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NZ companies need to change the way they value their employees.

In the next few years, New Zealand companies and other organisations will have to make a "huge mindset change" to avoid becoming hamstrung by employee turnover in what is being called The Great Resignation.

That's the firm view of Dr Rachel Wright, Director of Executive and Professional Development at the University of Auckland Business School*, as signs abound that the global phenomenon of large-scale staff resignations has also hit New Zealand.

Research released last month by human resources platform MyHR shows that, in the year ended March 31, staff turnover increased to 58.2 per cent nationally, up 10 per cent from 2020 to 2021. It surveyed more than 1250 companies and 27,000 employees in New Zealand.

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The Great Resignation is a global phenomenon seeing record numbers of people leave their jobs in the wake of the Covid-19 pandemic – a trend many ascribe to changed views of workers after lockdowns prompted feelings of job dissatisfaction and/or preferences for companies with more enlightened work/life balance cultures and ideals.

"It's not going away," says Wright," or at least not for quite some time. It's a global movement and organisations, companies and employers will have to accept that young people, in particular, are going to be mobile. No one will stay in a job or an organisation for 40 years any more."

While the Great Resignation is an acknowledged fact, there are different views on what employers should do about it. Some advocate paying higher salaries; more work/life balance, more hybrid working and even four-day weeks and additional annual and mental health leave.

But Wright says the biggest change needed in New Zealand is a mindset shift: "In the past, employees have been regarded as headcount that can be applied to add value to the organisation.

"That's all gone now. The value equation has been flipped. Organisations need to change – and some are changing – to think about the perspective of the individual and how the company can enrich the career of individuals, so they can help the company be more productive.

"They can't think of them as machines but as human beings and they need to find ways to look at people based on their potential – and not what role they can fill.

"It means they have to change their whole view on hiring, for example. They shouldn't just select someone for a role based on having the right skills and then see how they do. They should be looking to hire someone based on their potential – that way an organisation is likely to end up with people who can gain capabilities and move to different roles in their organisation, gaining value and a loyal employee, all the time signalling that the person is valued."

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Pay alone doesn't cut it, says Wright, but principles, a caring culture and firms that show they value a person's career will be the future of creating productive and loyal employees: "It's not about just fitting people into roles any more – roles they will just leave. It's about changing the whole employee value proposition and job package."

That kind of "huge mindset change" won't stop people leaving, she says, but will make many stay longer if their career is being enriched. When it is time for them to go, the ideal is to have them look back fondly on their time with an organisation that aided their career – so reputation is enhanced and, more to the point, the employee will be more inclined to return to that company one day with more experience, as a senior stakeholder or even a business partner.

Flexible working and hybrid working will be effective, she says, four-day weeks would not unless the whole organization embraced that change: "You know what it's like when you work part-time; you end up working full-time because there are things which have to be done.

"When we are talking about flexibility, it's still important for teams to come together on a regular basis or you lose that team cohesion; people go into siloes. There's a balance to be found."

Wright also feels strongly that, while change is badly needed in the leadership of many New Zealand companies and organisations, it will not come easily: "There are few companies set up for this change. Here in New Zealand, we still have a 'she'll be right' culture.

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"The traditional world of work is rapidly disappearing; the next few years are going to require some massive leadership and mindset changes if firms want to attract and retain talent. Our business world is still dominated by older, white males and all the lack of mindset change that suggests.

"So we can't just do the New Zealand thing and muddle through. In the end, we all have to make this change – it will be good for New Zealand as a whole.

"We are a small country and we are all in this together. Immigration looks like it will be a bit of a mess for some time yet – so let's get this right for New Zealand and New Zealanders."

*The Transitioning to C-Suite Programme prepares senior managers for strategic leadership by equipping them with both the academic expertise and business practicality that these challenging roles require. With four strategic specialisations in Information Technology Leadership, Financial Operations Leadership, GM and People Leadership and Supply Chain Leadership, C-Suite offers the ability to choose your area of focus and gain the confidence you need to perform at senior level. For more information: exec.auckland.ac.nz