Many businesses that weathered the economic storm of the COVID-19 pandemic didn't expect another downpour so soon. While pandemic era restrictions wane and customers more freely visit stores and restaurants, business owners are now facing massive staffing shortages. Turnover is nothing new, but the rates at which workers leave their positions have led to what Texas A&M University professor Anthony Klotz has termed "The Great Resignation"
What Makes The Great Resignation Different?
Employee turnover is a fact of business. But when both seasoned employees and new hires exit, it's devastating to small businesses and the overall economy. Workers quit their jobs in record-breaking numbers in 2021, leaving business owners struggling to deal with the high costs of recruiting and training new employees.
Economists and employment experts point to a variety of factors contributing to the sharp uptick in resignations, including:
- New career pursuits
- Remote job opportunities
- COVID-19 related safety concerns
- Better pay with another employer
How The Great Resignation Impacts Small Businesses
The impact of The Great Resignation cannot be understated. Businesses are affected in a variety of ways, such as:
Decreased Morale - Increased workload for those left behind can cause morale to plummet. An uninspired team is unlikely to see the importance of fulfilling your company's mission.
Lower Customer Satisfaction - Understaffed businesses have difficulty servicing customers in a timely manner. In addition, employees suffering from low morale are unlikely to give customers the high level of care they typically expect from your business.
Employee Replacement Costs - High employee turnover is expensive. It costs an average of $1,500 to replace an hourly employee.
What Small Businesses Can Do
While there's no lightning-fast solution, small businesses may reduce employee turnover by:
- Offering a signing bonus to new hires
- Revamping or implementing training programs
- Soliciting employee feedback through exit interviews
- Focusing on your company’s culture with efforts to make employees feel valued and empowered
- Creating a referral program with payment linked to new hire retention
The answer may be as unique as each business, geographic location, and industry. Create a plan that encourages good employees to stay so your small business can weather this storm.