Arguably, employee loyalty is as valuable and sought after as skills and experience. No executive can deny the depth of appreciation held for loyal employees – reliable, dependable, tried and tested, there through thick and thin. Loyalty is the soft skill set. It is truffle-like in its rare and exquisite desirability and equally difficult to find. Employee loyalty is great for business. It creates economic value and a competitive edge, and has a positive and sometimes sizeable impact on
on financial performance and operational excellence. It is no wonder business leaders so ardently pursue it. Post-pandemic, with the labour market shifts and the great resignation, we know well the value of employees who stay. Loyalty, viewed through the prism of reciprocal expectations, holds a virtuous status. Is it great for employees? So how good is it for workers? Financially, our employees may be better off not being so loyal. Recent job switchers in America were paid 7.6 per cent more than a year earlier, compared with the increase of 5.6 per cent for job stickers. Australia has a similar story. Pre-pandemic figures show a causal correlation between higher rates of job hopping and faster wage growth for job switches than for those who stayed. Based on equal relationships, reciprocity is almost an automatic reaction, a moral imperative founded on social expectations that good deeds should be repaid. But that is the case only outside of work. Loyalty rainbow We label it employee loyalty, but really what we seek is tenure, commitment and engagement. As for ‘loyalty bonuses’, the name is a guise. Instead, call them what they are – retention bonuses. If they were based on loyalty, you wouldn’t have to pay for it. So, is it fair to expect employee loyalty when we can’t deliver it back? Let’s face it, the employer/employee relationship is transactional. When cost cutting comes into play, even with sentimentality, affection and attachment, loyalty to employees is rarely on the balance sheet. So, how can leaders foster a culture to promote tenure and engagement and, if we are lucky, capture the gift of employee loyalty? Here are four principles to apply. 1. Know your workforce At the end of 2021, the rate of resignations in the US was the highest in 21 years. Generationally though, only 18 per cent of Baby Boomers and 22 per cent of Gen X changed jobs. Millennials led the way, with a whopping 52 per cent resigning. What is the makeup of your workforce, now and in the future? Out-of-date strategies won’t cut it. 2. Pain points and trust Your employees are combatting stratospheric costs of living. The global inflation rate peaked at 8.8 per cent in 2022, and the International Monetary Fund (IMF) forecasts 6.6 per cent for 2023. Compared with pre-pandemic inflation of 3.51 per cent in 2019, this is a marked difference. The decision to change jobs may be more of a necessity than anything else. Have a culture demonstrated behaviourally through open discussions on such serious pain points. Joint problem-solving and brainstorming innovative ways to combat some of these issues creates engagement and a feeling of being in it together. Be transparent about what you can and cannot deliver. It builds trust. If you want loyalty, trust is the titanium link. In today’s working world, we are all upskilling and reskilling our employees. But, it is a new kind of stress and pressure. Provide a supportive environment of understanding and patience. Mistakes are a necessary part of learning. Make them OK. It further strengthens relationship bonds. The good news is that learning environments keep people. Even better, companies that excel at internal mobility retain employees for an average of 5.4 years. 3. Your evolving role Your role differs from pre-pandemic times. Leaders are more involved in their employees’ quest to support the vision of their life’s meaning and purpose. To be a successful promoter of your evolving employee needs requires leadership skills to care, nurture, mentor and inspire. To do so, know your employees really well. Those casual catch-ups or coffees promised, which are sometimes missed, make a big difference. Make them your priority, not a peripheral fill-in. They are valuable times to connect. 4. Alumni strategy We can never totally combat resignations. Nor, as leaders, can we ever negate making those difficult calls on cost-cutting and redundancies. We can, however, make the exit in either situation as good an experience as possible. When global research shows more than 40 per cent of employees who changed jobs in 2022 felt they were better off in their previous job, it’s a no-brainer to make it oh-so-easy for your valued ex-employees to return.