US faces great resignation - What is the reason for this development?

by Barbara Hansen in — December 2021
The US labour market is experiencing a new trend called 'The Great Resignation'. Ken Schmitt, CEO & Founder of TurningPoint Executive Search, who has been in the executive search for nearly 25 years, addresses this new challenge.
Bio Pic Ken

How did it actually happen that you became a headhunter?

I actually answered an add in the newspaper, back in 1997. By then I decided to leave my job and I liked the idea of working in recruitment, so I responded to an ad for a Recruiter. Before I established my own company in 2007, I ended up working at four different recruiting firms, including a small local firm in San Diego and one of the global 'Big 4' firms, Heidrick & Struggles. In my early years of recruiting, I got to know the accounting and finance areas very well, and eventually I broadened my expertise to sales, marketing, operations and executive leadership.

Since 2007 you have owned your own business. How difficult it was to develop your own enterprise?

When I was working at Heidrick & Struggles, I had a mentor who advised me to make sure I developed a niche, rather than trying to 'be all things to all people'. This helped me to establish our firm as the experts in 4 key areas, and I share this same advice to everyone who wants to start their own business. It is so important to know who your target group is and not to just go after anyone. And most importantly, you must work hard to become the best within your niche. My team and I have managed to build our reputation in this manner, building and rebuilding our brand step by step over the last 15 years. We have worked with some amazing clients, and we are proud to be doing really well in our area.

Do you focus on some special industry?

By design, we do not have focus on any special industry. We prefer working across a variety of sectors to better support our clients that are searching for talent outside of their competitor base.

Technology is very big for us, as you might expect, specifically software, SaaS, AI and cyber security. Other key industries include manufacturing, healthcare, professional services, biotech and medical device

How many employees do you have?

Seven. While we have always worked for clients across the U.S., five of our employees are based in Southern California, one is in Northern California and we just hire our first east coast-based employee, back in Charlotte, North Carolina.

What do you offer to your clients?

We specialize in mid and executive level recruitment solutions - that is our niche. Of course we are happy to be resource when consulting with our clients about hiring trends, remuneration levels, creating compelling job descriptions and interviewing processes, however, we do not charge for this information.

We are also very proud of the unique, relevant content that we create on a regular basis including: compensation guides, infographics about hiring trends and leadership, Insights Reports, etc.

What are the trends in the U.S. market?

The 'Great Resignation', also known as the 'Big Quit', is a post-covid trend consisting of employees voluntarily leaving their jobs. This trend really accelerated beginning in the spring of 2021 and it continues today. These resignations are the result of many different trends that were worsened by COVID-19 including: many older employees deciding to retire early or sell their company, employees getting used working from home and not wanting to return to their office, many working women leaving the workforce, because they are having trouble finding daycare for their young kids, some employers refusing to provide necessary worker protection, companies refusing to offer higher wages and salaries, and a disconnect between the skills that companies are searching for, and the experience that many out of work employees can offer. Another trend, which we observe, is the big increase in compensation expectations among employees, specifically in the last 12 months.

What do you think is behind the big resignation?

The pandemic has allowed workers to rethink their careers, work conditions, and long-term goals. As many workplaces attempted to bring their employees back to an in-person office, workers are expressing their desire to have the flexibility to work from home. Additionally, many workers, particularly in younger cohorts, are seeking to gain a better work–life balance. According to an Adobe study, the exodus is being driven by Millennials and Generation Z, who are more likely to be dissatisfied with their work. More than half of Gen Z reported planning to seek a new job within the next year.

Who are your clients?

I have clients of different sizes, ranging from $ 10 million to $ 5 billion, but for us, it is not about the revenue size. What matters is the relationship with our clients. We do not want to have superficial vendor/supplier relationship, but instead, we look for a true partnership with our clients. We focus very heavily on maintaining open and honest communications throughout the process.

You are actively conducting a labour market survey, for which you run interviews with CEOs. What are the employers predicting for the next year?

There are two primary issues that I hear from most CEOs: the first one is the supply chain issue, which most leaders don't expect to ease until mid-2022. And the second issue is wage inflation. Wages are becoming a bigger part of their budgets, and companies are realizing that the cost of replacing an employee that is leaving, has increased by 10 % up to 30 %. However, overall, of the nearly 75 CEOs that I spoke with, the vast majority still expect to be profitable next year.