Organizations should prepare themselves for a continuation of quits as a new culture of quitting becomes the norm as the annual quit rate stands to jump up nearly 20 percent from annual pre pandemic levels, according to Gartner.
The pre pandemic average for quits stood at 31.9 million, but that figure could rise to 37.4 million this year, said executive consultancy Gartner in an April 28 news release.
“An individual organization with a turnover rate of 20 percent before the pandemic could face a turnover rate as high as 24 percent in 2022 and the years to come,” Piers Hudson, senior director in the Gartner HR practice said in the news release. “For example, a workforce of 25,000 employees would need to prepare for an additional 1,000 voluntary departures.”
The reason for the likely increase in quits is new flexibility in work arrangements and employees’ higher expectations, according to Gartner. A misalignment between leaders and workers is also contributing to the attrition.
“Organizations must look forward, not backward, and design a post-pandemic employee experience that meets employees’ changing expectations and leverages the advantages of hybrid work,” said Mr. Hudson.
Businesses who suffered from the Great Resignation, in which large numbers of workers voluntarily resigned during the pandemic looking for more fulfilling work or higher wages, are now hoping the “Great Regret” might bring workers back. According to recent surveys, over 70 percent of workers who switched employment during the pandemic found that their new jobs didn’t live up to their expectations, and nearly half wish they had their old job back.
After scores of nurses left hospital positions for travel roles, health system leaders are seeing some nurses return. One physician told us about a favorite nurse on his oncology unit who returned from over a year as a traveler, ready to settle down and be closer to family.
A chief nursing officer relayed that her system was seeing nurses who took agency positions to work toward personal financial goals, like earning a down payment for a house, wanting to come back now that they’ve reached it: “Travel roles are intense, and most nurses can’t do them forever”.
But other nursing leaders caution that they’re preparing for agency nurses to become a permanent fixture in the workforce: “More nurses will see travel as an option for different points in their career, when they have personal flexibility or need the extra money”.
The “Great Regret” might help some hospitals lessen their reliance on agency nursing in the short-term. But building a stable clinical workforce will require addressing underlying structural challenges, through changes in education, rethinking job roles and care models, and finding ways to build individualized job flexibility and customization.
While healthcare workers battle burnout, hospitals have been ramping up wages and other benefits to recruit and retain workers. It has created a culture of competition among health systems as well as travel agencies that offer considerably higher pay.
But other healthcare organizations are not hospitals’ only competitors. Some hospitals, particularly those in rural areas, are struggling to match rising employee pay among nonindustry employers such as Target and Walmart.
“We monitor and we’ve been looking and we ask around in the community and we can ask who’s paying what,” Troy Bruntz, CEO of Community Hospital in McCook, Neb., told Becker’s. “So we know where Walmart is on different things, and we’re OK. But if Walmart tried to match what Target’s doing, that would not be good.”
At Target, the hourly starting wage now ranges from $15-$24. The organization is making a $300 million investment total to boost wages and benefits, including health plans. Starting pay is dependent on the job, the market and local wage data, according to NPR.
Walmart raised the hourly wages for 565,000 workers in 2021 by at least $1 an hour, The New York Times reported. The company’s average hourly wage is $16.40, with the lowest being $12 and the highest being $17.
Meanwhile, Costco raised its minimum wage to $17 an hour, according to NPR. The federal minimum wage is $7.25.
Estimated employment for healthcare practitioners and technical occupations is 8.8 million, according to the latest data released March 31 by the U.S. Bureau of Labor Statistics. This includes nurse practitioners, physicians, registered nurses, physician assistants and respiratory therapists, among others.
In sales and related occupations, estimated employment is 13.3 million, according to the bureau. This includes retail salespersons, cashiers and first-line supervisors of retail salespersons, among others.
While retail companies up their wages, at least one hospital CEO is monitoring the issue. Healthcare leaders weigh their options
Mr. Bruntz said rising wages among retailers is an issue his organization monitors. Although Target does not have a store in McCook, there is a Walmart, where pay is increasing.
“I was quoted a few months ago saying Walmart was approaching $15 an hour, and we can handle that,” Mr. Bruntz said. “But when it gets to $20 or $25, it’s going to be an issue.”
He also said he cannot solely increase the wages of the people making less than $15 or less than $25 because he has to be fair in terms of wages for different types of roles.
Specifically, he said he is concerned about what matching rising wages at retailers would mean for labor expenses, which make up about half of the hospital’s cost structure.
