November 14, 2022

4 Ways to Improve HCM Amidst The Great Resignation and Labor Shortages

4 Ways to Improve HCM Amidst The Great Resignation and Labor Shortages

Facing Labor Shortages and The Great Resignation, HR Teams Turn to AI to Unearth Hidden Talent

The Great Resignation, commonly referred to as The Great Reshuffle or The Big Quit, saw a record number of employees resigning from their positions—leaving organizations across industries to manage the fallout of this mass exodus. It’s become increasingly clear that The Great Resignation was ultimately a warning sign of a larger systemic issue that’s projected to become the new normal across the globe.

As a result, agile companies are finding themselves in the continued position of identifying their top performers and implementing effective strategies to retain this talent while minimizing overall turnover. To do this effectively, HR teams need advanced digital solutions that streamline retention strategies and simplify talent management long term.

We’re taking a closer look at the Great Resignation, global labor shortages, the state of the economy, and the strategies organizations can introduce to combat these issues more successfully moving forward.

Understanding the Great Resignation

In 2021, more than 47 million workers quit their jobs amid The Great Reshuffle, according to the U.S. Bureau of Labor Statistics, and this mass exodus of workers is referred to as The Great Resignation. While the COVID-19 pandemic is generally accredited as the catalyst of The Great Resignation, this extreme turnover of workers also highlights ongoing issues employees have been experiencing in the workplace. And, although businesses added an unprecedented 3.8 million jobs in 2021, the U.S. Chamber of Commerce (USCOC) reports there are not enough workers to fill these roles—meaning If all unemployed individuals in the country found a job, there would still be 4 million open jobs.

Despite the true cause of these high attrition rates, an employee survey of over 52,000 workers from PwC indicates the Great Resignation is set to continue. In fact, a USCOC report indicated the possibility of skilled labor shortages becoming a permanent feature of the U.S. economy, according to an article from Forbes.

The Great Reshuffle is ultimately a manifestation of a shock to the labor market which has inevitably caused global concern—as demographic shifts will create persistent labor shortages that challenge employers worldwide.

Why are employees leaving?

-The costs of changing careers are currently low: The cost of switching jobs has gone down significantly, per a report from Mckinsey & Company. The current labor shortage in combination with the rise of remote work has given workers confidence that they can find work elsewhere on their own time.

-Employees with specialized training are in-demand: As organizations navigate the workforce war for talent, employees with specialized skill sets or training understand their value in the current labor market. This has quickly driven expectations from in-house talent you can’t afford to lose.

-Workers don’t see a future with the company: According to a report from Pew Research Center, the majority of workers who quit their jobs in 2021 cite low pay, a lack of opportunities for advancement, and feeling disrespected at work as their main reasons for leaving. Ultimately, workers weren’t leaving as a result of being unhappy in their roles, but because they couldn't see a future within the company.

With high global attrition rates expected to continue, it will be critical for high-performing labor markets to introduce strategies to improve employee engagement and retention for the foreseeable future.

Strategies for Mitigating the Fallout of the Great Resignation

Agile employers across industries are navigating an unprecedented labor market which is having direct implications on their business long term. Consequently, organizations require comprehensive strategies that can help them not only minimize the fallout of The Great Reshuffle and global demographic shifts but also promote greater retention moving forward. These approaches include:

1. Introduce opportunities for advancement

According to SHRM, more than half of workers said they need to learn new skills within the next year to continue their careers, yet 29% of these employees don’t feel optimistic about the opportunities for training, upskilling and reskilling currently available to them. As a result, organizations are in need of solutions that can mobilize and transition talent by identifying skill gaps and individual reskilling pathways—to provide the right internal mobility and reskilling opportunities for employees.

2. Recognizing how employees’ needs, priorities and expectations have changed

Pew Research indicates that resignations are largely avoidable if employers increase their awareness of employees’ abilities, aptitudes and aspirations. Workplaces need robust solutions that help them understand the needs and preferences of their employees so they can retain their most valuable talent more effectively moving forward.

