July 2021 saw 4M workers leave the workforce, with that number increasing in August and September. The largest age group among these workers were in the 30-45 age group. While these numbers are not insignificant, they still only represent 3% of the workforce, not 30%. But as we noted before in our discussion about the $15 minimum wage, business owners are at their best when they anticipate trends, instead of waiting for those trends to happen to them.
While the term “great resignation” is just as recent as the resignations themselves, a few theories have been floated as root causes of these employees leaving their jobs:
- “Pent-up” quitting: those who didn’t immediately resign in the face of uncertainty in 2020 have decided to finally do so now
- Existential revelations: when people were laid off or had some time to work remotely, they took a hard look at their present circumstances and didn’t like them
- High stress: resignations have been higher in health care, tech, food service, and retail, all sectors that either had a sharp increase or a sharp decrease in revenues and customers
Given that the event is still happening amidst a lot of other global uncertainty, it’s not clear that any of these possible causes is driving resignations more than another. There may be a hidden factor that will become more clear in time. But that shouldn’t stop buyers or sellers from moving forward with transactions.
Address the Situation
Whether you’re a buyer or a seller, you can lean into the so-called “Great Resignation” as part of your due diligence or preparation to sell your business, respectively.
We’ve already mentioned earlier this year that Covid-19 is causing buyers to look at staffing issues more closely. Buyers are often not going to be able to interview current employees directly, but they can ask the seller for employment information: how long employees have been there, what the historic turnover rate has been, and if that’s been any different since March 2020. If there is a significant difference, ask the seller for reasons why.
With the additional buyer scrutiny directed at personnel, it’s entirely justifiable to lean into retention as you prep your business for sale. If you have had more resignations than usual since March 2020, try to look at aspects of employment that may have broken under the stress:
- Company culture: is it healthy and thriving and did it weather the challenges that lockdowns and layoffs may have caused? If not, what are you doing to address this?
- Pay and working conditions: are your workers in-person or working remotely? How is your pay in relation to the rest of the marketplace and its adjustments since March 2020? If your staff is unhappy with pay and working conditions, what do you intend to do?
- Vendors and supply chains: bad business conditions tend to roll downhill. Did you have to absorb any of the challenges of your vendors? Did your supply chain break down? How did this affect your team? Are there measures you can take to mitigate future shocks? Have you implemented those measures?
Business owners often look at what is going on around them and try to think about how conditions might affect their businesses. But those who are looking to sell need to be particularly sensitive and proactive. It’s not enough to know about the Great Resignation, you need to make sure you take whatever measures you can to make sure you don’t become part of its statistics, as that will directly affect your ability to sell the business at the price you want.
Has your business been affected by the Great Resignation? We’d love to talk to you about how to turn things around. Give us a call.