Employee loyalty—An elusive goal?

Because of the skilled labor shortage, employers are ramping up retention efforts to try and hold on to the workers they currently employ. Are these efforts having the desired effect? Are they increasing employee loyalty and making it less likely that employees will jump ship? Many CEOs think not.

Employer Quandary

According to the 2007 Management Action Programs (MAP) Quarterly CEO Survey conducted by Vantage Research, some business leaders feel like they're spinning their wheels when they put their workers' needs first, creating an employee-focused company, only to struggle with long-term retention. This presents a quandary for CEOs who invest time, money, and emotional energy into building and managing the employee-focused workplace.

"Most CEOs believe their companies are currently geared much more toward employees than they were 10 years ago, particularly in providing enhanced benefits such as supportive working environments, flexible hours, and telecommuting," said Allan Hauptfeld, principal of Vantage Research & Consulting, Valencia, Calif. "Interestingly, however, their efforts may be falling short because one-third of these business leaders also believe their employees to be less company-loyal than 10 years ago."

New Priorities

In her article "Rethinking Company Loyalty" posted on the Harvard Business School Web site, Lauren Keller Johnson said, "Few business leaders would deny the importance of organizational loyalty, perhaps fewer still believe they can achieve it the way they once did. After all, the lifetime contract expired long ago, and your people—especially your best people—are more likely to display loyalty to their careers than to you, their employer.

"The very nature of the relationship between employers and employees has undergone a fundamental shift: Today, workers not only don't expect to work for decades on end for the same company, but they don't want to. They are largely disillusioned with the very idea of loyalty to organizations. But, at the same time, they don't really want to shift employers every two to three years for their entire careers. Similarly, companies would grind to a halt if they had to replace larger portions of the work force on a similar schedule."

Evolution

Ron Wood, ThermaSys Corp., who has more than 20 years' experience in human resources and has authored articles about work force development for thefabricator.com, shared his thoughts about the evolution of employee loyalty.

"Beginning around the mid-1980s, corporate America began a transition in its employee relations philosophy that increased its focus on short-term financial improvements to enhance its share value on Wall Street. This early philosophy has now been adopted by more and more employers.In fairness, the increased cost of employing workers has driven a lot of this thinking.

"Benefits, especially the high cost of providing health benefits, have required many employers to adopt lean staffing practices.When short-term revenues decline, one of the first things considered is a reduction in headcount.Workers are displaced on short notice and may or may not receive severance pay.

"[The fact that] the world has become a global market with countries like China and India having the ability to manufacture and distribute goods much cheaper than the U.S. [has exacerbated the problem].Big-box retailers like Wal-Mart buy their inventory at the best price available.

"The younger work force has seen their grandparents, parents, friends, and relatives affected by these employment changes and the resulting plant closings, downsizings, and rightsizing. They are not willing to form the same employer attachments that existed in earlier times. They will market their skill and experience to the highest bidder. They also value their personal life more than previous generations and will not readily sacrifice

personal time for the benefit of their employer. Moving up in a corporation no longer has the appeal that it once had.

"Current employment statistics indicate that most younger employees will change employers 10 times in a 30-year work life.

"There is no silver bullet for this employment culture change.Smart employers will listen to their employees' needs and accommodate their needs when possible. Females in the workplace value flexible work schedules to address family needs. The days of demanding rigid work hours and short-notice overtime are disappearing rapidly.Telecommuting is allowed more often when it is possible.

"As the baby boom generation retires, the need to retain valuable employees is going to become more critical, and employers will need to be creative in their employment practices in order to compete for the diminishing talent pool."

Not Either/Or

Johnson posed the question, "Is there a way for both employers and employees to strike a brand-new balance when it comes to loyalty—one that gives organizations the focus and expertise they need to compete and employees the career development opportunities they demand?" Her answer? "Yes."

According to Johnson, the first step is to re-evaluate loyalty. "Loyalty should not be viewed as an either/or proposition. It's true, the experts say, that to produce their best work, employees must be loyal to the company and what it stands for. But 'employees can give their employers 100 percent and provide great performance while furthering their own careers, said Joyce Gioia of the Herman Group, a consultancy based in Greensboro, N.C. 'The two aren't mutually exclusive,' especially when the skills that a person masters to further her own career are also what the company needs."

Growing From Within

Johnson said that "when firms help workers acquire new skills that support their professional advancement, they often win those workers' commitment—and attract loyal new employees." She also emphasized that "employers can promote company loyalty by helping people grow out of their jobs—ideally, into new ones within the company."

A Dud for Life?

Employers also should not equate loyalty with forever. Johnson quoted one source who said, "I'd rather have a star performer for three years than a dud for life."

Effective Strategies

Johnson recommended four strategies that can help ensure that the employer-employee relationship pays off for both parties.

Align career growth with company goals. Managers and employees should work together to identify the links between professional goals and company goals. Assessment tools and career coaches can help ascertain employee strengths and decide how best to leverage them for the company while furthering employee development.

Design work with variety and autonomy. Letting people take project ownership allows them to develop new skills and offers the opportunity to demonstrate what they can do.

Focus on relationships. Johnson said, "For many employees, loyalty is born or cemented through relationships with supervisors and colleagues." Good working relationships are a cornerstone of job satisfaction. How important are they? One school of thought surmises that people don't leave jobs, they leave managers.

Highlight the link between employees' values and your company's mission. Illustrating this point, Johnson cited the example of Medtronic, a medical-device developer in Minneapolis.

Johnson wrote, "At Medtronic … the most important meeting every year isn't the shareholders' annual gathering. It's the holiday program, broadcast to Medtronic's 30,000 employees worldwide, featuring the stories of patients who have benefited from the company's products. "Our people end up feeling personally involved in our company's mission to restore people to full life,' said Paul Erdahl, vice president of executive leadership and development. "They can see the end result of their work. Many of them are profoundly moved by the patients' stories.'"

Make sure that your company focuses on and invests in the right strategies to create employee loyalty.