The Great Resignation: How Australian firms can prepare

 

What is the Great Resignation?

The so-called ‘Great Resignation’ hit the US labor market in 2021, even as the economy rebounded from the Covid-19 pandemic. An estimated 47.4 million workers, a mind-boggling quarter of the total workforce, quit their jobs. The phenomenon is now expected to hit Australia hard. In fact, it may have already begun.

Research by the National Australia Bank (NAB) shows that one out of five Australian workers changed their jobs in 2021, while a quarter of them are currently considering doing so. This is confirmed by views from the other side of the table. According to the NAB’s latest quarterly business survey, 80% of businesses cited a lack of staff as the key reason hindering their ability to operate at full capacity, the highest level in the survey’s 32-year history.

What has changed?

A general sense of burnout clearly seems to be one reason why so many people have left, or are planning to leave, their jobs. In particular, this has affected frontline healthcare workers, who have borne the brunt of the pandemic’s onslaught since early 2020.

Yet, a more fundamental and permanent shift seems to have occurred in workers’ expectations about workplaces, and the nature of work itself. While ‘traditional’ expectations of higher wages, promotions, and more annual leaves are likely contributing to the mass resignations, knowledge workers in particular now increasingly expect to work flexibly and remotely. Smart companies are already beginning to listen, as Stewart Butterfield, the CEO of Slack, recently put it, “If we say that everyone must return to the office, or we expect people to, and one of our competitors says you can work remotely, who wouldn’t take the second option there?”

What’s the risk?

As the Great Resignation unfolds in Australia in 2022, businesses face two key risks. First, as the labor market tightens further and upward pressure on wages intensifies, payroll costs will increase as firms pay higher salaries to retain and attract talent. The second, and potentially more disruptive, risk is that the shortage of workers will hinder the ability of businesses to continue their operations optimally and execute future growth plans. As noted earlier, Australian businesses are already aware of this challenge, which could potentially turn into a systemic issue, impacting the wider economy for years to come.

 What should you do?

To stay competitive and attract the best talent in a post-pandemic world, Australian companies will have to adapt quickly with respect to recruitment and team-building. Here are five key strategies that we think are essential.

• Go global. Businesses can no longer afford to miss out on great candidates because of something as trivial as location. Expand the hiring pool beyond Australia’s borders to find the most sought-after skills. You can also control payroll costs this way, taking advantage of the differential in wages relative to developing and emerging economies.
• Embrace remote work. To stay relevant in the international job market, businesses need to start embedding flexibility and remote-working technology into their operations, both for onshore and offshore teams. The best candidates everywhere will increasingly demand this.
• Create individualized work environments. While companies should continue to emphasize high recruitment standards on key traits such as responsibility and conscientiousness when hiring remotely, they will need to be more culturally sensitive and flexible on things like work timings and workplace setups.
•  Ensure role clarity. This is important in any set up, but research on the performance of virtual teams has shown that it becomes essential to ensure high productivity of remote teams. With fewer opportunities for ‘water-cooler’ chats when working remotely, proactive and clear communication as well as documentation is key.
•  Create career paths for everyone. As the nature of work evolves, there is a risk that remote workers in general, and remote offshore workers in particular, may not get the same chances to excel and be promoted. Businesses need to be mindful of this, and institute processes to make sure that remote workers are included in important conversations.

The Great Opportunity

With millions of people looking to work remotely, smart companies will view the Great Resignation as a golden opportunity to get ahead of the curve. At Bettersource, we help clients across multiple industries in Australia to hire, and work remotely with, offshore professionals. Using our in-depth understanding of foreign labor markets and on-ground presence, we provide access to vetted high quality talent across various job functions. In addition to hiring and on-boarding, we support our clients with technological tools to help manage and work efficiently with offshore workers remotely.

The future of work is exciting. We hope to help you make the most of it.