6 minute read 28 Oct 2021

CEOs might study Maslow’s hierarchy of needs to understand the rationale and efficacy of one possible antidote: create a culture of belonging built one high-belonging team at a time.

An antidote to the Great Resignation

An antidote to the Great Resignation

Authors
Jeff Stier

EY Americas Consulting Purpose & Vision Realized Leader

Vision-led and purpose-driven leader. Accelerator of innovation.

Woodruff (Woody) Driggs

EY Americas Advisory Digital Transformation Wavespace Leader

Digital transformation wavespace leader helping EY clients re-imagine their future so they can thrive in the transformative age.

6 minute read 28 Oct 2021

Four steps senior executives can take today

In brief
  • The traditional employee-employer relationship has been forever altered due to the pandemic, with employees now seeking greater meaning in their work.
  • Millions of US workers have quit their jobs this year, and millions more are considering doing the same.
  • Leaders who understand the human factors around the Great Resignation and build a culture of belonging will be best positioned to attract and retain top talent.

CEOs might study Maslow’s hierarchy of needs to understand the rationale and efficacy of one possible antidote: create a culture of belonging built one high-belonging team at a time. 

For decades, employees largely defined themselves through the lens of their work — what they did at their place of employment rather than why they did it. However, after 18 months of the pandemic, workers are redefining what’s important to them and making decisions accordingly. To succeed going forward, we urge CEOs to heed the shift in workers’ mindset and expectations, understand its root cause and transform their organizations.

Understanding the Great Resignation

On a macro level, the pandemic gave workers a chance to re-evaluate their lives, values, needs and circumstances. Many, to their surprise, were able to succeed in their jobs and experience greater purpose and meaning while working remotely. Those who hunkered down, grateful for a job through the crisis, are finally taking a breath and considering their options. Many are frayed, burned out from the endless workday. Others have discovered a work-life-home balance that they intend to keep even if they have to change jobs to do so. They believe that having more time and flexibility for family, hobbies and exercise is more than just a nice-to-have — it’s essential to enjoying a full, productive life. This sentiment, combined with the fact that competition for experienced workers has reached a fever pitch during the pandemic,1 has inspired a mass exodus of millions of employees:

Nearly

20 million

US workers have quit their jobs since April 2021.²

Over

40%

of employees across the globe and multiple industries are considering leaving their current job this year.³

This phenomenon is known as the Great Resignation,4 and for savvy C-suite executives, it’s an opportunity to transform company culture, reimagine recruitment and retention strategies, and drive value for the long term.

Heeding the wake-up call

Many companies are responding with well-intended transactional fixes such as increased pay, more flexible hours and improved virtual collaboration technology. These transactional fixes do matter to employees, just less than employers think.The top three reasons employees cite for quitting are: they do not feel valued by their organizations (54%) or their managers (52%) and do not feel a sense of belonging at work (51%).6

In contrast to transactional fixes, employees largely seek cultural and relationship transformation. According to one survey, 9 out of 10 career professionals would sacrifice 23% of their future earnings — an average of $21,000 a year — for consistently meaningful work.7 The study also found that employees value salary, benefits and company leadership but are demanding greater purpose, meaning and belonging in their work-life balance. This gap between what workers want and how employers are responding is causing a leadership crisis in an increasing number of industries.

These symptoms are a wake-up call for CEOs and their boards. COVID-19 broke the back of the old inherent employer-employee contract. The pressing challenge today is determining what is required to re-imagine that contract and create a new employee value proposition (EVP) that addresses (and possibly reverses) the symptoms of the Great Resignation.

Analyzing Maslow’s hierarchy of needs 

Abraham Maslow was an American psychologist who developed a hierarchy of needs to explain human motivation and behavior. His theory comprises a five-tier model of human needs in which needs lower down in the hierarchy must be satisfied before individuals can attend to needs higher up (see Figure 1).

Figure 1

Before the pandemic, organizations’ EVPs generally satisfied the first two levels of Maslow’s hierarchy: in return for dedicating a large portion of their careers to a single organization, workers accepted a standard package of benefits that addressed (i) their level 1 physiological needs: food, clothing and health benefits and (ii) their level 2 safety needs: job security and a regular paycheck.

According to Maslow, workers, as humans, are intrinsically motivated to reach for more than just levels 1 and 2. We are programmed to also strive for levels 3, 4 and 5. Yet, most pre-pandemic organizational cultures and leadership styles failed to encourage or support their workers’ quest to feel they belong, are valued, and have the tools and training to reach for higher self-esteem.

