The pandemic had an unexpected global side effect; The Great Resignation of 2021 with millions of employees leaving their jobs. In the US, resignations spiked in April and have remained abnormally high for months; 4 million Americans resigned in July 2021 alone

Research by Microsoft revealed 41% of the global workforce are considering leaving their current jobs. A Harvard study last month found increased resignation rates in ages between 25 and 60, with the sharpest rise in the ages of 30 and 45 (up 20% on 2020). Although turnover is typically high among younger staff (<25), their resignation rate actually fell (due to financial uncertainty and reduced demand for entry-level staff).

Many of these mid-career workers delayed moves during the pandemic, leaving a year of pent-up resignations in 2021. Others are seeking a new life; months of high workloads and pandemic pressures causing a rethink of their goals. Remote working means employers seek new mid-career staff with experience since they won’t have the benefit of in-person training and guidance. Resignations particularly jumped in the healthcare and tech sectors, the two most strained by the pandemic, probably a combination of headhunting and higher salaries, and a response to increased workloads and burnout. In the UK, the impact of the Great Resignation is amplified by EU workers returning home, leading to acute shortages in some sectors and supply chains.

Retaining these experienced staff is critical to business, and employers challenged by the Great Resignation are turning to technology. Just as digital transformation of Customer Experience (CX) can drive revenues up, the use of Employee Experience (EX) solutions can keep costs down. Workforce management solutions increase flexibility yet ensure that the right people with the right skills, are doing the right tasks at the right time. Tied in with IoT sensors, AI, and machine learning, this technology is a very powerful tool. In the face of this staffing pressure, it is no surprise to see ServiceNow (NOW-US) and Workday (WORK-US) hitting their all-time highs. Their fwd P/Es of 79x and 116x look eye-watering from this side of the Atlantic, EV/Sales of 23x and 13x. Kainos (KNOS) is a key supplier of Workday to UK healthcare and public sector users and is trading on >50x fwd PE and 8x EV/Sales. Smaller and less mature but potentially more attractive plays in this sector include ActiveOps (AOM), Checkit (CKT), and Crimson Tide (TIDE). They are still very much in investment phase but anticipate strong growth and ActiveOps flags breakeven this year. Their fwd EV/Sales multiples are more reasonable at 5x – and under 2x for Checkit.r discussions, feel free to reach out to any member of the Cavendish team.

A Forbes article “How To Avoid Getting Swept Away By The Great Resignation” advises business on how to invest in EX, and more importantly, how to get it right. Employers that focus on EX innovation and deploy technology to improve flexibility and satisfaction are best positioned to meet the needs of their employees in the new post-pandemic working world.

Happy Friday