The Great Resignation
MBA, BSc, DipFP
Financial Planner / Managing Partner
The Great Resignation & What It Means For You
In late 2020 Anthony Klotz from A&M University Texas coined the phrase “The Great Resignation”. But what is it, and what does it mean for you as an employee, business-owner, or investor?
What Is The Great Resignation?
Since 2020 people have been resigning from their jobs en-masse, all around the globe. Generally, high staff turnovers are a sign of optimism in the economy, but this phenomenon is something different. Broadly speaking, this trend appears to be driven by burnout, and dissatisfaction with work life balance, triggered in large part by the current pandemic.
According to research conducted by Microsoft, 40% of employees, globally, are considering looking for another job.[i] Many are looking to ‘downsize’ their career, by working fewer hours, taking on less responsibility or reducing stress. Others are looking to change to a job that provides them with a sense of satisfaction. Either way, there is a definite movement towards prioritising other aspects of life over their careers.
The Great Resignation is expected to hit Australia in March 2022, having been slowed down by our extended lockdowns. If things go as predicted, this will cause a shift in the power balance away from employers and towards employees, particularly in highly skilled or labour-intensive industries. In fact, one research paper suggests that in Australia as many as 48% of employees plan to change employment in the next twelve months.
What To Do If You Plan To Be Part Of The Trend
If leaving your job and starting over is appealing, there are a few key things to consider before you do race into the boss’s office waving a resignation letter.
- Do a thorough analysis of your financial situation. Determine what expenditures are essential, and what you might be prepared to give up for less stress and more downtime. Once you have identified how much you really ‘need’ you can determine your next move.
- If you are planning to leave your job, make sure you have sufficient funds to see you through till you either get another job or you are able to establish an alternative source of income, like your own business.
- Think about additional income streams. Can you buy an investment property, do your investments pay sufficient dividends to live on, or could you spin a side-hustle or hobby into a paying business?
- Consider starting small. It may be that you can cut down to 3 days a week and still manage financially, rather than giving up your job completely. This might give you the time to work on ramping up that side-hustle or reskilling for the job you would love to do but have never had the skills for.
If The Great Resignation Comes With A Sea/Tree Change
Many of the people leaving their jobs are combining that with leaving the city and moving somewhere with a slower pace of life.
If this is you, there are a few things to consider, above and beyond whether you can get work:
- How well do you know the area you are considering moving to? Is selling your home in Sydney and buying in an unknown sleepy coastal town a good idea, or would renting for a while be a more practical solution?
- Does the town you are considering provide you with all the services you need – if you have school-age children, what are the schools like? Is there a nearby university? If you are approaching retirement, what are the hospital and medical services like?
- When you do sell your home and buy in that idyllic setting, what is the changeover cost? Will you have sufficient excess to bolster your super, or perhaps invest in a business, or an investment property to supplement your income?
What It Might Mean For Business Owners
If you own your own business, The Great Resignation could provide you with both challenges and opportunities.
On the one hand, it is likely to become more difficult to attract and retain staff.
On the other, if you have your finger on the pulse of your employee’s needs, it could be the opportunity you were looking for to attract the cream of your industry.
These days, employees are looking for more than just a salary, so when developing your HR Strategy, consider:
- Flexibility in location and hours of work
- Providing a positive workplace culture
- Viewing your employees as three-dimensional beings with needs outside the work environment, not just workers
What It Might Mean For Investors
Some companies will be harder hit than others by The Great Resignation. Companies with high labour intensity or labour skill levels will be more vulnerable.
When considering investing in any given stock, think about the exposure the company has in terms of their staff. A low revenue-per-worker ratio suggests an organisation, or industry, which has high labour intensity and is therefore more exposed than an organisation with a high revenue-to-worker ratio.
Certain industries, like software development, will also have high labour skill exposure.
Other industries, like hospitality and leisure, may have lower labour skill levels, but because of the low pay rates and high labour intensity, may be disproportionately affected by high levels of resignation.
The key is to look carefully at the underlying staffing structure of any company in which you might want to invest.
If you don’t plan to downsize your career, go bush, or otherwise join The Great Resignation, you may find there are still benefits for you. It is likely wages will increase in many industries because of labour shortages. If this applies to you, consider tucking that windfall away in superannuation or another investment. Just in case one day you do decide to join The Great Resignation.
If making a change to your career or lifestyle is something you are considering. Manly Financial Service have the expertise to give you the advice you need to transition to the life you want while maintaining your financial wellbeing. Call us on (02) 9976 3388 or contact us via the below link for an obligation-free chat.