resignations. How much was that training programme again?