Vice Chairman and Co-Leader, ESG and Board & CEO Services
On the Radar: The Great Resignation
It’s a problem most corporate leaders thought would go away. But nationwide, the rate at which workers are quitting their jobs has persisted.
Directors have become concerned—and rightly so, say experts. When the National Association of Corporate Directors surveyed its members, a stunning 70 percent of them said that increased competition for talent was the trend that would most affect their company in the next 12 months. No other issue—not cybersecurity, not even digital transformation—garnered more than 45 percent of votes. More than two in three directors said that the “Great Resignation” and its associated risks were brought up during board discussions.
(The survey was done in late 2021, which likely explains why only 11 percent of directors mentioned the potential near-term effects of rising geopolitical risk on their organizations. The war in Eastern Europe didn’t begin until February 2022.)
In 2021 alone, there were more than 40 million instances of American workers quitting their jobs, out of a US workforce of about 160 million. The trend wasn’t confined to the US, either. Among the 38 countries represented by the Organization for Economic Corporation and Development, there were 20 million fewer people in the workforce in 2021 than there were before the pandemic.
At the board level, it’s been a multi-year awakening to the challenge, says Tierney Remick, vice chairman of Korn Ferry’s Global Board and CEO practice. In 2020, as the pandemic disrupted businesses worldwide, directors asked questions about the benefits that were being delivered to employees. Rolling into last year, the approach shifted to a holistic focus on talent strategy: what is the organization offering to attract and retain talent at all levels? “It’s one of the largest investments the organization will make, and also a competitive advantage if it’s done well,” Remick says. Boards are recognizing that without talented people or a healthy corporate culture, even great business strategies can flounder.
It’s a concern, experts say, that likely won’t go away, even if the world’s economies slow down and people stop quitting en masse. The pandemic has shown employees at nearly all levels that they don’t necessarily require a regimented schedule to get their work done. Flexibility is rapidly becoming one of the key reasons why people take a new job… or keep their existing one.
Experts say that many boards could benefit from bringing in talent-focused executives as new directors. As cybersecurity and digital transformation have become more important, boards have brought in directors with backgrounds in those areas. Now boards can do the same with talent, which has become an existential issue. Adding a Chief Human Resources Officer to a board can give directors a unique voice that will help them guide company management on critical people-related issues, Remick says.
Directors also might want to consider the firm’s compensation practices beyond its top executives. For most of corporate history, stock awards have been reserved for higher-level managers. Perhaps that should change, says Dennis Carey, a Korn Ferry vice chairman and coleader of the firm’s Board and CEO Services practice. Hand out performance-based stock and equity awards to a broader group of employees, he says. That will give employees a vested interest in the long-term success of the organization, as well as a financial reason to stick around. “Show them the golden opportunity over the rainbow,” he says.