The Great Resignation is seen as an effect of the pandemic on the workforce, and one of the leading causes of the volatility of 2020-21. For many employees, the Covid-19 pandemic was a wakeup call which gave them the time to rethink their careers while at home.
For others, their jobs were either extremely limited or became obsolete, forcing them to find a new job. Whether they quit or were fired, wanted better pay or a more satisfying career, the Great Resignation has become a workforce shakeup that is reminiscent of labor revolutions in the past with great ramifications that can’t be ignored.
In September of 2021, a record 4.4 million Americans quit their jobs. This occurred amongst relative pandemic stability, and after Covid-19 unemployment benefits ended. Experts believe that this trend is here to stay (at least for the near future) as external factors are less of an issue and employees are still taking this initiative on their own. As financial planners, the Great Resignation has many repercussions both in the short and long term.
FP&A Team- In terms of the FP&A team itself, the direct implications relate to how the team will work under these circumstances. A high turnover rate can create harder work dynamics and make it more difficult to think in a long term perspective in a professional way. Furthermore, it is harder to create a workplace culture that establishes long term growth. When everyone on the financial team contributes, company growth becomes a reality.
CFO- For the CFO, leadership is even more important because we are currently in an employee market. Due to worker shortages and the high turnover rate, it is particularly easy to find a new job, especially for those with many years of professional experience and proven success. That being said, leadership is crucial in a time period where uncertainty is rampant, not only in the business world but also in work dynamics. It is the CFO’s job to adapt to these changes and make sure that the FP&A team knows what the company’s long term goals are, even in a time when working less than 2 years at one job has become a new norm for the younger workforce.
Broadening the CFO’s job description- Being an executive, the CFO needs to look out for the broader good of the company, not only the financial aspects. When too many people resign or the turnover rate is particularly high, this affects the financial plans of the company in an indirect way.
Listening to employees' concerns and creating a healthier work environment might cost more money in the short term, but looking at it as an investment will help the executives realize the value of employees being happy and staying invested in the company. Some examples of creating a better work environment are as follows:
Allowing a hybrid work from home/ office choice for those that haven’t implemented it officially.
Creating more opportunities for employees to share thoughts and ideas. This will benefit employees by giving them a feeling of belonging and worth, and also has the potential to propel the company to new heights.
Did you know that the idea of Amazon Prime started as a note put into a suggestion box by an engineer at the company?
Upskilling is another win- win idea. Upskilling makes workers feel more engaged and useful while simultaneously upgrading their skills without having to hire new talent. A LinedIn report showed that 94% of employees would stay at the company longer if the company invested in training them.
Financial Incentives- Although not the option that executives always want to implement, especially during volatility, sometimes a raise is the motivation needed for an employee to stay vested in the company. In addition, financial incentives such as programs to help pay off student debt, more vacation days, or bonuses are all ways to increase motivation and provide a reason to stay loyal.
This is where the CFO comes into play. Quantifying the monetary value of having to hire and train new employees, and comparing it to the price of keeping existing employees can give the executives a good perspective of why it is beneficial to do so. Furthermore, the results of increased motivation and wellbeing are ones that may only be seen farther down the line, but can be quantifiable as well.
One thing that the challenges of the past few years have taught us is that forecasting has become one of the most important aspects of financial planning. The Great Resignation adds additional aspects to forecasting that may not have been a focal point prior to 2020.
How will employees leaving affect the output and growth of the company?
If job openings are vacant for longer than they should be, is there a backup plan?
Will there need to be significant budget changes due to having to pay more for the same services?
In addition, high turnover rates indirectly affect the company:
How will a worker shortage disrupt the supply chain in your industry or service?
Will customers stay loyal if turnover rates affect the speed and quality of the product?
While these are questions that need to be answered in order to be prepared for all circumstances, there are proactive steps that the financial team can take in order to thrive during disruption. The overall changes due to Covid-19 provide plenty of opportunities for improving the way FP&A teams operate, and like every challenge, they provide new opportunities for growth.
One such change, as touched upon above, is thinking outside of the box. There are endless forecasting circumstances, and using every member of the financial team as a valuable tool to provide input and ideas can help the FP&A team plan for the short and long term.
Another such change is automation. Covid-19 sped up technology changes thanks to the switch to remote and online work and FP&A planning is no different. Trying to sift through droves of previously logged data along with implementing present changes and trying to set financial goals is simply too much without automation.
A big concern amongst companies is the fact that there is no time or team leader available to train a financial team on how to use a new service when the company is already short staffed. Therefore, platforms that combine pre-existing Excel data with advanced analytics in areas such as budgeting and forecasting are the perfect solution for companies during the Great Resignation as it minimizes the need for manual data entries.
The Great Resignation is yet another challenge that has been thrown at financial planning teams in the past few years. Although it may not seem as urgent as other pressing issues, the ramifications can have a big impact on future planning and budgeting that will only be seen later in the future. Therefore it is important for the company to understand the financial implications, what proactive measures can be taken to stay ahead, and how to minimize the damage by keeping a healthy work environment.