3. Fostering a positive company culture and improving the employee experience

Workers are consistently in pursuit of positive workplace environments where they feel motivated, engaged and satisfied long-term. Because of this, organizations require tools that can effectively identify skill gaps, provide valuable real-time insights and ultimately support an advanced digital transformation strategy. The culmination of these solutions helps ensure organizations can keep pace with varying economic and market conditions while staying in tune with the needs and desires of their workforce. As a result, organizations can retain valuable talent by driving feelings of satisfaction and helping team members reach their full potential moving forward.

4. Leveraging digital solutions that support retention

The global digital transformation has necessitated the use of advanced digital solutions to combat talent shortages and retention challenges in the modern workplace. Moving forward, it will be essential for organizations to recognize the return on investment (ROI) of a comprehensive, real-time and AI-backed human capital management (HCM) system — inevitably leading to the retention of irreplaceable talent and helping organizations keep pace in a competitive environment.

Common pitfalls to avoid along the way

As organizations introduce strategies to alleviate the impact of The Great Resignation and global labor shortages, it will be equally important to consider the most common pitfalls to avoid along the way. Mistakes that ultimately hinder companies in pursuit of greater retention include:

-Failing to leverage AI for data-driven insights.

-Not speaking skills language of the global labor market.

-Failing to understand how to bridge skills gaps amidst the current workforce.

-Being unaware of the skills employees need to keep your organization competitive.

-Not utilizing real-time data for more informed decision-making as part of skills inventories and skills taxonomies

The Benefits of Greater Retention and Reduced Employee Turnover

By improving employee retention and minimizing turnover, companies can see the benefits of an optimized HCM strategy including:

-Reduced costs: Gallup reports the cost of replacing an individual employee ranges from one and a half to two times the worker’s annual salary — including expenses for severance, recruiting, onboarding and training. A solid retention strategy is an effective way to eliminate the costs associated with high turnover.

-Improved company culture: Workplace culture plays an undeniable role in successfully recruiting and hiring new talent, as well as retaining valuable team members along the way. High employee attrition rates can quickly lead to low morale and high turnover, while engaged employees who feel connected to their work and their team, on the other hand, can considerably strengthen company culture.

-Increased productivity: Long-term current employees are typically more productive and engaged — considering they’ve had time and training to upskill efficiently, can accomplish daily tasks in a shorter time and are likely more loyal and committed to the company. In fact, Investopedia reports that after initial training is completed, new hires are functioning at about 25% productivity — meaning the cost of lost productivity is 75% of the employee's salary.

-Higher employee engagement: Research consistently indicates a direct link between retention and employee engagement. According to Inc, a survey found that engaged employees are 87% less likely to leave a company. This inevitably means as organizations prioritize retention efforts, they’re more likely to see highly engaged team members.

-Improved revenue and ROI: A thoughtful and comprehensive retention strategy leads to reduced hiring costs and training investments, increased productivity and an improved customer experience — ultimately a boon to your bottom line.

Utilizing Robust Data and Valuable Insights To Streamline the Process

For organizations in pursuit of solutions that protect against high turnover and economic uncertainty, SkyHive can help. SkyHive’s Quantum Labor Analytics platform was designed to optimize human economies — providing organizations with extensible workforce planning technology, real-time and comprehensive global workforce data and an advanced knowledge graph of jobs, skills, training and labor market intelligence.

Working with a trusted partner like SkyHive can help your organization:

-Gain actionable insights.

-Leverage data-driven decisions.

-Benchmark against your competitors.

-Reduce layoffs, support internal mobility and improve recruiting efforts.

-Utilize reports for more effective resource allocation.

-Save significant costs.

-Help maximize the potential of every existing employee.

-Foster a workforce planning strategy that withstands economic uncertainty.

With this ethical, end-to-end AI framework in place, SkyHive helps talent leaders identify ways to advance incumbent staff into critical roles and identify and prioritize employees who are essential to retain. Moreover, these solutions help employees see clear career mobility pathways available to them, along with the learning and skills required to advance — so valuable team members can be confident that they can stay within the company and grow their careers.

Despite the possibility of an economic downturn, organizations must avoid complacency, as employee attrition rates will rise if teams don’t take action to maximize retention and minimize turnover. If you’re ready to take the human-led, tech-powered approach to maximizing retention amid global labor shortages, economic uncertainty and fallout from The Great Resignation, request a demo from SkyHive to get started.

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