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Loyalty in the Eyes of the Employers and Employees

March 7, 2002
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In this fast-paced, rapidly changing business environment in which corporate growth, profitability and productivity are critical, the biggest question for HR may be, "How can we build and keep employee loyalty high?"

We asked some HR professionals and a sample of employees their thoughts on employee loyalty. We wanted to focus on women, so we used an employee sample of 30 professional businesswomen who ranged in age from under 25 to over 55 with the median in the 35 to 45 age group. They lived and worked in Massachusetts or California. The median length of time in their current position was 3.25 years, total years worked was 15.5, median number of jobs was two, and median salary range was $50,000 to $100,000. In addition to busy work lives, 60 percent had one or more children.

Both parties agree on the definition
If you haven't already explored this question with employees and managers, you may be in danger of not even recognizing loyalty when it's there. When we asked our groups to define loyalty, they responded with many similar definitions. They said loyalty includes being willing to stay through good and bad times, internalizing company goals as personal goals, and giving extra time, energy and commitment to the company when necessary.

Our groups described loyalty as a devotion to the company, and a positive representation of the company to the greater community. It's the ability of people to look at what's best for the organization and sometimes put the company ahead of personal, family and other considerations.

Loyalty changes over time
When asked if their loyalty had changed during their careers, 80 percent of the respondents indicated that it had. A little more than half of this group felt they were less loyal to their current companies than in the past, a third felt more loyal, and the rest considered themselves as loyal today as they had been in the past, but based their loyalty on new requirements.

Several factors contributed to decreased levels of loyalty. They include downsizing, mergers, low job satisfaction and a change in personal priorities from company to family and friends.

Interestingly, the impact on loyalty of downsizing and mergers was not from the actual loss of jobs. Rather the decrease is a result of the lack of communication between employees and managers. All of our respondents felt it was critically important that companies have ongoing, timely and honest communication with their employees about both good and bad news. One employee said, "I get frustrated when upper management manipulates news just to get a particular spin and invoke a certain mood with employees. We're intelligent folks—we can separate spin from facts."

One of the chief reasons for diminishing loyalty over a period of time was that hard work and extra effort are assumed, or required, as the norm by the organization, rather than being recognized and rewarded. These employees view the contributions that go "above and beyond" as discretionary, and want to be valued and respected for choosing to work longer hours, taking on increased responsibilities and giving superior service.

Those who indicated an increase in their loyalty cited high job satisfaction, recognition for a job well done and a company culture that supports a work/family balance. Again, women in our sample talked about being recognized for their contributions, as well as working in companies that supported them in times of personal need and offered opportunities for growth and development. One respondent wrote, "I believe loyalty is derived from personal and organizational success. My loyalty is highest when I have high job satisfaction and see the organization succeeding."

Take note, HR: Being valued and respected by one's employer is even more important in developing and maintaining loyalty than the company's work/family benefits. The good news is that loyalty can be influenced by things as simple and inexpensive as getting individual feedback on a job well done, being thanked for working longer hours or being part of the decision making process.

Two of our HR respondents, Gary Beisaw, director of ShopLink, Inc., a personal services company in Westwood, Massachusetts and Art Sharkey, director of human resources, Shipley Corporation, a chemical manufacturing company in Marlboro, Massachusetts, have a different view of loyalty in the 90's.

Beisaw says, "In this tight job market, loyalty has taken a back seat as people are more opportunistic. People are more short-term focused. If you think you're making only a two- to three-year commitment, it changes your level of loyalty. Both companies and employees think in terms of short-term commitments today."

Sharkey says he feels loyalty is less important today than other considerations in managing people in the workplace. "I'm not a big fan of loyalty. I want employees to be happy or at some time they may need to leave even if they're loyal," says Sharkey. "Having employees a long time is important, but longevity does not lessen the importance and need to meet performance goals."

Sharkey explains that some turnover is inevitable, and in some cases even desirable. He looks closely at the reasons given for leaving. In most cases the company sees "good people leave for good reasons." Examples of this include moving to shorten a commute, following a spouse, returning to former employers in even better positions and accepting positions after being recruited by Shipley's customers.

Can loyalty be bought?
Both survey respondents and HR professionals were asked this question to explore whether employees would give their loyalty as a result of getting a specific reward, i.e. higher salary, excellent benefits, a flexible schedule. In addition, the survey explored factors that influence loyalty. The group was split on whether loyalty could be bought, with 63 percent of the employees and 20 percent of the HR professionals saying, "Yes." Those saying "No" generally felt that an important distinction was that loyalty must be "earned."

When asked what influenced their loyalty, employees were in strong agreement (97 percent) that the most important influence is job satisfaction. Several of their responses provided a clear understanding of what this means in today's workplace, including challenging work, opportunities for advancement, professional growth and development, recognition and respect, and a flexible work environment.