“I double that half, that’s 25 percent more expenses instantly,” Mr. Bruntz said. “And how is that going to ratchet to a bottom line anything less than a massive negative number? So it’s a huge problem.”
Clinical positions are not the only ones hospitals and health systems are struggling to fill; they are encountering similar difficulties with technicians and food service workers. Regarding these roles, competition from industries outside healthcare is particularly challenging.
This is an issue Patrice Weiss, MD, executive vice president and chief medical officer of Roanoke, Va.-based Carilion Clinic, addressed during a Becker’spanel discussion April 4. The organization saw workforce issues not just in its clinical staff, but among environmental services staff.
“When you look at what … even fast food restaurants were offering to pay per hour, well gosh, those hours are a whole lot better,” she said during the panel discussion. “There’s no exposure. You’re not walking into a building where there’s an infectious disease or patients with pandemics are being admitted.”
Amid workforce challenges, Community Hospital is elevating its recruitment and retention efforts.
Mr. Bruntz touted the hospital as a hard place to leave because of the culture while acknowledging the monetary efforts his organization is making to keep staff.
He said the hospital has a retention program where full-time employees get a bonus amount if they are at the employer on Dec. 31 and have been there at least since April 15. Part-time workers are also eligible for a bonus, though a lesser amount.
“It also encourages staff [who work on an as-needed basis] to go part-time or full-time, and [those who are] part-time to go full-time,” Mr. Bruntz said. “That’s another thing we’re doing is higher amounts for higher status to encourage that trend.”
Additionally, Community Hospital, which has 330 employees, offers a referral bonus to staff to encourage people they know to come work with them.
“We want staff to bring people they like. [We are] encouraging staff to be their own ambassadors for filling positions,” Mr. Bruntz said.
He said the hospital also will offer employees a sizable market wage adjustment not because of competition from Walmart but because of inflation.
Graham County Hospital in Hill City, Kan., is also affected by the tight labor market, although it has not experienced much competition with retail companies, CEO Melissa Atkins told Becker’s. However, the hospital is struggling with competition from other healthcare organizations, particularly when it comes to patient care departments and nursing. While many hospitals have struggled to retain employees from travel agencies, Graham County Hospital has mostly been able to avoid it.
“As the demand increases, so does the wage,” Ms. Atkins said. “In addition to other hospitals offering sign-on bonuses and increased wages, nurse agency companies are offering higher wages for traveling nurse aides and nurses. We are extremely fortunate in that we have not had to use agency nurses. Our current staff has stepped up and filled in the shortages [with additional incentive pay].”
To combat this trend, the hospital has increased hourly wages and shift differentials, as many healthcare organizations have done. It has also provided bonuses using COVID-19 relief funds.
Overall, Mr. Bruntz said he prefers “not to get into an arms race with wages” among nonindustry competitors.
“It’s not going to end well for anybody. We prefer not to use that,” he said. “At the same time, we’re trying to do as much as possible without being in a full arms race. But if Walmart started paying $25 for a door greeter and cashier, we would have to reassess.”
UPDATE: April 14, 2022: Nurses will begin striking April 25 if they are unable to reach a deal with the system by then, according to a Wednesday statement from the union. The two sides have met with a federal mediator three times, and the strike would be open-ended.
Dive Brief:
Unionized nurses at Stanford hospitals in California voted in favor of authorizing a strike Thursday, meaning more than 4,500 nurses could walk off the job in a bid for better staffing, wages and mental health measures in new contracts.
Some 93% of nurses represented by the Committee for Recognition of Nursing Achievement voted in favor of the work stoppage, though the union did not set a date, according to a union release. It must give the hospitals 10 days notice before going on strike.
Nurses’ contracts expired March 31 and the union and hospital have engaged in more than 30 bargaining sessions over the past three months, including with a federal mediator, according to the union.
Dive Insight:
As the COVID-19 pandemic has worsened working conditions for nurses, some unions have made negotiating contracts a priority. Better staffing is key, along with higher wages and other benefits to help attract and retain employees amid ongoing shortages.
The California nurses’ demands in new contracts focus heavily on recruitment and retention of nursing staff “amid an industry-wide shortage and nurses being exhausted after working through the pandemic, many in short-staffed units,” the union said in the release.
They’re also asking for improved access to time off and more mental health support.
Nurses say their working conditions are becoming untenable and relying on travel staff and overtime shifts is not sustainable, according to the release.
