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The “Great Resignation” in tech: looking back and moving forward

The “Great Resignation” in tech: looking back and moving forward

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Insights from our new series on the Future of Work

Since the onset of the COVID-19 pandemic nearly two years ago, the workforce has seen rapid change across multiple dimensions. From mass layoffs and pay cuts to the transition to remote work, companies have been grappling with difficult decisions amid ever-changing circumstances.

Now, as we adapt to living with the implications of the pandemic, perhaps for the long-term, companies are establishing new policies and reimagining how they define work. At the same time, employees are leaving their jobs at record rates,¹ leading to the so-called “Great Resignation”.

Below we share select findings from our new study titled The Future of Work, which explores whether this mass re-organization of the workforce is impacting tech companies to the same degree, if certain groups of employees are driving the trend, what motivates tech employees to leave their jobs, and the likelihood that these trends will continue through 2022 and beyond.

We’ll also be sharing these findings — and discussing strategies for hiring and retention — in a January 25 webinar with Gem CPO Heather Dunn and BambooHR HR Director Cassie Whitlock. Please RSVP here: Hiring in 2022: Attracting and Retaining the Future Workforce.

How is the “Great Resignation” impacting tech companies?

In the second half of 2021, voluntary employee attrition was up 50% at technology companies year over year.²

Many sources reporting on the “Great Resignation” reference data from the US Bureau of Labor Statistics (BLS). This data looks at how “Quits Rate” — the number of people that reported quitting as a percent of total employed during that period — has changed over time across different industries.

According to BLS data, Quits Rate increased 30% year over year from November 2020 to November 2021 across all industries. The largest increase occurred in the Education & Health Services (+47%) and Leisure & Hospitality (+39%) sectors, an unsurprising outcome given these industries were most directly impacted by the pandemic.¹

Somewhat surprisingly, however, the next largest increase in Quits Rate occurred in the Information sector (33%), the category that includes most software and internet companies.

Though the BLS’s Information sector includes tech companies, it also contains a mix of traditional media, broadcasting, and telecommunications companies.³ To understand whether the Great Resignation was impacting tech companies in particular, we surveyed chief human resource officers (CHROs) and heads of people at technology companies.

In the second half of 2021, HR leadership at tech companies reported voluntary employee attrition was up nearly 50% year over year, from an annualized ~13% in 2H 2020 to ~20% in 2H 2021.² This suggests the “Great Resignation” did impact technology companies, and perhaps to a larger degree than other business sectors.

Which tech employees are leaving their jobs?

General & Administrative employees had the sharpest increase in attrition, possibly driven by remote work challenges and slow relative wage growth.²

In the second half of 2021, General & Administrative (G&A) employees had the highest attrition rates, and the largest increase in year over year attrition, compared to other role categories at the tech companies surveyed. While G&A employees had the highest voluntary attrition rates (20% annualized), Research & Development (R&D) employees had the lowest (13%).²

What could account for the differences in attrition across these roles? One hypothesis is that G&A employees, especially HR and recruiting professionals, were disproportionately challenged by market dynamics in the last couple of years, such as the mass transition to remote work. Another hypothesis is related to slower relative wage growth: while salary growth recovered to pre-COVID levels for R&D roles and sales and marketing (S&M) roles in 2021, it did not recover for G&A roles.²

Of the major tech hubs, Bay Area employees had the highest resignation rates.

To understand more about which employees were quitting and why, we surveyed employees from more than 70 tech companies. When looking at reported resignations by employee location over the last two years, resignation rates were highest for employees located in the Bay Area (56%) versus non-Bay Area employees (45%).⁴

Though this trend may have been exaggerated recently by the “Great Resignation” wave, it’s likely this finding is more geographically ubiquitous. Research from PRO Unlimited has shown employees located in the Bay Area are 50% more likely to engage with unsolicited recruiter outreach than the national average — more than any other geographical cohort. The next highest cohort was employees located in New York City, who were 25% more likely to engage than national average.⁵

Director-and-higher level employees reported higher resignation rates than mid-level employees, possibly due to the challenges of remote hiring and management.

Of the tech employees surveyed, those with director-and-higher seniority (e.g., director, vice president, C-suite) reported higher resignation rates than mid-level employees (e.g., senior associate, manager).⁴ Visier research on resignation rates showed similar trends in 2020: the highest year-over-year increase in resignation rates was seen among employees aged 30+ (in tech, those most likely to have a director or higher level title).⁶

One hypothesis for higher resignation rates in senior versus mid-level employees is based on management status: resignation rates may have increased for managers due to challenges with hiring, onboarding, managing, and retaining a remote workforce.

