In New Zealand, a recent survey of employees by HR software company, Employment Hero, reported that 48% of workers are planning to change jobs in the next year. 40% of workers are planning to search for a new job within the next six months, while 15% are already actively searching.

The NZ market is experiencing very-low unemployment and a significant shortage of skilled candidates across all industry sectors, especially in the Digital sector, with recruiters actively targeting a passive candidate market to attract talent.

As a result, we see significant organisation churn, creating further vacancies and driving an accelerating cycle. 

It’s been dubbed “The Great Resignation” by an organisational psychologist, Dr Anthony Klotz, and for good reason. Others have also coined the phrase, “the great reshuffle” or “The great lie down.”

For organisations the impact is huge. It’s tough to build a business with high employee turnover, especially when departments of just one or two personnel are common. It also costs money to advertise and find new staff – a minimum of 50-60% of an employee’s annual salary just to replace them.

It would be easy to say the reason for this is purely financial, related to the increased cost of living or the “work from home” expectations. While these are contributing factors, I think it oversimplifies the argument. I think there are various factors at play here that all interact and influence. When we look at some of the factors from a different perspective, then solutions start to appear.

As the world starts to recover from the Impacts of COVID-19, people are feeling more confident that they can take steps to deal with any challenges they are facing. They finally feel confident searching for a new job. Those people who had planned on leaving their jobs pre-pandemic but decided to hold off due to the instability caused by COVID-19 are now resuming their job searches. As a result, the backlog of resignations that has built up over the last 2 years is now beginning to clear.

Before I get into other areas, I am going to address the elephant in the room for the Public Service. I know this is causing some challenges for my colleagues in the Public Service and that is the continuing pay restraint. On 28 April 2020, the Public Service Commissioner issued guidance on the application of pay restraint. That guidance was updated from Apr 2021, following a Cabinet decision that visible pay restraint in the public sector was an appropriate response to the impact of COVID-19. That guidance meant that anyone earning greater than $100k p.a. would not be eligible for a salary increase, roughly 28% of staff according to the Public Service Commission. That guidance is to be reviewed again at the end of 2022.

In normal times these restraint requirements have been a reasonable response. Certainly, during the Global Financial Crisis, we saw similar restraints applied as nations struggled, but that was within the context of a recession. The difference, in this case, is that the economic data reflect an economy facing different challenges”

• Unemployment is at 3.2% and tipped to remain at that low level into 2023.
• Annual national growth is a forecast to hit 4.2.
• Inflation is currently at 6.9% expected to fall to 5% by mid-2023, before falling back to traditional levels of 2% thereafter.
• Nominal wage growth is currently 4.2% and tipped to peak at just over 6% in 2023.
• Salary growth would overtake inflation over the next 2 years. That is if you can gain a salary increase.

For 28% of Public Servants, that wage growth is out of reach and has been since 2020, due to the ongoing pay restraint. The only option is to seek employment in another organisation, obtaining a salary increase along the way, and that is what many are doing. “The Great Reshuffle” we are seeing in the Public Service may be an unintended consequence of this policy.

I know from talking to many CIOs that this is causing real challenges in their teams as the turnover rates climb. In a market where recruiters are actively approaching staff, failure to maintain a competitive salary will put organisations at a disadvantage.

I think this policy needs to be looked at in the context of the unintended consequences and potential impact on government Digital investment.

Maslow’s Hierarchy of Needs

There are other aspects I think that should be reflected on. In this post, I am going to explore them with Maslow’s Hierarchy of needs. Maslow’s theory presents his hierarchy of needs in a pyramid shape, with basic needs at the bottom of the pyramid and more high-level, intangible needs at the top. A person can only move on to addressing the higher-level needs when their basic needs are adequately fulfilled.

The basic layers are:

• Physiological needs: These most basic human survival needs include food and water, sufficient rest, clothing and shelter, overall health, and reproduction.
• Safety needs: Safety needs include protection from violence and theft, emotional stability and well-being, health security, and financial security.
• Love and belonging needs: Among these needs are friendships and family bonds—both with biological family (parents, siblings, children) and chosen family (spouses and partners). Additionally, membership in social groups contributes to meeting this need, from belonging to a team of coworkers to forging an identity in a union, club, or group of hobbyists.
• Esteem needs: The higher needs, beginning with esteem, are ego-driven needs. The primary elements of esteem are self-respect (the belief that you are valuable and deserving of dignity) and self-esteem (confidence in your potential for personal growth and accomplishments). Self-confidence and independence stem from this latter type of self-esteem.
• Self-actualisation needs: Self-actualisation needs include education, skill development—the refining of talents in areas such as music, athletics, design, cooking, and gardening—caring for others, and broader goals like learning a new language, travelling to new places, and winning awards.

