Employers Respond to Resignation Tsunami by Raising Pay
The Great Resignation has employers scrambling.
The U.S. Labor Department revealed that 4.3 million Americans left their jobs in August 2021, or about 2.9% of the national workforce – the highest number on record.
Business leaders are taking steps to combat the so-called resignation tsunami afflicting U.S. organizations by offering higher pay and competitive benefits for new recruits and remaining employees, according to research from the Society for Human Resource Management (SHRM).
In July, SHRM surveyed 200 U.S. executives at organizations with 50 or more employees, 1,150 U.S. workers and 1,187 HR professionals through SHRM's membership (an additional 1,034 HR professionals were surveyed in early September). Among the findings reported in Harvesting the Resignation Tsunami, released Oct. 25:
Nearly half (49%) of U.S. executives surveyed report their organization experiencing much higher turnover than usual in the past six months.
Most (84%) said that openings are going unfilled for longer periods than before the COVID-19 pandemic.
Following their former colleagues' exits, more than half (52%) of employees who chose to stay say they've had to take on more work and 55% now wonder if their pay is high enough.
This is especially true for Millennial and Generation Z employees, who make up the majority of the current U.S. workforce. Since their colleagues left, 63% wonder if their pay is enough.
Employers are responding by adjusting pay and benefits to attract new hires and keep current employees onboard, SHRM's researchers found.
For instance, more than half of organizations (58%) report that beyond normal yearly increases, they are offering higher starting salaries and wages than last year.
Among HR professionals who said their organization has seen higher or much higher turnover in the past six months, 42% said they had implemented new or additional remote work or flexibility options to reduce turnover,
32% have implemented new or additional employee referral bonuses,
28% have introduced new or additional merit increases.
"Employees are leaving their jobs to pursue new opportunities in record numbers, making hiring and retaining talent a significant challenge for employers across the country," said Johnny C. Taylor, Jr., SHRM-SCP, SHRM's president and chief executive officer. "It's a candidate's market, and organizations must respond by recognizing the need to think differently in how to recruit and retain talent, revisiting benefits and flexible work schedules, along with broadening the talent pool for open positions."
Why They're Leaving
SHRM's research found a divide between what employees believe are the most important rewards to make them stay versus what executives believe.
Gene Marks, founder of the Marks Group PC in Bala Cynwyd, Pa., which provides technology and financial management services to small and midsize businesses, recently wrote in The Guardian that he sees employers "still operating as if it's pre-COVID. When they're looking for employees, they're offering compensation similar to the rates they paid before. It hasn't dawned on them that times have changed, and the basic principles of economics are playing out in front of them: When demand exceeds supply, prices go up."
Marks added, "Those businesses that accept this reality will adapt and continue to profit. They will hire good people and succeed. Those business owners that refuse to understand this simple concept simply won't."