Why do tech employees leave — and why do they stay?

Tech employees resign seeking job satisfaction, career advancement, and compensation.

The most common reasons cited for employee resignations in the last two years were job satisfaction (relevant to 83% of resignations), career advancement and professional development (78%), and compensation (75%), closely followed by stress and burnout (73%).⁴

Though it wasn’t reported often as a primary resignation reason, belief in company mission was cited by 62% of respondents as at least somewhat relevant to their resignation. Additionally, only 24% of respondents cited team and company culture as at least somewhat relevant to their resignation.⁴

Tech employees report career advancement, professional development, and culture as primary reasons to stay at a company.

The most common reasons cited for staying at a company were career advancement and professional development (97%), salary (92%), and team and company culture (90%), closely followed by company mission (89%) and equity (88%).

Career advancement and professional development was the most common primary reason for staying (52%), followed by team and company culture (32%).⁴

Interestingly, tech employees report team and company culture as a “nice to have” — a reason to stay but not a reason to leave. While 90% of employees cite team culture as a reason to stay at a company, only 24% reported it as a reason to leave.⁴ This discrepancy has likely been exaggerated by the rise of remote work as employees start to prioritize career advancement, compensation, and flexibility over workplace culture. However, the trend will likely continue given the prevalence of long-term remote and hybrid work.

Will the “Great Resignation” continue through 2022 and beyond?

Attrition may increase on average in the next few months, especially at mature, slow-growth companies.

As of October 2021, 76% of the tech HR leaders we surveyed said they expected voluntary attrition to increase either slightly (56% of respondents) or significantly (17% of respondents) in the next 6 months or so.²

Employees most likely to leave their jobs in the next 6 months are those at larger, slow growth tech companies, where a meaningful 58% of employees report intent to resign, with 29% report their resignation as a certainty. Comparatively, only 12% of employees at high-growth companies reported intent to resign, with 6% reporting their resignation as a certainty.⁴

It’s likely these trends are related to the current start-up market, in which record levels of private funding⁷ are reducing the risk associated with early-stage companies and increasing the rate of entrepreneurship⁸, while high growth environments are increasing opportunities for career advancement and potential monetary upside.

While voluntary attrition may stabilize in 2022, it’s likely to remain high as job-switching becomes the norm.

Voluntary attrition has been on the rise for years. On average, BLS data shows annual Quits Rate increased every year from 2016 (the first year data was collected) to 2019.⁹ While Quits Rate dropped in 2020 for the first time in four years, this was likely due largely to the pandemic, during which layoffs increased, and uncertainty kept some from quitting. Tech company HR leaders report a similar upward trend in historical voluntary attrition, though data was only collected starting the first half of 2019.

Given these upward historical trends — both those seen across most industries and those specific to technology companies — as well as the outlook reported by HR leaders, we believe high rates of voluntary attrition are likely to endure through 2022 and beyond.

As job-switching becomes the norm, leading technology companies are implementing new strategies, policies, and incentives to stay competitive. From tactical improvements to the recruiting process such as manager-driven outreach and faster recruiting cycles to expanding incentive programs, many companies are innovating to keep up with the demands of the new workforce.

Check out our full Future of Work series introduction for additional information on these trends and how companies are adapting. And stay tuned for future chapters addressing topics such as employee engagement, performance management, and the future of employer benefits.

Disclaimer:

Disclaimer:

Unless otherwise indicated, the views expressed in this presentation are those of ICONIQ Growth (“ICONIQ" or the “Firm"), are the result of proprietary research, may be subjective, and may not be relied upon in making an investment decision. Information used in this presentation was obtained from numerous sources. Certain of these companies are portfolio companies of ICONIQ Growth. ICONIQ Growth does not make any representations or warranties as to the accuracy of the information obtained from these sources. 

This presentation is for general information purposes only and does not constitute investment advice. This presentation must not be relied upon in connection with any investment decision. The information in this presentation is not intended to and does not constitute financial, accounting, tax, legal, investment, consulting or other professional advice or services.  Nothing in this presentation is or should be construed as an offer, invitation or solicitation to engage in any investment activity or transaction, including an offer to sell or a solicitation of an offer to buy any securities which should only be made pursuant to definitive offering documents and subscription agreements, including without limitation, any investment fund or investment product referenced herein. 

