The great resignation is a labor market correction. We know what happens to public markets when they become unbalanced: laws of nature intervene and there is a correction. This is what we’re experiencing, but unless the root causes are established and addressed they become a serious sustainability issue.

For too long many companies have taken advantage of their people, simply because they could or because they were too slow to recognize the importance of culture and leadership. The power dynamic has shifted from government to employer to employee to a whole new power base and hierarchy: employee to employer to government. Add to this severe talent pool shortages brought about by demographics, geopolitical change, digitalization, and a new generational attitude to formal sector employment – in short, a shift to the experience economy around late 2016.

Companies most impacted by the Great Resignation are those with attitudes like “If you don’t like it here, you can get a job somewhere else,” those that don’t treat their people like human beings but rather as disposable capital line items. Frontline workers suffered the most in the past, but since 2014 the power balance tipped more and more to these employees and away from leaders and the organization’s human capital management (HCM) function. What we’re experiencing now is the first of a potential series of great corrections – and the risk of not addressing it poses a serious sustainability and growth risk for companies.

The workforce across all ranks now has much more power and influence. After the pandemic, many employees are now saying “I don’t want to be treated this way and I would rather have no job than this job!’” Prior to the pandemic, fear of the unknown was enough to keep somebody in an “OK” job. But, people were furloughed, some lost their jobs, and many who didn’t lose their jobs were still distressed and fearful. Suddenly, the unknown became a lot less scary, and when employers now offer them “OK” and “unknown,” they are choosing “unknown.” It is no surprise that so many people are leaving their jobs.

The Great Resignation is a sustainability warning to companies that have not focused on culture and leadership for a while. It is a great opportunity to double down to give people a workplace with a culture and climate in which they want to work and want to do the kind of work they feel is meaningful to themselves and their company.

The workplace is an environment of the leadership and employer’s own making. Employee experience affects all levels, not just junior employees but also more senior leaders whose high number of resignations is being coined the Grey Resignation. The Grey Resignation will hurt business as much as the Great Resignation.

When most leaders speak of challenges in finding the right talent, there’s a greater than average chance that they’re really talking about digital skills. This is understandable: we largely operate in and are moving further towards a digital world. In this digital world, organizations need the ability to create experiences that keep customers returning and employees engaged. This also means an increasing reliance on the organization’s ability to rapidly and successfully deploy new applications and services, based on leading technology.

However, there is more than one elephant in the room. One is that the skills needed are often the preserve of young people. The assumption is that the valuable digital skills are based on the technology with which those newer to the workforce grew up. These capabilities are highly prized and, if they can’t be obtained through hiring, can be developed through training programs for young people.

Yet while there is certainly appetite for employers to provide up- and reskilling support to those newer to the workforce, it is a benefit that is highly valued across all demographics. According to a Gallup study, more than half (57%) of all workers say they are “extremely” or “very” interested in participating in upskilling programs, with  53% of those aged 55 and above view upskilling as “very” or “extremely” important.

And yet it is the latter that are rapidly exiting in the workforce. This Grey Resignation represents a huge loss of talent, experience, and networks that cannot be easily replaced. For the most part, businesses are in danger of overlooking this before it is too late. The issue is exacerbated by culture debates and oversteer policies in an accelerated attempt to rectify diversity and inclusion targets since historically the older worker will predominately identify as male.

Why can’t older talent be easily replaced? Because so much of their capability is founded in deep-rooted experience and knowledge that is not easily collated and shared by formal means or automation. Some industries have been struggling with this brain-drain for several years, even those at the forefront of innovation such as the technology sector, where even losing the few people that understand how legacy systems work can raise a major barrier to technological progress.

Losing inherent knowledge and experience is always a concern whenever a person leaves. When a whole demographic heads for the door, it has the potential to be catastrophic, both for the employer in question and the wider ecosystem.  Relationships between customers and suppliers can start to break down as all the informal working practices – the bonds built up over time – disappear in an instant. These are intangible and hard to identify, let alone track, but they are a key part of commercial success and so they must be protected.

It’s important to understand the drivers behind the Grey Resignation. Some are like those mentioned above: a pandemic-prompted realization that the old ways of working do not fit with modern life, that the unknown is actually not as scary as once thought, or simply a deeper understanding of what they individually want to get out of work and life.

Like every other demographic, older workers have been exposed to new approaches to work since 2020. For some, it will have been a blip; others may well have found that remote or hybrid working suits them better.

This could be particularly true for employees that have had to balance demanding careers with caring for both elderly parents and helping with young grandchildren. The door to a more balanced way of life has been opened and people do not want to move backwards.

Some have felt forced out by changes in management and a need to cut costs during lockdowns. Voluntary redundancies and early retirements were common options during this time of urgent fiscal prudence, with many older workers feeling pressured to leave the workforce while their younger colleagues were put on furlough.

These insights are broad, and specific analysis is required in every company where there will be patterns and variations between sectors and, especially within different business functions, demographics or geographies of the companies themselves. As such, employers will need to proactively gather information to build a clear picture of what the specific drivers and motivations are that make it hard for them to retain experienced talent.

Some businesses might already have a good understanding of what’s driving out their experienced employees, but for many the mass exits may be unexpected.  Clearly if these companies wish to grow, this sustainability issue needs to be addressed:

  • Analyze and prioritize what’s happening on the ground and why particular groups of employees may have resigned. Predict which remaining employees are at risk of leaving (flight risk analysis).
  • Identify demographically similar groups of employees.
  • Determine priority and build tailored flight risk mitigation approaches for each demographically similar group of high flight risk workers, based on their motivational drivers to leave the business.
  • Base remediation plans on each individual employee’s motivation to possibly leave the business.

How Can SAP Help?

There are several SAP products that can help and their value is, not least of all, that they can integrate natively with one-another:

SAP SuccessFactors Workforce Analytics can help transform people data consolidated from multiple sources as a trusted demographics data source and identify demographically similar groups of employees.

Experience insights gathered from employee feedback to measure sentiment, satisfaction, and engagement (the greatest predictor of flight risk) can be conducted with Employee Experience Management Solutions from SAP and Qualtrics.  

Predictive capabilities in SAP Analytics Cloud can leverage employee survey results to create a flight risk prediction, like “who might leave the business and why?”

Armed with demographically similar groups of employees and a tool that predicts who might leave and why, organizations can then design a series of specific talent management remediation strategies to stave of potential further resignations.

Implementing each of the integrated human experience management (HXM) approaches identified to prevent resignations is the sweet spot and strength of SAP SuccessFactors Human Experience Management Suite. This is also the same world-leading integrated talent management toolset that is best placed to transform the culture and climate in the organization to help ensure future bulk resignations are far less likely.

Learn more at www.sap.com/people-analytics.

Kim Fischer is people analytics architect at SAP SuccessFactors.