What is “The Great Resignation?” Anthony Klutz, professor, and psychologist at Texas A&M, coined the phrase last May during an interview with Bloomberg to describe the exodus of people resigning from roles due to new thinking about how and why we work.
“The Great Resignation” has also inspired the creation of other phrases such as “The Great Reset” and “The Great Realisation” to describe this work revolution. This work revolution is not necessarily about finding a better role or more compensation, but more about taking control of one’s work and personal life.
According to a Microsoft survey, 40% of people say they plan to leave their current employer. At the same time, McKinsey reports 43% of businesses plan to increase headcount. How will they attract talent during this talent revolution?
Largely evidenced in the US, The Great Resignation saw 4.5 million workers leave their jobs in November according to the US Labor Department’s latest Job Openings and Labor Turnover Report, the highest figure on record, and the wave of quitting continues.
Will this mass transition happen again in spring 2022 after bonus pay-outs? And will this trend spread across the globe?
Why the concern for the energy sector?
We continue to see the shift from fossil fuels to low carbon renewables and the focus on net carbon emissions creating jobs particularly underscored by ESG. Some of these new roles require “hot” skill sets. It’s become a highly competitive market for high quality talent as the energy transition is only just starting to unfold.
Secondly, people that had once considered moving to another job two or three years ago are seeing opportunities to make a change now that Covid is better managed, and markets have recovered.
Essentially there has been delayed transitioning out of roles due to uncertainty caused by the pandemic, meaning the boost in recent transitions could be a result of more than a year’s worth of pent-up resignations.
Alongside, we are seeing many people pursuing a life “reset.” They are reflecting on and reconsidering new life priorities other than pay and titles.
According to LinkedIn, 74% of professionals believe employee turnover will continue to increase in the coming year. We spoke to our network of energy professionals to understand the potential impact on the energy sector, especially at the most senior level. What we found was mixed feedback on whether this change may be on the horizon.
“It’s a global reflection,” said one managing director. “We are all wondering how we want to be and where we want to work. But we’re not seeing any concrete movements yet. Much depends on what tier you belong to.”
“I see people changing location a lot in Europe, and this is much less the case in Asia where things can be restricted,.” they told us. Will the trend that started in the US spread across Europe, and then potentially stop?
“It was an exceptional year for commodities so some people may think about the next step, perhaps become more entrepreneurial,” commented a trader. “But it’s unlikely to lead to the fundamental life change. I don’t see many traders wanting to save the planet or the world – it’s still an extremely ambitious environment.”
“After years of being in an industry that no one was terribly interested in, energy is at the fulcrum of everything that is happening in decarbonising the world. Our skills are in high demand, and we are being pursued for important roles,.” a senior executive in a global energy company told us.
For some, higher compensation packages may pull talent from current organisations, especially where the talent pool is limited. “Compensation has to be market based and competitive,” we were told. “People are getting thousands more even for entry level roles.” Temptation is out there.
Are leading companies using a pre-emptive approach to mitigating employee loss, and creating retention strategies? Have organisations secured a talent pipeline to offset the impact should people leave?
We are seeing that the energy sector has responded, and salaries have been a starting point. The commodities super cycle combined with inflationary pressures has seen remuneration rise very quickly, with some organisations increasing salaries across the board.
Businesses have also continued to invest in middle and back office, finance, risk, compliance, aligning opportunity and remuneration more closely with front office and senior roles to drive retention across the business.
However, “The Great Resignation” is less about pay and more about life priorities.
Flexibility, purpose, culture: key retention drivers to offset resignation
According to Indeed, 54% of professionals say they would leave a job if they couldn’t work flexibly. Flexibility is now a key priority for many candidates, and often ahead of remuneration.
“As a parent of two young children flexible working is now the most important perk that I look for when considering a new opportunity,” one candidate working in the carbon sector told us.
“But in the past two months I have received a dozen calls from recruiters where the opening line has been about compensation. Compared to my current role it was a significant increase however the majority were for strictly ‘on-site’ positions.”
In the end, the candidate took a role that combined both total flexibility with a salary increase though the remuneration was seen as a ‘bonus’ rather than the other way around.
Many businesses we spoke to have already invested to enable higher levels of employee flexibility and choice.
However, far too many employers, as was this candidate’s experience, are yet to review their approach which is becoming key to competitive advantage.
