Business Briefs: What Drives The Great Resignation; The Big City Exodus and Happiness, Stocks & COVID

Welcome to Business Briefs! The world of academic publications features fascinating findings from real-world experiments in business and the marketplace. Here are some key takeaways and applicable nuggets of knowledge that may be helpful for your business.

Why We Quit

It seems intuitively true that money is what inspires employees. Extending on that assumption, it stands to reason that, the right level of compensation can make any job desirable. That is, at $100/hour, plenty of undesirable jobs become a lot more attractive. 

Researchers at MIT launched a series of queries to figure out the biggest factors behind The Great Resignation. Surprise! It’s not money. 

In an analysis of 34 million online profiles, the researchers identified workers who left their employers between April and September 2021. Employees in the apparel industry left at an average rate of 19%. Airlines were a little more stable, with a 5% departure rate. 

But those averages might be misleading, as there was huge variance within the professional fields. Companies such as SpaceX, Tesla and Netflix all experienced higher departure rates than their competitors in the same industries. 

The researchers then added to the equation a text analysis of 1.4 million Glassdoor reviews. Collecting from the reviews reasons cited for leaving an employer, the top reasons employees leave an employer are as follows:

  1. Toxic culture
  2. Job insecurity/reorganization
  3. High level of innovation
  4. Failure to recognize employees
  5. Bad COVID response

While toxic culture might have been expected to rank highly, the impact of innovation may come as a surprise. The researchers explained that it was associated with high-stress environments that wore employees down. And as for money issues: Compensation was far below the top five reasons, coming in at #16. 

Read more here

Toxic Culture Is Driving the Great Resignation – Donald Sull, Charles Sull, and Ben Zweig, MIT Sloan Management Review

A Different Exodus

Beyond the exodus happening in The Great Resignation, there is also a perceived exodus from big expensive cities. Theoretically, remote work opportunities mean that people can work anywhere, and this mobility may be fueling relocation from large cities with a high cost of living. 

A team of researchers developed a way to track what’s going in terms of workforce mobility. 

Their first step was to figure out the business sectors that were more appropriate for remote work. The answer was SSS – that stands for skilled scalable services: 80% of those jobs can be done at home. And those sorts of businesses tend to congregate in large cities,

Then the team looked at population data and found that the more SSS workers a zip code had, the bigger its decline in population since January 2020.  

Part of the project involved figuring out how many people were working at home. For this, they used user location data from Facebook’s mobile app. They also used cellphone data from SafeGraph to assess changes in visits to local businesses such as coffee shops and barbers. And Zillow data was used somehow, too. 

What they found is that when the SSS people started moving away, the businesses that served them lost their customer base. Based on all the data, the researchers predict an ongoing disruption for the most dense American cities, as they also have the highest cost of living. The big cities will lose highly skilled works, as well as local services that depend on the support of those skilled workers. 

Read more here

The Geography of Remote Work – Lukas Althoff,  Fabian Eckert, Sharat Ganapati, and Conor Walsh, Regional Science and Urban Economics

Happy Employees, Happy Stocks

Glassdoor, a website that lets employees review their employers, is evidently a data bonanza for researchers. A team from New York used it to assess 220,760 employee ratings from 1,829 publicly held companies. In assessment, they distinguished between regular-time reviews, and reviews identified as COVID-relevant by Glassdoor.

Then they mapped employee review trends to stock market returns. 

The findings? Generally speaking, there’s not much of a relationship between employee satisfaction and returns. BUT, in COVID-19 contexts, higher employee ratings translate to higher stock returns. So in troubled times, happier employees make a difference. 

Read more here

Employee Satisfaction and Stock Returns During the COVID-19 Pandemic – Mary Becker, Alexander Cardazzi, and Zachary McGurk, Journal of Behavioral and Experimental Finance