Basic Needs

It’s fair to say over the past 2 years there has been a huge emphasis on the two basic levels. Organisations and the team of 5 million, have worked hard to ensure everyone feels supported and safe as the world has dealt with the impacts of COVID-19.

What we also see though is that staff are feeling burned out. The combination of keeping themselves and their families safe, as well as maintaining productivity at work has led to an increase in stress levels. In Aug 2021 research from AUT suggests 11 per cent of New Zealand workers might be experiencing burnout: physical or mental problems due to stress or overwork. That figure is now likely to be higher.

The other factor here is the rising cost of living and how that is impacting a household’s ability to fulfil those basic needs.

Take time to understand how staff are feeling and gain transparency over workloads. A big challenge when talking about stress is it can become a self-fulfilling cycle, as the more you talk about stress, the greater stress people feel. Make sure staff have the various support mechanisms they require to maintain resilience.

Reset the social relationships

In Maslow’s view, the next level is Love and belonging. Let’s face it, people are social beings and that need for personal interaction is critical for many. I think while remote working has been a huge boost for most organisations, staff have missed a large portion of the social interactions between them. Whether it’s morning tea, or a chat getting coffee, staff carry out a lot of their social activity at work. That has been missing for many for a while now.

The flip side of that is that staff have enjoyed the freedom and opportunity that working from home presents. We are seeing a pushback against returning to the office because of that.

The real outcome though is that staff have lost elements of the social connection to their colleagues and the organisation. When that bond is broken, staff no longer see work as a long-term relationship built around friends and colleagues, and it becomes easier to say goodbye.

That also impacts organisational resilience as many people gain strength and support through their relationships with colleagues.

To prevent this, organisations need to reset the social support activities, within the context of a flexible working model. They need to understand how they will retain that social cohesion when staff are working remotely, so they do not become disengaged. As staff return to the office in greater numbers, they should also emphasise the relationship aspects of work, helping to rebuild the bonds between colleagues.

Organisations also need to look at how they work. While many have transitioned to remote working during the crisis, they still haven’t changed their working practices or processes to leverage a more flexible, digital way of working.

A question many are asking is relating to the impact of flexible working on staff productivity. Very few organisations measured staff productivity before the shift and traditionally measured attendance as a proxy for productivity. Moving to a new flexible way of working will require organisations to rethink how they measure value, productivity and performance.

Personal esteem and sense of value are also where money matters

Most surveys when asking why staff leave organisations routinely find that money is not the primary reason. They often call out the need for staff to feel they are making a valuable contribution and that they are valued as an employee.

Where money does start to become a reason is when employees feel they are out of step with their peers in similar roles. This is where the Public Sector pay restraint is starting to hit home. If you are not seeing any salary growth for multiple years while others in similar roles are seeing high levels of growth, that impacts an individual’s esteem and ego. They feel undervalued as they see others gaining increases and they get left behind. I believe they then move, not out of a direct need for more money, but to regain their sense of worth.

This also impacts an employee’s perception of whether an organisation values them as an employee. That circles back to an individual’s need to feel they are delivering value.

Over the past 2 years, our sense of value to society has also changed. We have seen a huge focus on our front-line essential workers and the services they deliver to society. Those in areas such as Health, Social Welfare and Education, always knew the value they created, now the wider public has a renewed appreciation of those areas.

That doesn’t mean that lots more people will become doctors, nurses or teachers, but it may mean they seek out roles that better align with this new perception of social value.

Compounding this is that without the distraction of the social relationships and camaraderie that comes with working in the office, many are starting to realise they don’t enjoy the work that they do.

Organisations should provide visibility and insights to show how an employee adds value to the organisation and how the organisation adds value to society. That may be through reinforcing customer stories or volunteering programs.

People want to get on with their career growth

For many the past two years have meant putting their career aspirations and their goals around self-actualisation, on hold. Taking a risk on a new role in the middle of such uncertainty just wasn’t possible. Instead, they’ve been busy keeping the businesses they work for afloat. Upskilling for many has been off the radar.

With confidence growing, staff are now seeking to get back to their plans. That may be going overseas for a period, taking training, or as in my case, exploring a new venture.

It’s hard to argue against this one as so many people have been through so much over the past two years, such a positive response will be good for everyone.

Supporting employee upskilling and growth plans should be emphasised. This doesn’t require big budgets and paying for lots of training courses. It could be setting up mentoring programs or providing opportunities for staff to grow in their jobs. If staff feel they can achieve their growth objectives in the same organisation, they will stick around, even if the salary isn’t quite right.

In the end, even if you do lose them, you want your people to see you as a good employer, so hopefully, they will tell others and come back in the future, better equipped with skills, for your organisation.

Next Steps

Contact me via the link below if you would like to talk more about the challenges of developing and retaining your digitally skilled staff or how I could help with your initiatives.

https://www.hemlockconsulting.nz/contact-me