Co-authored with Dr. Cynthia Overton, Sr. Director of Tech Workplace Initiatives at the Kapor Center, Dr. Allison Scott, CEO of the Kapor Foundation, and Dr. Sonia Koshy, Sr. Director of Research and Evaluation at the Kapor Center
As each day passes, we continue to see massive disruptions in the ways we work, including in the millions of American workers who have quit their jobs. Data from the labor department reveal historically high quitting rates (4.5 million workers in November 2021), employee engagement is down, and businesses across all industries are scrambling to fill open positions. The Great Resignation (or the Great Awakening) is the new hot topic, so what is really happening and how can tech companies learn from the broader employment trends to reevaluate their business priorities and evolve to meet this moment?
Who is really leaving, and why?
- Quit rates are starkly different across industries: Hospitality and healthcare industries have been hit the hardest, with significant resignation rates in the sectors with increased exposure to COVID-19 (see Figure 1). Low-wage workers are also most likely to have left their jobs. But, tech is not exempt, with increased resignations since 2020, and an estimated 72% of respondents from a national survey sample of 1,200 tech and IT workers indicating they are considering leaving their current job.
- Race and gender differences exist among those considering quitting: Among the overall workforce, 35% of Black employees and 40% of Asian employees are considering leaving their current role in comparison to just 26% of white employees. Meanwhile, 40% of women have considered leaving their current role or company for another role, and one-third of women have considered taking on fewer responsibilities in their career or leaving the workforce completely. Trends in the tech sector mirror those in the overall workforce. Data from over 2,000 employees in tech revealed continued struggles over workplace culture among historically excluded groups during the pandemic. More than half of respondents who were women (53%), Black (56%), or Latinx (58%) stated they had left or were considering leaving a toxic company culture in 2021.
- Reasons for leaving are varied: There are a number of push factors, including job dissatisfaction, lack of career advancement, burnout, lack of work-life balance, COVID risk, desire to continue remote work and maintain flexible work schedules, and seeking greater purpose. The majority of US employees are rethinking what they want out of their career, with a greater emphasis on remote and flexible work options, opportunities for upskilling and reskilling, compensation, employee engagement, and aligned company values and culture. Reasons vary by age groups, gender, and by sectors.
What should tech companies be asking themselves?
“The Great Resignation” has led to many questioning existing power dynamics. Employees are voting with their social media voices, their union cards and their feet rather than accept the way things have operated. Here are a few questions that companies should be asking:
- What do our retention rates and turnover data say? We know the Great Resignation isn’t hitting every sector or demographic group evenly. Consider exploring your retention rates by job type and demographic groups, conducting anonymous surveys including third party exit interviews, and tapping into employee-led bodies (such as ERGs) for candid feedback. You may discover that your retention rates are lower than others in your sector, that mid-level female employees are restless, Black employees are seeking more diverse leadership, or that parents are seeking options providing greater flexibility.
- What do our employees need? Increased pay and better working conditions are often the immediate employer responses. But we have learned from study after study, that this time around, employees are asking for much more action around hybrid/remote work, flexible work schedules, visible commitments to diversity and inclusion, work aligned with core values, and a culture of support of well-being and mental health. Again, these needs vary significantly across age groups, job types, levels of experience, race, gender, and immigration status. You won’t be able to implement effective retention solutions without the specific knowledge about what is driving turnover in your company.
- What role does diversity and inclusion play? The increase in awareness of racial inequities following the murder of George Floyd in 2020 left many in the workforce in search of values-aligned companies that have made real progress towards diversity, equity, inclusion, and belonging. Companies that simply made performative statements and donations to non-profits increased cynicism, not retention. Employers with comprehensive approaches to DEIB－including those implementing the 5 initiatives found in the Tech Leavers study to significantly increase retention — will have a competitive advantage. Social impact companies and companies with serious commitments to advancing DEIB are increasingly well-positioned to attract top talent.
What are the opportunities to transform tech for the workforce of the future?
Although this shift in the labor market has left most companies scrambling for new talent, we see this as a new opportunity to address long standing racial and economic inequality and make progress on tech’s dismal diversity numbers. Here are promising steps:
- New Pathways to Tech: Low-wage workers (primarily of color) are most likely to quit. The current workforce dynamics have presented an opportunity for startups to innovate new models in training tech workers. They have created the need for new pathways to tech jobs, to meet needs for skilled talent, and to increase tech diversity.
- New Incentives: Given the scramble for talent, employees are in a better position to place demands on companies about increased pay, benefits, and working conditions, including flexibility. New benefits include employer-paid access to upskilling education. (Career Karma, a Kapor Capital portfolio company, just announced its $40million Series B raise to pivot in this direction.)
- New Action on Workplace Diversity: As employees continue to demand progress on diversity and inclusion, companies will be forced to make greater investments and implement comprehensive solutions that move beyond aspirational statements; they’re being asked for specific commitments that allow them to be held accountable.
- New Entrepreneurs and Investors: As more employees continue to seek meaning and values-alignment in their work, record resignations have also been accompanied by a record number of new businesses. There is a growing ecosystem of advice, support and investment in entrepreneurs whose lived experience is leading them to create solutions to longstanding social issues. Simultaneously, there’s a growing demand from investors who want to help grow ‘impact’ businesses.
As with all crises, enormous opportunities exist in the current moment to replace historic inequities with more fair and equitable models.