Any reproduction or distribution of this presentation in whole or in part, or the disclosure of any of its contents, without the prior consent of ICONIQ, is strictly unauthorized.

This presentation may contain forward-looking statements based on current plans, estimates and projections. The recipient of this presentation ("you") are cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. The numbers, figures and case studies included in this presentation have been included for purposes of illustration only, and no assurance can be given that the actual results of ICONIQ or any of its partners and affiliates will correspond with the results contemplated in the presentation. No information is contained herein with respect to conflicts of interest, which may be significant. The portfolio companies and other parties mentioned herein may reflect a selective list of the prior investments made by ICONIQ.

Certain of the economic and market information contained herein may have been obtained from published sources and/or prepared by other parties. While such sources are believed to be reliable, none of ICONIQ or any of its affiliates and partners, employees and representatives assume any responsibility for the accuracy of such information.

All of the information in the presentation is presented as of the date made available to you (except as otherwise specified), and is subject to change without notice, and may not be current or may have changed (possibly materially) between the date made available to you and the date actually received or reviewed by you. ICONIQ assumes no obligation to update or otherwise revise any information, projections, forecasts or estimates contained in the presentation, including any revisions to reflect changes in economic or market conditions or other circumstances arising after the date the items were made available to you or to reflect the occurrence of unanticipated events. Numbers or amounts herein may increase or decrease as a result of currency fluctuations.

Disclaimer:

The views expressed in this presentation are those of ICONIQ Growth ("ICONIQ" or the "firm"), are the result of proprietary research, may be subjective, and may not be relied upon in making an investment decision.  This presentation is for general information purposes only and does not constitute investment advice. This presentation must not be relied upon in connection with any investment decision. The information in this presentation is not intended to and does not constitute financial, accounting, tax, legal, investment, consulting or other professional advice or services. Nothing in this presentation is or should be construed as an offer, invitation or solicitation to engage in any investment activity or transaction, including an offer to sell or a solicitation of an offer to buy any securities which should only be made pursuant to definitive offering documents and subscription agreements, including without limitation, any investment fund or investment product referenced herein.  Any reproduction or distribution of this presentation in whole or in part, or the disclosure of any of its contents, without the prior consent of ICONIQ, is strictly unauthorized. This presentation may contain forward-looking statements based on current plans, estimates and projections. The recipient of this presentation ("you") are cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. The numbers, figures and case studies included in this presentation have been included for purposes of illustration only, and no assurance can be given that the actual results of ICONIQ or any of its partners and affiliates will correspond with the results contemplated in the presentation. No information is contained herein with respect to conflicts of interest, which may be significant. The portfolio companies and other parties mentioned herein may reflect a selective list of the prior investments made by ICONIQ. Certain of the economic and market information contained herein may have been obtained from published sources and/or prepared by other parties. While such sources are believed to be reliable, none of ICONIQ or any of its affiliates and partners, employees and representatives assume any responsibility for the accuracy of such information. All of the information in the presentation is presented as of the date made available to you (except as otherwise specified), and is subject to change without notice, and may not be current or may have changed (possibly materially) between the date made available to you and the date actually received or reviewed by you. ICONIQ assumes no obligation to update or otherwise revise any information, projections, forecasts or estimates contained in the presentation, including any revisions to reflect changes in economic or market conditions or other circumstances arising after the date the items were made available to you or to reflect the occurrence of unanticipated events. For avoidance of doubt, ICONIQ is not acting as an adviser or fiduciary in any respect in connection with providing this presentation and no relationship shall arise between you and ICONIQ as a result of this presentation being made available to you. ICONIQ is a diversified financial services firm and has direct client relationships with persons that may become limited partners of ICONIQ funds. Notwithstanding that a person may be referred to herein as a "client" of the firm, no limited partner of any fund will, in its capacity as such, be a client of ICONIQ. There can be no assurance that the investments made by any ICONIQ fund will be profitable or will equal the performance of prior investments made by persons described in this presentation. Any information in this presentation is directed at, and intended for, only persons who are experienced institutional or professional investors (“professional investors”) as defined by applicable law and regulation. Any person that is not a professional investor is not an intended recipient of this presentation and the matters discussed herein.

For avoidance of doubt, ICONIQ is not acting as an adviser or fiduciary in any respect in connection with providing this presentation and no relationship shall arise between you and ICONIQ as a result of this presentation being made available to you.