“Some energy companies are enabling employees to work from anywhere for a certain amount of time each year. If you can do your job from Marbella or Miami that puts a dagger in The Great Resignation because you can work 8-10 hours and still have time for a round of golf.”
Factors such as life stage and role within the business are also important as they influence the need and desire for flexibility.
The power of purpose in the energy transition and ESG
Aligning a company’s purpose with its value and vision is at the heart of The Great Resignation When people choose to leave a company, join a new organisation or remain with their current role, purpose is a factor that will significantly influence choices.
Purpose has always mattered, but the disruption of the pandemic magnified its importance. When lives were turned upside down, we were reminded what really matters to us. We reflected on our needs and discovered the importance of a full and meaningful life.
“As leaders we need to ensure we’re attracting the best talent, retaining people and engaging both hearts and minds,” a senior LNG executive told us.
This is where clarity around ESG – environment, society and governance – goals and deliverables are key. This is the new de facto stakeholder standard, and organisations that approach it as a tick-box compliance risk greater employee disenfranchisement.
According to a study by Harvard Business Review, there are many reasons why organisations can benefit from being purpose driven:. 52% of purpose driven companies experienced over 10% growth compared to 42% of non-purpose driven companies. Purpose driven companies also benefit from greater global expansion (66% as opposed to 48%) and success in transformation efforts (52% in contrast with 16%).
Purpose also provides benefits for employee work experience. Northwestern University reports companies with greater sense of purpose have employees saying their work is more meaningful.
Energy businesses that are making clear climate change and decarbonisation commitments can appeal more strongly to a selective talent pool.
“We hire a lot of young graduates,” said another. “They are smart, they want to make a difference, they are ambitious. They are willing to work on hard projects with a lot of uncertainty.”
“We’re seeing pent up supply chains struggling to recover because of the chip and talent shortage,” they told us. “It has afforded people the opportunity to rethink what’s important to them.”
Culture rises up the agenda
According to PWC’s 2021 Global Culture Survey of 3200 leaders and employees worldwide, 66% of C-Suite executives and board members believe culture is more important to performance than strategy or operating models.
While a distinctive culture creates competitive advantage and a greater ability to adapt, 46% of professionals feel less connected to their company’s culture now versus a year ago. This demonstrates the importance of putting people over process at the heart of a retention strategy.
Investing in creating a great culture and place to work has never been more important. Inclusive behaviours and respectful leadership that shows compassion for the needs of employees are now imperatives for strong employer brands. Employees want to see that their ideas are listened to and adopted and that they are part of decision making.
Employees also want to experience the culture first hand in the workplace. So before taking a role, employees are researching culture by checking out social platforms like Instagram, Tik Tok and LinkedIn.
Potential candidates are asking, “What is your work environment? Is it a fun, great place to work – or is it horrible and dated, with ancient tech?”
Yet PWC data shows a widening gap between what leaders say about culture and what employees experience.
“Younger staff are hitting back at toxic cultures and pressing change in terms of working hours and leadership behaviours. They have shown that values matter, and businesses need to respond.” said a senior renewable energy executive.
Many companies are working to improve their company culture and are considering these key enablers: tone from the top, development and training, formal communications, employee networks, engagement networks, feedback gathered and acted upon, and visible signals from leadership.
Recommendations for Talent Retention:
Senior leaders need to build organizational structures and cultures that appeal to the priorities of the current and future generation of talent.
- Quantify the problem
- Quantify the scope of the problem and its impact
- Determine impact of resignations on key business metrics
- Identify the causes of resignations
- What is driving resignations?
- Explore metrics such as compensation, advancement opportunities, flexibility, work life balance, development
- Develop retention programmes
- Aim to correct specific ‘crunch’ issues within your organisation
- Examine how a DEI focus, advancement policies and skills development programmes can strengthen engagement and retention
- Create a recruitment pipeline
- Develop a clear and differentiating strategy that places culture and flexibility at the heart
- Identify long term goals and needs
- Develop candidate sourcing strategy
- Social networking via LinkedIn and other social media platforms
- Partner with an executive search firm
Consultants at Falcon Brook are currently preparing clients for the talent revolution now that the market is secure and very competitive. We can help you develop a talent pipeline so that roles can be filled when needed. Contact us to learn more. firstname.lastname@example.org