3B Analysis: The Great Resignation
And How to Benefit From It
“The Great Resignation” is one of the biggest news this year, and when it comes to the recruitment sector it’s probably the biggest. The effects it has over the economy are hard to ignore and we decided to dive into more detail, examining how this can affect the industry we are in.
The term was coined by Anthony Klotz in May 2021, when he said that a wave of resignations was coming as a result of the lockdown and the way people adapted to a new style of working. While we see this trend worldwide, it is certainly most pronounced in the United States. According to the US Bureau of Labor Statistics the voluntary resignations per month (called “quits rate”) rose in August to an all-time high of 2.9%, constituting over 4.3 million people.
While the rate of people quitting their jobs is clear, the reasons why are not as clear-cut, mainly due to the myths and confusion surrounding them. This is why we decided to start with debunking those myths and getting to the real reasons, as well as how your company can take advantage of them.
Contrary to what the media leads you to believe, the main reason why people quit has very little to do with the work-from-home approach or the government checks. It is hard to imagine how someone can live off a one-time stimulus check of $2,000-$3,000 and some personal savings, especially considering that over 50% of upper-income Americans live paycheck-to-paycheck. Now imagine how much harder would that be with kids.
The common misconception about “The Great Resignation” is that it’s mainly driven by the white-collar workforce, who now have a different perspective on the way they can (and maybe they should) work. Working from home undoubtedly provides some amazing benefits such as more time (no need to commute to work, which takes a significant portion of the day for most people), more comfort (partially less stress, supervision and noise compared to the work in an office space) and one of the most significant advantages (although not shared by everyone) — more time with the family.
However, contrary to people’s expectations, when you look at the number of people leaving their positions in finance, real estate or information technologies is fairly small. And that makes sense — most people in the professional and business services have years of experience in their respective sectors and more than likely have spent at least a few years in the company they are in. Ditching the workplace where you have built meaningful relationships, status and presence is not nearly as easy compared to another sector like the hospitality industry.
The truth of the matter is that this Great Resignation is driven by the number of blue-collar workers switching to better positions or jobs in industries that simply pay better. From an employee’s perspective, this is nothing more than a job change. The better staffing agencies have noticed this pattern and realized that this is really more of a “switch” situation rather than a “quit” situation.
Resignation, a term loosely tossed around, may only be applicable to seniors (people over 60), who decided to leave their jobs in 2020 or 2021 and not come back. Needless to say, Covid-19 does have its significant contribution for that, as being an elderly person potentially exposed to a deadly virus in an office space is something that cannot be easily ignored. With that being said, we hope you will agree with us when we say that a decision by a person, who is just a few years away from his pension, decides to leave the workforce for good, it’s much more appropriate to call it early retirement rather than resignation.
To put it simply — “The Great Resignation” is mostly about low-income workers switching jobs to make more money, with the moderate surge of early retirements in a pandemic. This leads us to the core of this article — how can staffing and recruitment agencies take advantage of this?
How To take Advantage of the Great Resignation
There’s no doubt that this recently-occurred situation provides an amazing opportunity for your company to not only separate itself from the crowd, but also significantly increase its revenue. We suggest you keep an eye on the following three elements when designing your strategy:
- Supply vs Demand — concentrate on sectors with high demand and low supply for workforce. This means that the employees are either quickly switching jobs (high turnover) or there’s just not enough of them in that specific field (make sure you check our article about the Truck Driver Crisis in the UK).
- Salary Increases — low supply and increased demand inevitably lead to higher prices, which in this case will manifest under the form of salary increases and potentially better payment for staffing agencies. While it’s true that you need to apply more intelligence in sourcing the candidates, the remuneration for your efforts will also be much better.
- Focus on Blue-Collar Workforce — we talked extensively about this in the article, to show you that this is without a shadow of a doubt the low-hanging fruit — the perfect balance between high demand, increased salaries and high turnover. It is true that you get paid less per hired/contracted candidate compared to a white-collar position, but we are positive that the volume you can generate will offset any difference.
We hope that with this article we managed to shed some light into a topic that is quite controversial, but also very important for you, as a staffing agency, to acknowledge and take full advantage of. And whenever you are ready to take it a step further through state-of-the-art software that can automate and effectively manage your onboarding, vetting and compliance, we are more than happy to show you a demo of our product. All you have to do is just visit us at 3B Onboarding and book a demo. Let us show you how much better your business could be.
