Workers may be delighted (or they may be unexpectedly disappointed) at the prospect of being a part of the Great Resignation, but what about those who own their own businesses? What do the motives behind all those people quitting their jobs mean to entrepreneurs?
“There are a number of reasons behind the Great Resignation, most of which have been triggered (or magnified) by the pandemic,” says Seth Hanft, Employee Benefits Practice Counsel at BakerHostetler in Columbus, Ohio. “For example, the shift to work-from-home has eliminated many of the personal/professional barriers that previously existed. This means many employees are never really off the clock. That can take its toll, so many are leaving their current positions to find a job that better fits their work-life balance needs. For others, the pandemic has created financial opportunity. With workforce shortages, many positions are in high demand, which means a lateral move can reap significant immediate financial benefits. Finally, others are simply recalibrating, meaning they are leaving in search of a position that provides more personal/professional satisfaction. All of these reasons, and more, have contributed to the Great Resignation.”
Perhaps in a way not seen since 9-11, the pandemic has forced people to contemplate the meaning of their lives. And while September 11th was a day that expanded to a week, Covid-19 was 15 days (“to slow the spread”) that stretched to, well, we’re coming up on two years now.
That’s a long time for you to think hard about what your life is all about. And when it’s all said and done, you quickly realize it ain’t all about work.
“One of the biggest reasons behind the Great Resignation is a quest for greater work-life balance,” says Tolen Teigen, Chief Investment Officer for FinDec in Stockton, California. “People had pondered making a change in the past. But, with the Pandemic, they’ve had the reason to go for it. It provided people the permission to make a leap as they were already working remotely or, perhaps, they had to take a temporary pay cut. The Great Resignation phenomenon is largely a preference based on quality-of-life decisions.”
Unlike the typical employee, most entrepreneurs went through this thought process long ago. They didn’t need a pandemic to spur them to re-evaluate where they wanted to be in life and when they’d decide to quit their regular job.
“They’ve already made the decision to do so,” says Teigen. “They’ve already had their own private resignation when they branched out on their own.”
That’s not to say the Great Resignation won’t be useful to business owners. Because they’ve already gone through this process, they can empathize with those going through it today, even if it doesn’t necessarily impact their entrepreneurial status right now.
“I don’t see that the same resignation phenomenon will apply to entrepreneurs because these individuals are in business for themselves,” says Susan Lubow, Employee Benefits and Retirement Plans Co-Leader at BakerHostetler in Columbus, Ohio. “They set their job expectations prior to the Pandemic and perhaps were not as impacted by the Pandemic. In short, many of the reasons that may apply to other workers (changing work-life balance or moving toward increased financial opportunity) may not have the same impact on entrepreneurs and those in business for themselves.”
If you think about this, the sense that entrepreneurs are especially equipped to deal with the Pandemic, or any other crisis for that matter, follows the “rugged individualist” meme long associated with those who start their own businesses.
“When you work for yourself, you often have the flexibility you need to balance work and play-making,” says Jeffrey Zhou, Co-Founder & CEO of Fig Loans in New York City. “This means that you’re probably less likely to resign or retire altogether. Freelancers and entrepreneurs often have the ability to scale their work with their lifestyle demands, which makes it easier to feel like you’re working less, while achieving more.”
As a result, rather than shifting gears, entrepreneurs, more often than not, have found the chaos of the Pandemic has afforded them with the opportunity to put the pedal to the metal.
“Almost all of our business owner clients have seen an increase in business over the last two years,” says Chris Gure, an Investment Consultant in Charlotte, North Carolina. “With more and more people working from home or retiring, they seem to have more time to spend money.”
But it’s not all sunshine and happiness. Entrepreneurs, like other business owners, may find themselves having to deal with the impact of the Great Resignation on their employees. This manifests itself in any number of areas.
“It depends on the industry and the ability to share the jobs a labor shortage causes with the remaining work force,” says Guy Baker, founder of Wealth Teams Alliance in Irvine, California. “It may mean increasing the income of the remaining employees to make certain that jobs are completed.”
What’s the biggest impact?
“In a word, disruptions,” says Hanft. “You see it everywhere you go. Restaurants are short-staffed so service suffers and/or the employer is forced to reduce operations/hours, creating financial hardships. Short-staffed logistics companies are running behind on critical deliveries. And the list goes on. To counteract this, employers are being forced to offer unprecedented compensation and benefits packages to attract and retain talent, which is creating hiring wars.”
It’s the specifics of those benefits packages which can catapult a small business into the big leagues. But that’s the price you pay if you want to attract and/or keep top talent.
“When business owners are reacting to an exodus of employees, they’re often looking at what benefits they can implement to become more attractive to employees overall,” says Zhou. “This might mean adding a higher match to their 401(k) plan, or better health insurance. However, when you’re already losing money in retirement benefits, it may tighten the benefits budget overall, limiting how employers can reward their employees.”
Then there’s the problem associated with the expense of losing employees.
“It impacts it by potentially having higher administrative costs,” says Teigen. “You need to be tracking down people who have moved on and continue to send them paperwork until they decide to roll over their funds. Your administrative support team needs to keep on top of termination, rehires, keeping track of start/stop dates, etc.”
You might not personally be feeling the psychological effects of the Great Resignation, but that doesn’t leave your company unaffected.