Although the Great Retirement, which saw professionals leaving in droves in search of more flexible and fulfilling work opportunities, primarily affected large companies, small companies can learn some lessons.
“While large companies don’t fully appreciate the cost of replacing key employees, they often have some resources that can mitigate the loss while they recruit new employees. However, small companies often do not have the same resources and are more affected by the loss of key personnel and therefore have to take into account the trend for employees to prioritize a healthy work environment,” says René Richter, Managing Director of RemChannel.
The Big Retreat refers to a US-led trend of workers resigning in large numbers amid the Covid-19 pandemic, opting instead for stimulus packages. However, it has sparked similar movements around the world, including South Africa, as workers seek more flexible working environments at home and abroad.
RemChannel’s latest semi-annual salary and wage movement survey, conducted in September, shows that the rising cost of living coupled with inflexible work environments continue to push employees to seek greener pastures.
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Great resignation an ongoing trend
Richter points out that the trend towards great resignation in the field of professional services is continuing. Compared to the March 2022 survey, turnover excluding temporary workers has increased by 2.4 percentage points and by 2.8 percentage points since September 2020.
“Most worryingly, the churn rate is also steadily increasing. Compared to the March 2022 release, terminations increased by 2.1 percentage points to 38.5%, despite a weak economic climate. Excluding the academic staff of respondents to this survey, sales and marketing turnover (28.8%) and staff turnover (20.6%) are the highest of any discipline surveyed.”
The changing world of work has increased the complexity of compensation management and in particular the Employee Value Proposition (EVP). The shift in power from employer to employee, particularly among professionals, is becoming increasingly evident in the dismissal statistics published in this survey.”
The survey report notes that the loss of institutional knowledge at higher levels in the organization, a trend noted in April 2022, is even more concerning. Statistics from the survey show that 15.7% of top management and executives with 15+ years of experience are leaving their company.
Nobesuthu Ndlovu, managing director of Old Mutual SME, says small businesses’ skilled core workers are usually the backbone of the business and therefore losing their skills can have serious consequences.
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People who quit now are often the backbone of a company
“These are the people who typically know the business inside out and have been instrumental in some of its successes, unlike large companies that have an entire finance, R&D and sales department where losing an employee is felt but does not mean a breakdown in the chain of operations.”
She says that for small businesses, the loss of core staff also typically results in the company outsourcing the services it needs because it doesn’t have the HR capacity to find, hire, onboard and train new employees. Large companies have a department, usually with a budget dedicated to it. Recruitment costs are also usually not included in the running costs of small companies.
Ndlovu says her Old Mutual SME clients have found they need help with employee retention. “One of the reasons employees chose large companies over small companies, despite the flexibility and work-life balance that comes with a smaller company, is their formal employee benefits, such as pension and retirement benefits, medical assistance and GAP coverage .”
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Tempting permanent staff
These costs aren’t always feasible or profitable for small businesses, but recruiting permanent staff is an important consideration. There are many ways for small businesses to make their mark, such as: B. Leveraging a more flexible work environment that counters companies’ higher salaries, a better corporate culture where employees’ opinions count, and the provision of training and development opportunities. Those considerations can go a long way in the current context of preventing the Great Resignation, Ndlovu says.
According to Richter, it costs the large companies that took part in this survey an estimated R16.8 billion to replace staff each year, and those costs have been an even greater burden for small businesses.
Shouldn’t that justify measuring the cost of lost talent? “Certainly, these funds could be used to review the employee value proposition and make changes to critical areas that would improve the retention of critical skills in the organization.”
Richter says it is therefore crucial to continue to develop in an agile manner to ensure future viability and create growth and employment opportunities in South Africa.