The next two most important factors were relationships with their managers (80 percent), and with their peers (73 percent). Some of their comments demonstrate the impact of these factors: "My director left the company, so there was no real reason to stay." "I am loyal to the people I work with and don't want to let them down. Changing management and reorganizing groups lowers my loyalty and performance." "At first my loyalty was very high, but when my manager and VP decided they were no longer committed, my loyalty went right down." And "I'm extremely loyal to the people I'm responsible for and the people I work with. Because of my loyalty to the vice president, I would go to any division and do whatever needed to be done to help that division."

A second group of important factors included: salary (70 percent), family considerations (67 percent), and lastly, corporate benefits (56 percent) which placed seventh on the list. The most common examples of family considerations were: a flexible work schedule following the birth of a child, time away from work to schedule doctor appointments and other personal matters, and empathetic support during times of personal and family crises.

When we asked the HR professionals to rate the same factors in terms of what they felt were important to employees, they ranked their top three choices in order of priority as benefits, job satisfaction, and peer relationships and family considerations equally.

The difference in the ranking of benefits between the two groups may be a wake up call for HR. As stated by Susan Glover, director of human resource operations at Bentley College in Waltham, Massachusetts, "People today expect regular benefits, health, insurance and retirement plans. Now you have to go beyond those to build loyalty."

How does loyalty impact the workplace?
Measuring the impact of loyalty is often more qualitative than quantitative and HR often tries to measure impact by looking at a variety of anecdotal indicators. Linda Walker, vice president of human resources at Irvine, California-based Parker Aerospace Corporation, conducts employee opinion surveys on a regular basis to examine areas of productivity, knowledge of company goals, quality of communication and willingness to refer others to the organization. She says she believes the company's high rate of referrals is a measure of employee loyalty. Other numbers she finds useful to gauge loyalty include length of service and turnover.

If you're going to focus your company's time and resources on building loyalty, you need to ask how loyalty impacts personal performance and contributes to individual and corporate success. Our employee sample talked about willingness to work harder, enjoying work, making the company a priority, being willing to take on extra projects and work, making win-win decisions for the company in customer dealings, performing at peak, providing premier customer service and taking greater pride in personal accomplishments. These could translate into numbers in terms of customer retention, productivity, high customer satisfaction levels and increased sales.

Employees noted that their performance changed when they felt their personal loyalty on the decline. They become more apt to work only the required forty hours, would lose focus more easily, let deadlines slip, give little extra effort, think "it's only a job" and advise peers having difficulty to leave versus stay and resolve their issues. With loyalty at its lowest, they would not want to come to work, which could equate to increased absenteeism and termination.

What are companies doing to influence loyalty?
Several attempts to gain, build or earn employee loyalty were described during interviews with the HR managers. In many cases, HR has tried to foster employee involvement, provide creative and responsive benefits, and open two-way communications in a variety of ways. One of the programs Bentley College has developed to move beyond the usual array of employee benefits is a child-care and elder-care resource and referral program. In 1996, this program helped the company win a spot on the Working Women Count Honor Roll by the Commonwealth of Massachusetts for improving the working environment for women.

Bentley also has initiated a goal system that defines the overall goals of the college, then develops division, department and individual goals. By ensuring that individual goals are tied to the overall goals of the college, each employee is able to identify his or her personal contribution to the company goals. The college also recently strengthened merit raise programs so exceptional performers receive more than average performers. The president holds regular "town meetings" to let employees know what's happening and to ensure that everyone knows where the college is headed. All of this helps fulfill the strong need for communication and recognition that our sampling of employees said was important to them.

At Parker Aerospace, several initiatives contribute to enhanced loyalty, including frequent communication, opportunities for strong peer interaction, and reward and recognition programs. With more than 5,600 employees in the division Walker supports, there are lots of newsletters, one-on-one meetings, and team decisions including interviewing panels in which other team members participate in hiring decisions.

At Shipley, a company known for its excellent employee benefits, efforts are made to provide additional amenities. Examples include bringing children to work so they can see and experience what their parents do, an on-site fitness center, a walking trail and plans to install an onsite ATM to save employees from running out to the bank. Gifts are sent from the company when a new child is born, flowers are sent when there's a death in an employee's family, and contributions are made in support of family activities from sports to schools and charitable causes.

A year-old start-up company, ShopLink provides every level of employee with stock options and has a multifaceted communication plan in place to keep staff involved. As one example, it uses global e-mails to share recognition of employee efforts and acknowledge their appreciation. People are informed of the company's plans, its goals and objectives, and where they as individuals fit into the big picture.

Rethinking loyalty
What does all this mean to you? If you don't have employee loyalty on your agenda, put it there. If you have put benefits in place with the goal of increasing loyalty, check with your employees to make sure that the benefits do impact loyalty. Don't make assumptions. You may find that the innovative benefits you have put in place are simply fulfilling the basic expectations of today's employees.

HR is in a unique position to design and lead a plan for building loyalty into the business strategy. We can accomplish this by looking beyond the daily routine and consistently cultivating work environments that promote open communication, reward and recognize individual performers, and offer flexibility to balance outside responsibilities. It can't be done in a vacuum. We need to ensure that managers are trained to talk with employees about their interests and goals for professional development, are aware of individual contributions and recognize people for their input, and understand the importance of following the work/family policies that have been put in place.

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