Recent research supports Maslow’s conclusions. For example, social belonging is a fundamental human need, “hardwired” into human DNA.8 When workers feel that they belong, benefits to employers include, among other things, better job performance, lower turnover risk and fewer sick days.

During the pandemic, workers were able to do their jobs virtually and experience more meaningful time with families; focus on hobbies; work out more; and reflect on what is most important. They had an epiphany that it’s possible to be a productive employee and satisfy need levels 1 through 4. This in-pandemic employee experience — juxtaposed with employers’ reticence to adjust to new employee expectations — created the gap that is the root cause of the Great Resignation.

Closing the gap

How do organizations close this gap? By understanding Maslow’s hierarchy of needs and evolving their operating models to better satisfy employees’ basic human needs. In so doing, they will improve retention and loyalty, while also improving engagement, innovation, productivity and performance. Below are four steps CEOs can take today to close the gap and reverse the Great Resignation:

  1. Build a culture of belonging. Draft a new contract between the company and employees, and redesign your EVP to better enable workers to satisfy the human needs to belong and build self-esteem (Maslow’s need levels 3 and 4). Research shows that people with the highest sense of belonging have 34% higher intent to stay than those with a low sense of belonging.9
  2. Remember that a culture of belonging is built one high-belonging team at a time. Upskill executives and team leaders on how to coach and empower small teams to be high-belonging teams. There is a detailed neuroscience-driven method for how to build and sustain high-belonging teams informed by Maslow’s hierarchy of human needs.
  3. Evolve executive compensation to hold team leaders accountable for achieving minimum KPIs related to creating and sustaining high-belonging teams.
  4. Operate with daily purpose and future vision. Today, many employees expect the companies they work for to do more than simply make money for shareholders — although that is also important. They want to work for organizations that stand for something meaningful today and have clear visions for the value they plan to create tomorrow for stakeholders and society. Companies that execute with purpose are more likely to create long-term value.

By taking these four steps, CEOs can begin to address the human factors underlying the Great Resignation and its symptoms: increased employee attrition, stress, burnout and low morale.

  • References#Hide References

    [1] “The 2021 Employment Market And What It Means For Recruitment,” Forbes website, https://www.forbes.com/sites/forbescommunicationscouncil/2021/08/04/the-2021-employment-market-and-what-it-means-for-recruitment/?sh=5177075c1ee2, accessed 20 September 2021.

    [2] “Job Openings and Labor Turnover Survey News Release,” U.S. Bureau of Labor Statistics website, https://www.bls.gov/news.release/jolts.htm, accessed 21 October 2021.

    [3] “The Next Great Disruption Is Hybrid Work—Are We Ready?,” Microsoft website, https://www.microsoft.com/en-us/worklab/work-trend-index/hybrid-work, accessed 21 October 2021.

    [4] “The Great Resignation Is Here, and It's Real,” Inc website, https://www.inc.com/phillip-kane/the-great-resignation-is-here-its-real.html, accessed 20 September 2021.

    [5] “‘Great Attrition’ or ‘Great Attraction’? The choice is yours,” McKinsey website, https://www.mckinsey.com/business-functions/people-and-organizational-performance/our-insights/great-attrition-or-great-attraction-the-choice-is-yours, accessed 25 October 2021.

    [6] Ibid.

    [7] “Workers Value Meaning at Work; New Research from BetterUp Shows Just How Much They’re Willing to Pay for It,” BetterUp website, https://www.betterup.com/press/workers-value-meaning-at-work-new-research-from-betterup-shows-just-how-much-theyre-willing-to-pay-for-it, accessed 25 October 2021.

    [8] “The Value of Belonging at Work,” Harvard Business Review website, https://hbr.org/2019/12/the-value-of-belonging-at-work, accessed 20 September 2021.

    [9] “Stay or go? Can belonging drive retention?,” BetterUp website, https://www.betterup.com/blog/can-belonging-drive-retention, accessed 25 October 2021.

Summary

Establishing an organization-wide ecosystem of high-belonging teams lays the foundation for the workplace to become a positive contributing factor — rather than a hinderance — to every employee’s intrinsic, human quest to climb Maslow’s needs ladder. CEOs who are ready and willing to rethink why their organizations exist and how they operate when it comes to their most valuable resource will become more valued and trusted partners in their workers’ lives and create long-term sustainable bonds of trust, loyalty and productivity.

About this article

Authors
Jeff Stier

EY Americas Consulting Purpose & Vision Realized Leader

Vision-led and purpose-driven leader. Accelerator of innovation.

Woodruff (Woody) Driggs

EY Americas Advisory Digital Transformation Wavespace Leader

Digital transformation wavespace leader helping EY clients re-imagine their future so they can thrive in the transformative age.