The Insurance Impact of the Great Resignation on Small Businesses

Seeing how workplaces had been changing, psychologist and professor Anthony Klotz coined the term “Great Resignation” in May 2021. People began leaving their jobs nationwide, which led to this potentially long-lasting phenomenon in the business world.

This has had a significant impact on how businesses manage their human resources and achieve their goals. In 2022, a staggering 46.6 million Americans quit their jobs. This resulted in a significant gap in talent availability, with over 10.5 million jobs remaining unfilled until the third quarter of 2022.

The loss of skilled labor has put additional pressure on the remaining staff to step up, raising workload demands and risk factors, with small businesses being the hardest hit of all. Let’s examine the severity of the problem and how certain practices can be implemented to ensure that businesses operate smoothly.

Why Has Retaining and Hiring Become Problematic?

Changing Work Dynamics, Remote Models

The two main issues that have made it extremely difficult to hire and retain employees are remote work models and the emerging need for more flexibility. These generated a conscious desire to step back from physically or mentally stressful jobs among a significant number of the population. The demands of today’s workforce and their retention in this highly competitive market, not to mention the rise of the gig economy and contractual work models, present a challenge for small businesses.

A Diverse Workforce with Diverse Needs

Today’s workforce is incredibly diverse and calls for inclusivity. Be it Gen Z, millennials, or baby boomers, organizations employ a variety of generations at various levels. As a diverse workforce has diverse needs, small businesses find it challenging to accommodate the same.

A Growing No. of Opportunities

As was already mentioned, there are an increasing number of open positions, which has created a sizable market for job seekers. According to a report, more than 50% of small businesses find it difficult to hire for a particular position because of the demand for high salaries. Due to the challenge of giving appraisals every time a worker receives a better opportunity, it has become particularly difficult to retain employees. A further challenge for small businesses is finding qualified candidates when a company has a set pay scale.

A Large Pool of Passive Hidden Talent

Another significant challenge that hiring managers currently and, in the future, will face is passive talent. Due to a variety of factors, including lack of time, efforts required, or other factors, many people don’t even actively search for new jobs. 48% of small business owners face this difficulty because it is challenging to pinpoint this passive talent, which makes hiring ineffective in some ways.

So, How Does This Impact Small Businesses and Employees?

Poor Quality Service and Products

The greatest asset of any company is its human resources, and for small businesses, the workforce can make or break a deal. Poor-quality services and products will be produced as a result of this chaos if enough competent employees are not present to manage the operations. 

Burnouts Leading to Resignations

Management’s difficulties in attracting and keeping employees worsen staffing problems. The existing staff is put under more strain as a result, making it challenging for them to manage everything while still receiving the same pay. In a report by Deloitte, mental health problems and burnout were listed as two of the top five reasons for leaving jobs for both Gen Z and millennial workers.

Hampered Brand Value and Reputation

Working conditions and culture are directly related to the high rate of resignations and the challenge of finding new employees. Because one out of three candidates reject a job offer due to negative online reviews, whether they are true or not, this sets the standard for other candidates.

Type of Insurance Coverage for Safeguarding from The Risks Arising From Fewer Staff and Staff Departures

Here are a few insurances that can help small businesses safeguard their assets while also giving their employees better coverage, enhancing their sense of security and comfort at work.

Professional Liability Insurance

Human errors can result from negligence and poor service due to staffing issues, and users of the small business’s services or products may suffer negative effects as a result. Based on an evaluation of the risk factors involved, professional liability insurance covers such murky areas of any business. 

Additionally, this relieves pressure from the staff, allowing them to work more freely without worrying about making mistakes, which are anyways bound to happen. Its partner may be general liability insurance, which addresses other potential general issues, including but not restricted to customer accidents at the facility, etc.

Property Insurance

Small businesses’ top priority should be to provide their employees with complete protection if they want to keep the ball moving. Insuring the property is a must in case of any natural disaster, fire, or theft that hits the store or business in question. 

This provides an additional layer of security, enabling company owners to operate more freely and maintain a positive workplace culture. Commercial vehicles can also be covered by a similar insurance policy, called a commercial vehicle insurance policy.

Worker’s Compensation Insurance

One of the most crucial insurance plans to have in place to shield employees from unforeseeable accidents is worker’s compensation insurance. For instance, a worker’s compensation insurance policy would pay for expenses if a worker lost their life while operating a machine at a manufacturing facility or if an employee suffered injuries while working in the kitchen. Since many US states mandate this insurance, it must be the first option considered when defending small businesses.

Product Liability Insurance

Product liability insurance covers any harm that results from using a company’s products. These lawsuits have the potential to bring the company into disrepute, so it is important to have adequate insurance coverage to deal with them, and this insurance policy can provide that coverage.

Business Interruption Insurance

This massive wave of resignations and staffing issues can interfere with the smooth operation of your company. Other factors, such as natural disasters, fires that shut down operations, etc., may also contribute. A business interruption insurance policy can help a small business survive tough times and prevent itself from going out of business.

Need an immaculate risk assessment for your small business? Let us help. Contact us to learn more.