The hospitals are taking precautionary steps to prepare for a potential strike and will resume negotiations with the union and a federal mediator Tuesday, according to a statement from Stanford.
But according to CRONA, nurses have filed significantly more assignment despite objections documents from 2020 to 2021 — forms that notify hospital supervisors of assignments nurses take despite personal objections around lacking resources, training or staff.
And a survey of CRONA nurses conducted in November 2021 founds that as many as 45% were considering quitting their jobs, according to the union.
That’s in line with other national surveys, including one from staffing firm Incredible Health released in March that found more than a third of nurses said they plan to leave their current jobs by the end of this year.
The CRONA nurses “readiness to strike demonstrates the urgency of the great professional and personal crisis they are facing and the solutions they are demanding from hospital executives,” the union said in the release.
No major strikes among healthcare workers have occurred so far this year, though several happened in 2021 and in 2020, the first year of the pandemic.
Even as COVID admissions continue to wane, hospitals report that workforce shortages persist. The impact on hospital finances is stark: as shown in the graphic above, there has beenan eight percent increase in clinical labor costs per patient day since the start of the pandemic, amounting to an additional $17M annually for an average 500-bed hospital.
Two of the primary factors driving this increase—higher turnover among clinical staff and a continued reliance on travel nurses—are mutually reinforcing.
Quarterly turnover rates for some nursing positions doubled from Q4 2019 to Q2 2021, as hospitals turned to expensive agency labor to fill resulting vacancies. Spiking demand for travel nurses, still running nearly three times higher than the pre-pandemic baseline, fueled more turnover, as more nurses left for these lucrative roles.
It’s unclear how long increased labor costs will persist.
Some HR tactics, like signing and retention bonuses, are one-time expenditures. But total hospital employment is still down two percent from pre-pandemic levels, pointing to a diminished healthcare labor supply.
Permanent wage increases may end up being unavoidable, especially for lower-wage jobs, where a new compensation baseline for talent is being set by the market, both inside and outside the healthcare industry.
Those who left their jobs during the Great Resignation did so out of more than just frustration, but instead used it as an opportunity to follow their dreams and aspirations, writes Whitney Johnson, CEO of Disruption Advisors, a talent development company, in the Harvard Business ReviewApril 6.
The pandemic forced many people to reevaluate many facets of their lives, from where to live to how to spend more time with family. Ms. Johnson argues that workers’ thoughts on changing the way they work is a good thing, giving workers agency to discover new aspirations and proactively seek them.
“The Great Resignation appellation is, I believe, mistaken. Most workers are not simply quitting. They are following a dream refined in pandemic adversity. They are aspiring to grow in the ways most important to them,” she writes.
Even for those who have been forced out of the workforce, like working mothers and caregivers, Ms. Johnson argues that it will lead to a boom of innovative new businesses, created by those resourceful workers who find another way to work outside the realms of traditional industry.
She also states that this “great aspiration” is beneficial for employers too, who can make the most of a fresh pool of talent, full of newly motivated employees who are dedicated and searching for meaning.
Despite the gains, employment in healthcare is down by about 378,000 jobs (2.3%) from where it was in February 2020.
After a rough end to 2021 in terms of job losses,healthcare appears to be on the rebound – for now. The latest jobs report from the U.S. Bureau of Labor Statistics showed hospitals gaining jobs in January, though the industry is still below the levels seen before the COVID-19 pandemic.
In total, the healthcare sector saw a gain of 18,000 jobs last month. It lost 3,100 jobs in December; the prior month, November 2021, was the last time the sector saw job gains, when it posted a net gain of 2,100.
Hospitals made up for some, but not all, of the job losses seen during the tail end of 2021. They gained 3,400 jobs in January, after losing 5,100 jobs in December and 3,900 in November.
The last time hospitals gained jobs was in October, when 1,100 were added. Hospitals lost 8,100 jobs in September.
The biggest increase was in ambulatory healthcare services, which gained 14,700 jobs during the month. Physicians’ offices added 9,700 jobs. Nursing and residential-care facilities lost about 100 jobs in January.
Despite the gains, employment in healthcare is down by about 378,000 jobs (2.3%) from where it was in February 2020, at the dawn of the pandemic, according to BLS.
The broader U.S. economy added 467,000 jobs in January, after gaining 199,000 jobs in December, while the unemployment rate held fairly steady at about 4%.
WHAT’S THE IMPACT?