ICONIQ is a diversified financial services firm and has direct client relationships with persons that may become limited partners of ICONIQ funds. Notwithstanding that a person may be referred to herein as a "client" of the firm, no limited partner of any fund will, in its capacity as such, be a client of ICONIQ. There can be no assurance that the investments made by any ICONIQ fund will be profitable or will equal the performance of prior investments made by persons described in this presentation.

Any information in this presentation is directed at, and intended for, only persons who are experienced institutional or professional investors (“professional investors”) as defined by applicable law and regulation. Any person that is not a professional investor is not an intended recipient of this presentation and the matters discussed herein.

Copyright © 2024 ICONIQ Capital, LLC. All rights reserved.

Disclaimer

The views expressed in this presentation are those of ICONIQ Growth ("ICONIQ" or the "firm"), are the result of proprietary research, may be subjective, and may not be relied upon in making an investment decision.  This presentation is for general information purposes only and does not constitute investment advice. This presentation must not be relied upon in connection with any investment decision. The information in this presentation is not intended to and does not constitute financial, accounting, tax, legal, investment, consulting or other professional advice or services. Nothing in this presentation is or should be construed as an offer, invitation or solicitation to engage in any investment activity or transaction, including an offer to sell or a solicitation of an offer to buy any securities which should only be made pursuant to definitive offering documents and subscription agreements, including without limitation, any investment fund or investment product referenced herein.  Any reproduction or distribution of this presentation in whole or in part, or the disclosure of any of its contents, without the prior consent of ICONIQ, is strictly unauthorized. This presentation may contain forward-looking statements based on current plans, estimates and projections. The recipient of this presentation ("you") are cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. The numbers, figures and case studies included in this presentation have been included for purposes of illustration only, and no assurance can be given that the actual results of ICONIQ or any of its partners and affiliates will correspond with the results contemplated in the presentation. No information is contained herein with respect to conflicts of interest, which may be significant. The portfolio companies and other parties mentioned herein may reflect a selective list of the prior investments made by ICONIQ. Certain of the economic and market information contained herein may have been obtained from published sources and/or prepared by other parties. While such sources are believed to be reliable, none of ICONIQ or any of its affiliates and partners, employees and representatives assume any responsibility for the accuracy of such information. All of the information in the presentation is presented as of the date made available to you (except as otherwise specified), and is subject to change without notice, and may not be current or may have changed (possibly materially) between the date made available to you and the date actually received or reviewed by you. ICONIQ assumes no obligation to update or otherwise revise any information, projections, forecasts or estimates contained in the presentation, including any revisions to reflect changes in economic or market conditions or other circumstances arising after the date the items were made available to you or to reflect the occurrence of unanticipated events. For avoidance of doubt, ICONIQ is not acting as an adviser or fiduciary in any respect in connection with providing this presentation and no relationship shall arise between you and ICONIQ as a result of this presentation being made available to you. ICONIQ is a diversified financial services firm and has direct client relationships with persons that may become limited partners of ICONIQ funds. Notwithstanding that a person may be referred to herein as a "client" of the firm, no limited partner of any fund will, in its capacity as such, be a client of ICONIQ. There can be no assurance that the investments made by any ICONIQ fund will be profitable or will equal the performance of prior investments made by persons described in this presentation. Any information in this presentation is directed at, and intended for, only persons who are experienced institutional or professional investors (“professional investors”) as defined by applicable law and regulation. Any person that is not a professional investor is not an intended recipient of this presentation and the matters discussed herein.

For avoidance of doubt, ICONIQ is not acting as an adviser or fiduciary in any respect in connection with providing this presentation and no relationship shall arise between you and ICONIQ as a result of this presentation being made available to you.

ICONIQ is a diversified financial services firm and has direct client relationships with persons that may become limited partners of ICONIQ funds. Notwithstanding that a person may be referred to herein as a "client" of the firm, no limited partner of any fund will, in its capacity as such, be a client of ICONIQ. There can be no assurance that the investments made by any ICONIQ fund will be profitable or will equal the performance of prior investments made by persons described in this presentation.

Any information in this presentation is directed at, and intended for, only persons who are experienced institutional or professional investors (“professional investors”) as defined by applicable law and regulation. Any person that is not a professional investor is not an intended recipient of this presentation and the matters discussed herein.

Copyright © 2024 ICONIQ Capital, LLC. All rights reserved.

The ICONIQ Growth website does not present information relating to ICONIQ Capital, its investment funds, or its advisory business and should not be consulted for any advisory purposes. The ICONIQ Growth content is intended for the use of company founders and executives.