Know The Cost! The Economic Impact the Great Resignation Has for Businesses

The Great Resignation has shaken up many businesses. Following the reopening of the economy after the COVID lockdown, a diminished labor force led to a tight market for workers. As a result, many companies saw a flood of departures, leading to business disruptions and higher costs. 

But what have been the long-range results of the Great Resignation? And what can you do to soften the impact on your business? 

How Your Business Can Strive for Success Amid the Great Resignation

The Economic Impact of the Great Resignation 

The Great Resignation has had a notable impact on the overall economy. According to a study by the Chicago Federal Reserve Bank, the spike in employee mobility has added up to 1.1 percentage points to the rate of inflation.  

So, for April, consumer prices showed a whopping 8.3% increase compared to the previous year. Taking the Chicago Fed data into account, that means that about 13% of this total can be accounted for by the Great Resignation. 

Keep that proportion in mind as you face higher costs in 2022 and the coming years. By understanding the impact of the Great Resignation on your business, you can effectively plan for it and discover ways to avoid the worst effects. 

How the Great Resignation Impacts Your Business 

The Great Resignation has obvious financial impacts, as laid out by the data noted above. Fueled by a tight labor market, more employee movement leads to higher costs. These added expenses for wages and other employee compensation cuts into the bottom line. 

However, this calculation only represents a portion of the total impact. The widespread departure of employees touches many parts of your business at once. These all hamper your ability to compete, sometimes in less obvious ways. 

Here are some of the other ways this trend can damage your business: 

  • More attention is placed on retention 
  • Higher costs for replacement hires 
  • Lost business due to insufficient staffing levels 
  • Loss of momentum for your business while you concentrate on recruiting and retention 

How to Improve Retention During the Great Resignation 

Understanding the impact of employee mobility only goes so far. You also need to devise a meaningful action plan. That way, you can counter the economic forces dragging on your business and come out with a more successful operation. 

Here are some steps you can take to improve retention during the Great Resignation: 

Get Proactive 

Don’t let the job market get ahead of you. In the face of a complicated economic situation, take aggressive steps to secure your position. Provide raises and bonuses to your top workers and communicate with your team to maximize your ability to respond effectively. 

Look Beyond Wages 

The Great Resignation has pushed wages higher. However, don’t narrowly focus on this one aspect of employee relations. You can also improve retention in other ways. Consider factors like benefits, vacation policy, and culture.  

Build for the Future 

The Great Resignation has been fueled by the hope of better near-term wages. You can counteract this draw by offering your employees hope for the future. Stress the long-term value of sticking with your organization. Here are some enticements you can provide: 

  • Ongoing Training 
  • Promote From Within 
  • Reward Employee Loyalty 
  • Encourage Engagement 

Facilitate Better Work/Life Balance 

Don’t just go beyond compensation as you think about retention. Go beyond the job. Give your employees better work/life balance, meaning they have more than a paycheck to consider. You can do this with remote work, flexible scheduling, better childcare options, and other potential benefits. 

The Great Resignation has complicated the already-difficult task of team building. However, ABLE Associates can help. You’ll receive the expertise and support you need to find the best candidates for your open positions. 

Looking to Further Understand How to Navigate Around the Great Resignation?

Contact ABLE Associates today to learn more. 

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