Inflation versus The Great Resignation looked like a boxing match with no sure winner. After all, unemployment was — and still officially is at time of writing — at 3.6 percent, a point short of the half-century low we saw in 2020. The turmoil the pandemic caused to people’s lives turned the phenomenon of “job hopping” into “The Great Resignation”/”Great Reshuffle” in a way nobody had expected, with a powerful effect on hiring teams the world over.
The result was a demand for flexibility from employees only too willing to move on to — what they perceived as — greener pastures if more flexibility wasn’t forthcoming, leading to exacerbated retention issues across industries. Reality switched from a world in which employers demanded flexibility of their employees and potential employees to one in which employees demanded it of their employers and potential employers.
Round 1 – Bullying and Backlash
Wishing it away didn’t work, although many tried. Why is anybody’s guess. Productivity and profits surged during lockdown; and, although there is more than one reason for this, remote work proved itself, kept costs low, kept quality up, and helped those profits surge. Attempts to instate “back-to-office” policies failed and were adapted or rescinded across some major companies. The reaction for Apple was seismic. Over 1,000 employees, current and former, signed an open letter, part of which said:
“Stop treating us like school kids who need to be told when to be where and what homework to do.”
The company also lost a highly valued director in its machine learning division, Ian Goodfellow, to Google, specifically due to its back-to-office mandate. (KO in favor of Google on that one.) Having a black eye and egg on one’s face at the same time isn’t a good look, which may have been on Elon Musk’s mind when his return-to-office demand contained the caveat:
“If there are particularly exceptional contributors for whom [remote work] is impossible, I will review and approve those exceptions directly.”
Welcome back, non-exceptional people! Don’t forget we’re a family with a thriving company culture! Yay! High-five, anyone?
While Musk continues to straddle the two worlds of tech industry genius and luddite, Apple backed off, citing (awkwardly clears throat) COVID. Many big players in the financial industry also tried the hard-line, boxing gloves on approach, and came away with a black eye. However, COVID itself may be more than an excuse for those demanding remote work rights. If variants keep coming and everything keeps changing, stability of some sort is required — not just for quality of life or health, but also for business as usual — at least in terms of productivity and results.
All of which makes employees appear far more business-savvy than many “leaders” running businesses – and seemingly in circles – today.
Points to the employees, then.
Round 2 – Clashing With Chaos
Inflation v. The Great Resignation didn’t get past the weigh in, image wise. Asking employees to start forking out hard cash just to sit in the office all day, when their money is worth much less than it was pre-COVID, appeared to be the perfect ingredient in a perfect storm, making The Great Resignation potentially worse for bosses attempting to punch below a tightened belt.
Counters with uppercut. Ouch.
And it didn’t help that the the tech industry lost $1 trillion over 3 days of trading. News of layoffs, lots of layoffs, soon followed. Then the rescinding of job offers, demonstrating objectively that the industry was turning on a dime in response to the downturn. Suddenly, the tech industry and other industries existed like night and day, only side-by-side, one stomping on hiring strategies and burning offers, the other bending over backwards to get new people in.
Has anybody not placed a bet yet?
As inflation became slowly worse, the new phenomenon of rescinded job offers started spreading to other industries, such as retail marketing, insurance and consulting. Storm clouds were closing in and the word “recession” was on everybody’s lips, with some predicting a close call by the end of 2022, others a “mild” recession early in 2023, and some, like Jeremy Grantham, warning that the BIG POP is coming and $45 trillion of assets in the US alone will be wiped out.
Still, Ali did beat Foreman in ‘74, so why worry?
However, geniuses who are never wrong — like Jeremy ‘Debbie Downer’ Grantham — aside, there are those who believe the lessons of history can help us understand what level of recession we’re heading into – if we’re not there already, of course. (Shhh.)
Bubble bursts like the financial crisis of 2007-2008 and the dot-com disaster of 2000-2001 were both credit-driven — debt-related excesses in their relative infrastructures built up until bursting point, giving us around a decade of economic woes. Recession based on inflation has historically inflicted less damage to corporate earnings, which should make a big difference to investors.
Many industries remain strong and should be able to go the distance.
In a mild recession, there is no sure bet that employers will suddenly gain the upper hand, at least not to the point of putting on boxing gloves and snarling orders at employees to return to the office or else. The best strategy is a white gloves approach. Flexibility should be considered here to stay, at least among those who wish to remain competitive and heal any hiring and retention issues.
Once people have been given something, it’s hard to take it back.
That’s human nature and it shouldn’t be underestimated. And that’s without even broaching the subject of company culture or morale among teams. Loyalty gives great ROI if you know how to inspire it. March was the 10th consecutive month that resignations passed the 4 million mark, so there are lots of companies out there who have absolutely no idea how to do that.
And they’ll pull on the boxing gloves once the recession becomes official.
Round 3 – Keeping Your Balance
The Great Reshuffle was named when it became apparent that people quitting their jobs were not moving out of the labor force, but into other occupations. It’s a good phrase to describe a sense of balance — although not much relief for companies who were left and found it difficult to attract new talent.
But who’s to blame for that? The Great Reshuffle was really all about talent leaving to go to companies who offered more flexibility, a better work-life balance, greater respect, a chance for an enhanced sense of team morale and personal work satisfaction.
To companies losing out it was more like the Ali shuffle. Still, thinking hard about using agility and coordination to beat your competition isn’t a bad thing. Especially for those who’ve made mistakes in the past. Investing in long-term retention, rather than hoping people will feel trapped into staying, will pay back on the investment many times over for any business — just as those who crack the whip will eventually pay for it.
Besides, whips don’t fit in a boxing metaphor.
Any recession will bring a rebalancing of power, of course.
Those who think this gives them the upper hand — revenge against selfish employees who wanted a life of their own — and turn it into a fist, will be at a serious disadvantage to those who don’t. Demanding that people return to the office at their own increasingly high expense, while saying “Not you, buddy” to those being laid off, will bring only more negative surprises the “experts” didn’t see coming. Still, your own business fitness, your own expertise, and your finely-tuned strategies are yours to apply as you wish.
In the end, it all depends on who you have in your corner.