Has corporate culture contributed to the Great Resignation?

The impact on employers of the Great Resignation is not in question. It is affecting blue-collar and white-collar sectors equally. Industry may explain some of the variation in attrition rates across companies but not all of it. Even within the same industry, significant differences in attrition rates have been observed. Employees are 3.4 times more likely to leave Space X than Boeing, and more than twice as likely to quit Netflix than Warner Brothers. This is not to say that some industries were not impacted more by the Great Resignation than others, but the marked difference in attrition rates, was seen among companies within the same industries.[1]

So why the difference? It seems to be related to corporate culture. In general, corporate culture is a much more reliable predictor of industry-adjusted attrition than how employees assess their compensation. A toxic corporate culture, for example, is 10.4 times more powerful than compensation in predicting a company’s attrition rate compared with its industry. Unsurprisingly, companies with a reputation for a healthy culture, experienced lower-than-average turnover during the first six months of the Great Resignation.

What is corporate culture? There seems to be wide agreement that corporate culture refers to a shared meaning shared by members that distinguishes one organisation from other organisations. It is based on shared attitudes, beliefs, customs, and written and unwritten rules that have been developed over time and are considered valid. And for each employee, this translates to the relationship they experience with their employer.

All relationships are to some extent transactional, but none more than that between employer and employee. One provides capital, the other labour. This dynamic would be symbiotic in a perfect world since one can’t exist without the other; an employer cannot run a business without employees, and they need a job with which to earn a steady income. Even so, the disparity between the two has grown exponentially throughout the past few decades. The result has been a fabricated veil of empathy to acquire that which each side desires.

The Covid pandemic changed all that. Working from home has reconfigured the way employees structure their office hours, and, as a result, their work/life balance. Employees globally have demonstrated that they can use technology to do their jobs from home successfully, creatively, and functionally. If their companies employ a mandate that states they must return to work from the office, research shows that employees will likely leave even without a job in hand.[2] What should be noted is that employees will work anywhere and rearrange their lifestyle and schedule if they truly feel valued. Value is something that has unfortunately gotten lost among the many priorities of building a successful, business.

The Great Resignation is a clear statement from employees to employers that their perspectives and priorities have changed. Building a culture of trust and appreciation seems to be key. The failure to appreciate employees, is an element of culture that predicts attrition. A failure to recognise performance is likely to drive out a company’s most productive employees.

There are of course other elements such as job insecurity, compensation, and burnout (to name a few) that also influence attrition. The important point is that there are aspects of corporate culture that appear to matter more. Employers should make efforts to understand and address the elements of their corporate culture that are contributing to the Great Resignation and take meaningful action to remedy them. By doing so, employers can retain the talent they currently have, attract the talent they need and create a thriving organisation in the post-pandemic era.

[1] D. Sull, C. Sull & B. Zweig Toxic Culture is Driving the Great Resignation

[2] A. De Smett, B. Dowling et al. Great Attrition or Great Attraction? The choice is yours.