UNLEASHcast: Economics of the Great Resignation with Tomeka Hill-Thomas

In this episode of the UNLEASHcast interview series Jon speaks to Mercer economist Tomeka Hill-Thomas about all things ‘Great Resignation’-related.

Check out the audio above, or the full transcript beneath…

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Jon Kennard: Tomeka thank you so much for talking to UNLEASHcast today, we’re going to be talking about primarily, the ‘Great Resignation‘, and a few topics spinning off that that are very important. Let’s start there though. Give us your thoughts on the ‘Great Resignation’.

Tomeka Hill-Thomas: Thank you so much. Well, in the late 2020s and early 2021, we saw people that were leaving their job because they were just so frustrated and stressed out due to the pandemic because the vaccinations were not readily available, their children were not going to school, people had to stay home with their children, and other things related to the pandemic. So you saw that people were just leaving the jobs, really out of frustration.

However, by mid 2021 to now I think there’s just been a shift. And the reason behind the resignations, for starters, I think there’s been a shift in the position of power. Employees now recognize how [much] happier they are with more flexibility in their jobs. And they’re looking for that now. They also see the economy, until fairly recently, was growing at a very large rate, and they’ve wanted more income.

So as a result, you now saw companies respond to this new demand by offering hybrid work, better employee assistance programs, and not just higher salaries, but also larger signing bonuses to help meet the demand for this from the workers. So right now, I see companies in some ways at the mercy of the current and potential new employees. And I think this will probably continue for the next quarter or so.

Now that we have the situation in Ukraine and Russia, I think, it’s kind of questionable, on how the economy’s gonna do in the next couple of months. But I do think up until probably the summer, you’ll still see that employees will have the demand and the control of the reins as a result.

JK: There’s obviously a number of reasons, many of which you’ve just outlined for this. But do you think these dynamics in what employers are looking for from their employer are going to persist beyond the summer, in your prediction? Or are they going to be echoes of what they’re after that we’re going to as we go forward into next year as well?

TH-T: You know, I think the pandemic has led both employees and the employers to rethink their relationship. Employees are now rethinking how their job aligns with their purpose and values.

Employees are now suffering burnout, due to this heavy load has been put on them due to the pandemic. Employers, on the other hand, are evaluating their role in society and their relationship with their employees.

So what does this all mean? I think now and in the near future, employees are going to be making clear decisions on what the relationship between them and their employees should be.

You’re going to see some employers leaning in to become a more family environment while you’re going to see more employers coming back with a set of boundaries as a part of work-life balance.

As I mentioned before, you know, the power has now pivoted more toward the employees. So there are new demands for better work-life balance. These demands have led to companies to deliver on total wellbeing, meaning they want better health as it relates to their mental state, their physical state, their financial, as well as the social health.

And because employers are looking for more purpose, some companies have started helping employees discover their purpose, with much more training. So when the economy slows down, probably at the end of this year, I do expect that the relationship will probably change again, but I know it’s not going to go back to where it was prior. I expect the change in how employers look at the talent supply will change. The pandemic has already exasperated growing digital education and skilling globally. I suspect that the demand on talent will further push at this once the economy begins to slow down. This is why you know we see here in my company, we’ve seen an uptick in the number of clients with interest in developing new talent processes around skills and more investment on training.

JK: So that’s one area, how employers are dealing with all of this. How are you advising your clients to do this? And do you think there’s something a bit deeper going on in the economy? Apart from flexible work? Do you think there’s there’s a bigger underlying issue?

TH-T: Now, good question. We’re now seeing employers become more strategic and how they manage that workforce to meet the new demands and to the shifts in economy. You know, one, you see employers want to improve workforce planning to better manage how and where within their company, they should hire new talent, retain their current employees, use automation, outsourcing, etc. And the bottom line is there is no one choice, it’s likely a combination of all these things to help maximize productivity within your firm.

Also, employers want to address the employee experience for T-retention populations, you know, they want to make sure their high performers are happy. They want to make sure their executive leadership is happy.

So this is requiring companies doing employees engagement surveys and doing research on the sentiment of their employees to better understand what their concerns are. Also, I believe that companies have to think about managing their workforce while being aware that the economy over the past few months has been very hot. But now since Ukraine and Russia, they’re going through this situation right now, is a big question mark as to where these are gonna go. So I suspect that things are gonna cool off a little bit. So there’s this anticipation that employers are having, and they seem to be really nervous about how this will impact their employees as well as how it will affect their business.

JK: I’ve only got one last question. This is coming at quite an apposite time, I think, as yesterday we had International Women’s Day. The pandemic’s really affected women and people of color in particular, it’s highlighted pay gaps, gender pay gap, which is arguably less of an issue than it was but still a big issue. What I mean by that, sorry, is that more companies are understanding the importance of being transparent. Have you seen from your experience positive progress in these areas and what needs to happen to keep this going?

TH-T: I have actually seen a lot of great progress in this. There have been recent events that have led to more companies looking to determine if there are disparities and pay one, there are increased regulations in Europe and in the United States for several states. The EU now requires that member states collect and publish information on pay gaps. And in the United States, there has been greater transparencies in states like Colorado, Connecticut, and New York, which require companies to share pay raises.

So employees will now have more information that they have to share and employees are now have better insight as to what they should be looking for at the job. Also, there have been a lot of demands from activist investors with disclosures.

And here in America, especially since 2020, racial justice has been a huge driver. So due to these events, some of the top HR priorities that we have seen is that companies are now addressing whether there are pay gaps for women and people of color as similar ranks and roles.

I know at my firm, at Mercer, we have experienced an increase in a number of companies who wants to help determine if there are any gaps in pay for women and people of color. And not only do they want to identify the gaps, they want to see what are the drivers behind those gaps. Also, we have seen that this has gone beyond just looking at pay. We have seen a lot of studies looking at total rewards packages, such as retirement plans, 401k plans, and employer-sponsored stock purchasing plans.

So we have been looking to see, I know at Mercer, how employer matches and non matches have helped reduce the gap and how different employee groups are saving for retirement. And last, address why the differences in hiring, promotion and exit rates have impacted female and people of color for representation throughout the race and a specific job roles. That has been also a very big question that companies are seeking to answer.

Not only have we been looking to determine whether low representation for women and people of color, are the result of differences in hiring, promotion and exit rates, but we’ve been looking for drivers to explain why this has been occurring.

JK: It’s an ongoing analysis, isn’t it? It’s terrible, really, that it should take a pandemic, to kickstart this research and make things able to be more transparent. But if there’s something that’s good that’s come out of this, then it is it does mean that people are very much more aware of this and very much more transparent about this. Tomeka thank you so much for your time. It’s really good to get the Mercer perspective and your perspective on on these topics. Thank you.

TH-T: Thank you. Pleasure.

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