In a preview of the jobs report by economic research firm Glassdoor, researchers predicted that job losses in healthcare and leisure and hospitality would drag down overall payroll employment. Other coronavirus-sensitive sectors, such as retail and education, were also impacted, though seasonal factors helped mute job losses in those sectors.
Over the course of the pandemic, new COVID-19 cases have been somewhat predictive of job market data, but current record levels represent a situation without precedent, and there are few good comparisons, Glassdoor found. Since September 2020, each new 1,000 daily cases has been correlated with 4,000 fewer job gains, but the level of cases seen in January is unlike any other previous point in the pandemic, leading to uncertainty heading into the BLS jobs report.
The Bureau of Labor Statistics’ preliminary benchmark estimates forecast a modest downward revision in payroll employment of 166,000 for March 2021.
THE LARGER TREND
The Great Resignation hit the healthcare sector hard in November. BLS released job numbers in January showing that healthcare is among the top three industries cited in a 3% rise in the monthly “quits rate,” matching a high from September. The number of quits surged to 4.53 million for the month.
The numbers coincide with an already-strapped healthcare staffing market. Shortages and burnout among healthcare staff are a pervasive issue.
Multiple factors are contributing to labor pressures, including staff burnout stemming from the enduring pandemic and an overall shortage of qualified help, which has resulted in higher costs to hire temporary staff, as well as wage inflation.
Further, a Fitch Ratings report in November noted that lack of staff is forcing some in-patient behavioral health and senior housing operators to lower admission rates.
Companies that fail to adjust to labor shortages and satisfy the growing demands of workers will likely falter as they lose the battle for talent, BlackRock CEO Larry Fink said in a letter to CEOs.
“No relationship has been changed more by the pandemic than the one between employers and employees,” Fink said, noting that “employees across the globe are looking for more from their employer — including more flexibility and more meaningful work.” Fink, while leading the world’s largest asset manager, has sought for a decade to influence corporate behavior through an annual CEO letter.
“As companies rebuild themselves coming out of the pandemic, CEOs face a profoundly different paradigm than we used to,” Fink said. Companies can no longer overlook employee mental health, insist that staff work in the office five days per week and provide modest wage increases for low- and middle-income workers.
Dive Insight:
CFOs considering an increase in prices and employee wages need to balance the imperative to sustain profits with pressures from the worst inflation and labor shortages in decades.
The persistence of COVID-19 has slowed the labor market’s post-lockdown recovery and churned up company payrolls. Fink noted that in November the quits rate, or the number of workers who left their jobs as a percent of total employment, rose to 3%, a record high first breached in September.
CFOs aiming to attract and retain employees with wage increases must take into account a 7% jump in the consumer price index (CPI) during the 12 months through December — the biggest surge since 1982.
“Workers demanding more from their employers is an essential feature of effective capitalism,” Fink said. Describing “a new world of work,” he said, “companies not adjusting to this new reality and responding to workers do so at their own peril.
“Turnover drives up expenses, drives down productivity and erodes culture and corporate memory,” Fink said. BlackRock manages more than $10 trillion in assets for institutional and retail investors.
In order to satisfy workers, CEOs must look beyond pay and workplace flexibility, Fink said. The coronavirus “shone a light on issues like racial equality, childcare and mental health — and revealed the gap between generational expectations at work.”
Fink also reiterated his support for “stakeholder capitalism,” saying that “a company must create value for and be valued by its full range of stakeholders in order to deliver long-term value for its shareholders.”
“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke,’” he said. “It is capitalism driven by mutually beneficial relationships between you and the employees, customers, suppliers and communities your company relies on to prosper.”
Most stakeholders expect companies to help “decarbonize” the global economy, Fink said, predicting that so-called sustainable investment will surge well beyond the $4 trillion total.
BlackRock has asked companies to set short-, medium- and long-term targets for greenhouse gas reductions which “are critical to the long-term economic interests of your shareholders,” he said.
At the same time, “divesting from entire sectors — or simply passing carbon-intensive assets from public markets to private markets — will not get the world to net zero,” Fink said, adding that “BlackRock does not pursue divestment from oil and gas companies as a policy.”
Fink’s annual letter drew fire from environmentalists.
The letter “is just another rehashing of the same vague rhetoric, without any meaningful new commitment to actually help lead the necessary transition to a climate-safe future,” Ben Cushing, the Sierra Club’s fossil-free finance campaign manager, said in a statement.
HENRY KOTULA 