Countless recent media stories about the Great Resignation (including this, this, and this) make for compelling general reading. But for leaders of small-scale SaaS businesses, the Great Resignation is nothing short of greatly distressing. In a competitive environment that has long been engaged in a talent arms-race, record numbers of job quitters is truly harrowing news for the SaaS world. But this opinion piece from October by Karl W. Smith of Bloomberg (“Workers Who Quit their Jobs Could Improve US Productivity”) helps re-frame this inexorable movement in way that has informed Lock 8’s recent efforts to combat it. The following post hopes to briefly summarize Smith’s article and share some tactics that have shown promising early signs in the face of the Great Resignation.
Smith opens with this observation about the unprecedented level of churn in the job market: “at the heart of this phenomenon is a self-reinforcing cycle that has the potential to remake the labor market. As employers become more desperate to expand their workforce, job openings proliferate and workers become more confident in their options.” The reinforcing aspect of this cycle kicks-in when more workers quit, and their “reservation wage — the minimum they’ll accept — for taking a job” rises. This rise makes workers choosier, which cultivates even more desperation among employers…and, thus the cycle repeats and amplifies. What follows in the article is a macro-economic analysis and an argument in favor of creative destruction to the economy — “the cycle will be broken when employers turn their focus away from hiring more workers and toward increasing the productivity of their existing workforce.” Fascinating…and unassailable in the grand scheme. But what to do in the meantime and in our little small-scale SaaS corner of the world?
Like many articles on the Great Resignation, Smith’s focuses largely on low-cost jobs, macro-economic trends, and traditional definitions of labor, business expenditures, and productivity. While those concepts are universally relevant, variables like highly skilled workers, innovation, and capital efficiency seem more immediately impactful to the world of small software businesses. This brings to mind Daniel Pink’s insights regarding knowledge workers’ motivation being tied to autonomy, mastery, and purpose, a view we have ascribed to for years. This raises the related question: how are the same forces that are shaping the Great Resignation also influencing what employees truly value today?
First, money matters. There is unquestionably upward pressure on wages; and employers need to respond accordingly. But, as Karl points out in his article, “reservation wage” is not JUST about size of paycheck. Thankfully so — if it truly is all about the Benjamins, the little guy inevitably loses. No, we need to think more expansively about how to attract and retain talent. Building on the rock-solid foundation of autonomy, mastery, and purpose, we have observed that employees in late-2021 increasingly demand / appreciate: support, flexibility, and empathy. Accordingly, Lock 8’s portfolio companies have prioritized “other” initiatives, policies, and benefits that seek to embrace and advance these themes.
- Support: This feels like a natural counter-balance to the concept of autonomy, which Pink describes as “freedom among employees to be self-directed.” Sure, we all want to be self-directed, but not alone and stranded (as many felt over recent months amid the pandemic). Such support can take countless forms; here are a few that we’ve focused on:
- Leadership: Lean heavily into training company leaders / managers — this has the double-benefit of providing valuable professional development to all, while also elevating managers’ ability to lead, mentor, and retain talent. After all, loyalty (or lack thereof) to one’s supervisor inevitably tops the list of factors in employee retention.
- Health Care: Among rapidly rising health care costs, the company steps-up to cover increases to premiums. There may be nothing more important right now than supporting employees’ physical / mental health, especially if this can also support their financial wellbeing.
- Savings: Offer 401-k company contributions that go beyond more standard matching programs. Company contributions help employees (particularly entry-level ones) get into the habit of saving for the future, irrespective of whether they themselves enroll in the 401-k.
- Creative Destruction: Per Smith’s point, employee departures can be a catalyst for productivity enhancements. When people leave businesses, a silver lining exists in the form of opportunities to find new ways to do things. Whether through “digital transformation” (a term we dislike) or general process improvement, there is a chance to adapt and grow. With this approach, companies can turn a negative into a positive, and demonstrate valuable support for employees who remain after departures (and for those on whom an added burden so often falls).
- Flexibility: At this point in the pandemic, it’s easy to think that tech companies have universally maximized flexible work. But there is always room for refinements well beyond simply allowing WFH. This is particularly true among small-scale businesses that tend to have less mature HR infrastructure and policies. Some recent changes among our partner companies include:
- Flex-PTO: Surprisingly, many small-scale SaaS businesses have not yet formally adopted flexible policies for vacations / holidays / time-off. Doing so, while also setting clear expectations around how such a program can work effectively for all, is a big step. (This also removes inherently inflexible practices such as use-it-or-lose-it and vacation carry-over).
- Uniquely Defining Health: It’s long been true that employers desire a healthy workforce — everyone benefits. But healthy living means different things to everyone. With this in mind, a popular policy change has been to offer a per-employee stipend. This can be used at each person’s sole discretion, with broad latitude toward supporting individual health.
- Uniquely Defining WFH: This same flexibility has been extended to home office expenses and reimbursement / stipends to cover related expenses. There is no one-size-fits-all in terms of home office needs, so flexible reimbursement has been a welcome change from what had previously been somewhat prescriptive.
- Empathy: If Pink’s concept of mastery is about developing a comprehensive knowledge or skill in a subject, then empathy brings a human touch to such competence. Empathy is the ability to understand and share the feelings of another; and we all desire that from the world around us. Team members certainly expect that from employers today, and a few consequent changes have been well received.
- Culture Committee: For many people, culture-building events can feel like “mandatory fun.” This is particularly true today, where virtual happy hours and remote events can feel like nothing more than awkward obligations for more screen-time. What helps is when the company gets out of the way. Empower — with a reasonable budget and clear authority — a group of people (often more junior team members) who are excited about organizing experiences for their peers. The results are consistently authentic and fun; and the approach demonstrates a respect by the business for what the team actually wants to do.
- Policy Audit: Inevitably, there are aspects of the work experience that are imperfect — policies, communication practices, benefits, reward structures — and these rankle people. Proactively convening a cross-functional group to regularly review and propose changes…and then thoughtfully considering and implementing the resulting recommendations…is a great way to demonstrate empathy to what the team values. Admittedly, this can be perilous for company leaders depending on the team’s recommendations; but even just cultivating such discussions is better than not.
- Giving Back: Businesses everywhere give back to their communities and demonstrate admirable corporate social responsibility. Historically, that has meant supporting employees’ efforts to give their time and treasure to a specifically identified company cause. And, while this still holds true, it has evolved in order to allow far more individuality for people to select the organizations and causes that resonate most profoundly with them personally…or even to opt-out entirely without judgment or penalty if that just isn’t one’s cup of tea.
Attracting and retaining employees amid the Great Resignation is undoubtedly an ongoing challenge — and wage inflation is a reality in this situation. But, as Karl’s article articulates so well, increasing the productivity of the existing workforce is the clearest path toward optimizing performance…and embracing some “other” tactics through prioritizing support, flexibility, and empathy appears to be a path well worth pursuing.