Companies' failure to innovate leads to 'great quit' in SA
Failure by South Africa-based non-executive directors to successfully harness digital technologies to make pertinent company decisions is one of the key factors contributing to SA’s “great resignation”.
This is one of the findings of the PwC Non-Executive Directors report for 2022.
The report, based on interviews with over 2 000 non-executive directors, is an annual analysis of key trends on the boardroom agenda. These include executive remuneration; the demographics of non-executive directors; environmental, social and governance; as well as regulatory challenges facing Johannesburg Stock Exchange (JSE)-listed companies’ non-executive directors.
The report highlights how nearly two years into the COVID-19 pandemic, the initial shock to systems and the economy has ebbed, while for the most part, there are pockets of economic improvement.
There has also been a wave of mass resignations, widely termed as “the great resignation”. This is a global phenomenon in which employees voluntarily resign from their jobs en masse, beginning in early 2021, primarily in the US.
Also known as the “big quit”, the pandemic-induced phenomenon has been attributed to many causes, including the shift to remote work, rampant stress among the workforce, salary discontentment, job insecurity and company re-organisation.
The findings of the PwC Non-Executive Directors report released yesterday at the virtual media event show many skilled employees in SA have left corporate structures to seek greater fulfilment in their work lives as free agents.
While company shareholders appear to lack empathy for the ‘war for talent’ unfolding among corporates, current trends reflect increased retention awards and sign-on bonuses, meaning companies are struggling to retain key talent, says the report.
Among the reasons for low levels of retention is that while the surveyed non-executive directors identified technology as one of the top five areas of pressing concern, implementation of digital technologies − such as sentiment analysis tools to improve employee engagement and extract and analyse actionable insights − are not used within the majority of JSE-listed firms.
Leila Ebrahimi, PwC reward practice co-lead and partner in PwC’s people and organisation division, pointed out these technologies provide underlying information on how employees feel about their workplace – data that could help boards build a strong company culture and retain employees.
“In this report, we didn’t necessarily see strong evidence of technology influencing how the board conducts business, and this is something we have been expecting to see for a while. The board can harness technology to make effective decisions concerning employees – for instance, having a dashboard where information is stored and easily accessible and available to them.
“We believe this is strongly necessary because the power of data visualisation can have an impact on managing the great resignation and better understanding employees, in order to understand the talent and the issues they are facing. We are not seeing it come through among our South African boards yet.”
According to PwC, in the US, resignation figures have been reported at anywhere between four million and 11.5 million employees, and by August 2021, there had been widespread pandemic-related resignations reported across the UK – 4.7% of the workforce.
In Europe, Forbes magazine reports that up to 40% of the global workforce is considering changing jobs post-pandemic.
The Harvard Business Review reports that the greatest increase in resignations has been observed in the 30 to 45 age group, with an average increase of more than 20% between 2020 and 2021.
According to research by reward-management platform Remchannel, South Africans have been working harder than ever during the pandemic, a trend that has led to the great resignation unfolding locally.
While there are no official statistics available to show the number of resignations in SA, the country has observed massive resignations in recent months, notes PwC. These signal the early stages of the great resignation and the trend is expected to intensify this year, according to the report.
“In 2022, we find ourselves in the midst of what seems to have been aptly named ‘the great resignation’. Retention of the talent that businesses need to move forward is suddenly a major risk factor.
“The pandemic, and the corresponding ‘forced’ changes to remote and hybrid working models, accelerated individuals reflecting more on the ‘why’ of their jobs. This question has also potentially been exacerbated by many employers’ insistence that employees return to the office full-time.”
Andreas Horak, PwC reward practice co-lead and director in PwC's people and organisation division, said boards can feel hesitant about making decisions they believe will increase organisational agility and sustainability.
“About 56% of the respondents indicated that digitisation and disruption thereof is critical to the board agenda; however, only 4% of respondents said they effectively use digital dashboards to help them make decisions to drive efficiencies. So there is an awareness, but there isn’t necessarily a system or an implementation that has occurred,” explained Horak.
Given the dynamics of SA’s political, social and economic evolution, it is perhaps not surprising that many boards are still finding their way 28 years after the country’s first democratic election, says PwC.
“Boards are often preoccupied with ‘big picture’ concerns such as balancing composition issues like diversity and transformation with other imperatives such as experience, age and tenure.
“With these high-visibility considerations taking precedence, have we overlooked the importance of the climate in which boardroom interactions take place, or the tendency of humans to think and act in certain ways?”