The ‘Great Retirement’ appears to be hastening the exodus of US and other Western companies from Russia

<img class="caas-img has-preview" alt="McDonald’s has said it is losing $50 million a month as it closes its offices in Russia. AP Photo“src=”–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTQ5NQ–/ – ~ B / aD0xMDExO3c9MTQ0MDthcHBpZD15dGFjaHlvbg – / https: // “data-src =”– /YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTQ5NQ–/–~B/aD0xMDExO3c9MTQ0MDthcHBpZD15dGFjaHlvbg–/”/ >
McDonald’s said it was losing $50 million a month by closing its Russian stores. AP Photo

Companies around the world are fleeing Russia in unprecedented corporate solidarity with their governments shaken by the invasion of Ukraine. To date, over 750 multinational companies have declared that they reduction, suspension or severing of ties with Russiamore than three times the number abandoned South Africa due to apartheid in the 1980s.

Many corporate statements announcing the decisions emphasized humanitarian aspects and unity with the Ukrainian people. For example, Pepsi has suspended the sale of soda in Russia, describing the events in Ukraine as “terrifying”; Ford Motor Co. referred to the “threat to peace and stability” from Russia in suspension of operations at its three factories in the country; and Ikea closed their shops there he called the war a “human tragedy.”

Detractors it’s a type of corporate beneficence dismissed it as a “sign of virtue”, implying that ulterior motive for the public. As corporate social responsibility scientistswe believe that altruism may play a role in such corporate decisions, but as virtual signaling suggests, others are more profit driven drivers usually at work, especially considering the stakes when deciding to leave an entire country.

In this case, a common theme we see for many companies is “great retirement— and the struggle to attract increasingly picky, younger Generation Z and Millennials workers who speak they want to work behind socially responsible brands.

<img class="caas-img caas-lazy has-preview" alt="Pepsi, which has been operating in Russia for over 60 years, has suspended the sale of carbonated drinks, calling the incursion “terrible.” AP Photo/Alexander Zemlyanichenko“data-src=”–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTQ1Nw–/ lgDvyBwh_Yb5IQHYTqmIEQ–~B/aD05MzM7dz0xNDQwO2FwcGlkPXl0YWNoeW9u/”/><img alt="Pepsi, which has been operating in Russia for over 60 years, has suspended the sale of carbonated drinks, calling the incursion “terrible.” AP Photo/Alexander Zemlyanichenko“src=”–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTQ1Nw–/ -~B/aD05MzM7dz0xNDQwO2FwcGlkPXl0YWNoeW9u/” class=”caas-img”/>

Weighted decision

The company’s decision to completely cease operations in the country is rarely taken lightly.

Leaving Russia companies will incur significant costs from abandoning equipment, shops and factories, or even the entire workforce. For example, Exxon said that it is $4 billion expected to be lost in assets due to his decision to leave Russia, while Closing McDonald’s restaurants will cost the company $50 million a month.

And it is not known when companies leave Russia can return – if ever.

However, that hasn’t stopped hundreds of companies from making the difficult decision to step back. Along with condemning the invasion and expressing solidarity with the Ukrainian people, many companies have also acknowledged clear business-related reasons. Appliance manufacturer Whirlpool cited the safety of their employeesJapanese automaker Toyota accused logistical and logistical obstaclesand streaming video company Netflix said payment processing problems we will deformation operations.

Growing power of workers

While these practical reasons, along with moral considerations, may be enough to provoke an exodus, we believe that the great retirement, when a record number of workers leave their jobs, exacerbates all these other risks associated with being in Russia.

About 47 million US workers voluntarily left work in 2021, representing more than a quarter civilian labor force, according to the Bureau of Labor Statistics. More than 4.5 million people quit in November alone, a single-month record, and nearly as many continued to file their notices in early 2022.

It’s not just an American phenomenon. Many other countries have the same high scores. workers who voluntarily quit their jobs.

This trend has shifted negotiating power to employeesand companies are trying acquire skilled workers to fill vacancies. Employees require higher pay and additional benefitsand some rethink their careers to make their work more in line with their values.

