More realistically, though, the mass employee exodus reflects the culmination of a decades-long leadership vacuum that has left people feeling disrespected, dehumanized, and burned out. Reinforcing the point, Limeade, an immersive well-being company, published data indicating that 28% of people quit without another job.
Employee sentiment towards employers signaled a rise in workplace dissatisfaction well before the pandemic. Ten years ago, Gallup uncovered surprisingly low employee engagement in the U.S. (29%) and globally (13%). More recent findings reinforce the stability of weak worker-company commitment and dissatisfaction working for their employer.
By forcing companies to adopt remote employment to survive, the pandemic helped create the perfect conditions for already downtrodden workers to seek better alternatives on their terms and without geographical barriers.
The way companies respond to the labor shortage will have a lasting impact. Many companies now offer high-value incentives, such as tuition reimbursements or sign-on bonuses, to help fill job openings. These strategies may deliver short-term results, but incentives will not produce long-term value unless companies address the underlying causes. The biggest single mistake a company can make in this environment is to hire for body heat, a tendency borne out of panic that can negatively impact a brand’s reputation in the eyes of consumers.
Those companies that “awaken” to the issues driving employee disenchantment and take steps to mitigate them can break away from a sea of competitors.
Closing the leadership gap is the most important thing companies can do to reengage employees and improve performance. With estimates of managerial incompetence rates as high as 60% — 75%, it is a universal crisis nearly as pervasive as Covid-19.
A manager’s primary task is to persuade people to coordinate their actions with others, at least temporarily, to advance the team’s interests. An individual pursuing a self-centered goal may not benefit the group, but that which is in the group’s interest nearly always helps the individual. Consequently, leadership is simply the capacity to build and maintain a high-performing team, and the best way to evaluate a leader’s effectiveness is to measure team performance.
The first step toward solving the leadership crisis is selecting the best people for management roles. A Gallup survey found that companies fail to hire the right person for a manager job 82% of the time. Companies get it wrong because they hire based on “perceived” leadership characteristics — self-assuredness, drive, and charisma — rather than the essential (and subtle) qualities of being humble, competent, decisive, and honest. It’s a systemic problem, according to Tomas Chamorro-Premuzik, who argues that companies choose men over women for leadership jobs because they are more confident and self-promoting. Of course, it’s exceedingly difficult to convince people to rally around a shared cause when the leader is a self-interested hypocrite.
The second step is to build an authentic culture that reflects values employees will embrace and rally around. A well-established empirical finding indicates that people work for companies that share their values and leave when they become incompatible, a process called attraction-selection-attrition.
One problem is that corporate hypocrisy is destabilizing company culture in unimaginable ways. The Center for Political Accountability, for example, exposes companies that support diversity-related initiatives, among others, while funding political committees that enable gerrymandering. Two examples of what happens when values disconnect have played out in recent months. The first occurred in August 2021 when Lt. Colonel Stuard Scheller, a 17-year U.S. military veteran, publicly questioned senior military leaders’ decisions and accountability on the withdrawal from Afghanistan, resulting in him being relieved of command due to a “loss of trust and confidence.” Lt. Scheller resigned from Marine Corps a few days later. A second instance played out in February 2022, when Neil Young, a well-known folk singer, called on Spotify employees to quit because of the CEO, Daniel Ek, saying on his website:
“To the workers at SPOTIFY, I say Daniel Ek is your big problem — not Joe Rogan … Ek pulls the strings. Get out of that place before it eats up your soul.”
Choosing to accept or terminate employment based on value congruence leads to organizational homogeneity over time. Unsurprisingly, research indicates that companies with positive employee-manager relationships have higher engagement scores and job performance than companies with poor employee-manager relationships.
The third step is to create an environment that allows employees to balance their work and personal lives. Finding healthy work-life equilibrium lowers stress and the likelihood of burnout. Therefore, companies must identify the structural issues in play and redesign work to achieve goals without overloading employees.
Stress is an insidious problem impacting every aspect of society, but it’s not new. It is a long-standing problem that has, unfortunately, received little attention in the workplace. The American Psychological Association declared that stress was a significant health problem at least as early as 2007, with money and work being the most prominent causes. One of the latest articles, Stress in America, highlights pandemic-related stressors and points once more to the chronic role of finance and employment.
Chronic stress is a workplace health emergency, with 57% of U.S. and Canadian employees reporting the world’s highest daily stress level. Elevated stress over time can lead to a series of mental and physical ailments, including depression, cardiovascular disease, and gastrointestinal issues, among others. Another byproduct of stress is employee burnout, which Emma Seppälä and Kim Cameron estimate to cost U.S. companies $500 billion per year in healthcare spending, absenteeism, turnover, and poor performance.
The flow of communication and structure of work play directly affect workplace stress. In Time, Talent, and Energy, Michael Mankins and Eric Garton outline three changes company leaders can make to reduce employee burnout. First, managers must treat time as carefully as their finances by prioritizing work, setting clear timelines, minimizing non-essential emails and meetings, and providing real-time feedback on productivity. Second, companies must stop overloading their most talented employees. Managers need to improve the capacity to evaluate an employee’s talent to better match people with deliverables and minimize overload; more accurate employee appraisals will also enhance development. Relying too heavily on the most productive employees will eventually drive them away from the company. Finally, as described above, companies must create a culture that inspires them to action.
Creating a positive employee experience is another way companies can improve work-life balance. Encouraging as-needed breaks and letting employees choose the desired work arrangement (office, remote, or blended) imparts a sense of control, an essential aspect of well-being. Another way to improve workplace experience is to assign employees to project teams to enhance collaboration and strengthen social ties. And, last, companies can implement programs that reflect employees’ needs, such as child-care, wellness programs, and pet insurance.
After enduring decades of neglect and workplace stress, employees reached the tipping point during the pandemic. The Great Resignation is an ultimatum from workers to companies to fix the problems or start recruiting. People realize they have value and options and are unwilling to tolerate mistreatment, regardless of whether they have another job.
The three essential steps to construct a more engaged, happier workforce include upgrading management, establishing an authentic culture, and redefining the employee experience to reduce stress and improve balance. There is much work involved in each step, but companies must invest in these initiatives to rebuild employees’ trust. Companies that make the necessary changes to address the causes of employee resentment will alter their trajectory.
No one can choose the family into which they are born, but everyone has the power to choose with whom and where they work. Millions of employees are making this point clear to corporations every month. The sooner companies realize they are the problem, not the employees, the faster they can begin The Great Awakening.
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