Another sign of a shift in power is the recent success of youth unionization efforts. An increasing number of Starbucks locations are unionizing as Amazon forms its first union in the US after workers on New York’s Staten Island voted to create it in April 2022. Starbucks and Amazon both companies suspended their activities in Russia.

Some industries there is a particularly high level of staff turnoverincluding management consulting and oil and gas, according to a recent article in the MIT Sloan Management Review. The attrition rate measures how many workers are lost and not replaced in a given period of time.

Management consulting, which a talented workforce is vitalfor example, the dropout rate was 16% over the six-month period the researchers followed, more than five times the national average.

<img class="caas-img caas-lazy has-preview" alt="Job openings soared as a record proportion of workers quit their jobs. AP Photo/Matt Rourke“data-src=”–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTQ3MA–/ 1.2/ajc8G4s0iNwJ9oVYKotxPg–~B/aD05NjA7dz0xNDQwO2FwcGlkPXl0YWNoeW9u/”/><img alt="Job openings soared as a record proportion of workers quit their jobs. AP Photo/Matt Rourke“src=”–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTQ3MA–/ ajc8G4s0iNwJ9oVYKotxPg–~B/aD05NjA7dz0xNDQwO2FwcGlkPXl0YWNoeW9u/>0054f475eae60cd” class=”caas-img” class=”caas-img”
Job openings soared as a record proportion of workers quit their jobs. AP Photo/Matt Rourke

Workers demand solidarity with Ukraine

That’s why it came as no surprise to us that companies in these labour-intensive industries were either among those that cut ties with Russia or quickly cut ties after facing criticism from employees.

An IT consultant with almost 700,000 employees, Accenture, seemed to set the tone for what to expect from companies in its industry when it said on March 3, 2022 that termination of all activities in Russia.

“Accenture stands with the people of Ukraine and governments, companies and individuals around the world, calling for an immediate end to the illegal and horrific attack on the people of Ukraine and their freedom,” the statement reads.

Competitors McKinsey and Boston Consulting Group originally planned a more timid withdrawal, cutting ties with the Russian government but continuing to honor existing private contracts. But after current and former employees of both companies took up social media to evoke their perceived soft stance and even cowardice towards Russia, companies quickly expanded of course by announcement they pulled out completely. All other consulting giants did the same, including bein, Deloitte, HEY, KPMG and PVC.

The big Western oil companies did the same. faced pressure from employees to leave Russia, and the workers went so far as to refuse to ship Russian oil and gas to their docks. It’s happening on top of governments push companies to take action that go beyond the sanctions. Breaking ties, companies like HELL, Shell and Exxon have abandoned significant assets in Russia, which will lead to huge losses on their balance sheets.

Short term cost for long term benefit

But accepting these short-term losses appears to be worth it in order to avoid larger losses in the future.

Attracting and retaining a talented workforce is an important factor long-term profitability of the company.

Training new employees is expensiveand the best talent is always hard to hire – a challenge aggravated by great humility. Poll after poll showed that employees are increasingly driven by purpose and expect from their companies reinforce your values.

No company known to us explicitly mentioned the problems associated with a large resignation as the driving force behind their decision to leave Russia. And industries with high turnover and an active workforce, such as big technology I didn’t see the full output. In some cases, for example, when Apple, Alphabet and Metathey have suspended some operations but trying to keep doing business partly because they play an important role in providing Russian citizens with free information to counter Kremlin propaganda.

Each company and each industry must undergo its own unique analysis based on exposure to business and reputational risks in Russia. We believe that greater submission exacerbates this risk, in some cases significantly. And employees are increasingly reports feelings of stress over Ukraine.

Russian aggression against Ukraine was condemned almost universally in the West. With this in mind, many of the companies that broke off relationships while sacrificing short term gains – probably knew what to stay would be much more damaging to their brandnot only with clients but also their employees.

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This article has been reprinted from Talk, a non-profit news site dedicated to exchanging ideas among expert scientists. It was written: Stephen Kreft, Indiana University and Elham Mafi-Kreft, Indiana University.

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The authors do not work for, advise on, own shares in, or receive funding from any company or organization that could benefit from this article, and do not disclose any relevant affiliations other than their academic position.