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Is employee loyalty dead?

Posted July 4th, 2011 in Articles, Blogs and tagged , by admin

Organizations are at a crossroads in their challenge to develop committed workers, but not enough executives are taking notice. Or if they do, they may not be addressing the most serious root causes. And part of this problem is the concept of loyalty.

There was a day in the workplace when a person would get a job and stick with it throughout their professional lifetimes. The American Bureau of Labor Statistics reported in 2010, that the average person born the latter years of the baby boom holds or will hold 11 jobs from ages 18-44. Today, people in their 20′s change jobs an average of every 2 years. Employers are frustrated with the lack of employee loyalty. At the same time, many employees are unhappy with their work because it contains no meaning for them. They ask, “What am I loyal to?”

According to the Center for Work-Life Policy, the proportion of employees professing loyalty to their employers slumped from 95% to 39% from June, 2007 to December 2008. The study also found that the number of employees trusting their employers fell from 79% to 22% over the same period. A survey by DDI, an American Consultancy, found that more than 50% of all employees were “stagnators”-employees with little interesting work to do and little hope for promotion-and half of these people planned to look for new work once the economy improves.

According to a Deloitte study, “Talent Edge 2020: building the Recovery Together-What Talent Expects and How Leaders Are Responding,” a stronger economy may actually be fueling a growing concern among employers about retaining top talent. With the economy improving, nearly 65% employees surveyed are actively testing the job marked. “We’re living in a world where each generation in the workforce has vastly different goals, expectations and desires,” said Jeff Schwartz, principal, Deloitte Consulting and U.S. Talent Services leader. “As employees eye the exit signs following a hard hitting recession, employers need to tailor and target their talent strategies to satisfy each employee group from baby boomers to millennials.”

Some other key findings of the report include:

  • Baby boomers, among all workforce generations surveyed, expressed the strongest discontent with their employers and the greatest frustration that their loyalty and hard work has been neither recognized nor rewarded. Almost 1/3 of baby boomers surveyed say a lack of trust in leadership is a top turnover trigger.
  • Generation X employees are clearly the group most likely to be looking at exit strategies from their current jobs, with only 28% expecting to stay with their current employers, citing lack of career progress.
  • Millennials exhibit a sharply different view of a strong corporate culture, providing their employers have a strong commitment to corporate responsibility/volunteerism, and seeing work as “fun.”

Lynda Gratton, a workplace expert proclaimed in an article in the Financial Times, that employee loyalty has been “killed off through shortening contracts, outsourcing, automation and multiple careers.” Gratton argues that “loyalty is about the future-trust is about the present.”

In the work world where employees were lifetime workers, and employers took care of them, that concept of loyalty made sense. However, today’s work world is vastly different: Lifetime employment doesn’t exist, and employers, including governments, have reneged on their promises. The traditional concept of loyalty implies allegiance to someone or something even if it contradicts self-interests. In the workplace setting, this concept has been viewed as an employer’s expectation that an employee would eventually be rewarded for this kind of allegiance.

In his notable book, A Brand Called You, management guru Tom Peters argues loyalty is not blind loyalty to the company. Rather, it’s loyalty to an employee’s colleagues, to the team, to the project and to themselves. Diane Arthur, author of The Employee Recruitment and Retention Handbook, says employers should worry more about giving loyalty than getting it. In an article in the Harvard Business Review’s Working Knowledge (September, 2005), Lauren Keller Johnson explains how the death of the lifetime employment contract has altered the concept of loyalty.

Tammy Erickson, a Harvard Business Review blogger, believes the old system of loyal service in exchange for security is dead:

“How can leaders recreate an atmosphere of trust in the organization? My superficial answer: Forget about it–or at least, forget about restoring trust as you understood it previously. Trust in corporations was traditionally constructed in this way: The individual was loyal. The institution protected and cared for the individual. Employees professed to have no priorities outside  their specific institution. And the corporation promised long-term opportunities and enhanced rewards for those who stayed. In truth, we have been chipping away at one side of this relationship for decades…It’s time to acknowledge that the old equation…is gone. It won’t come back. It can’t be restored, and frankly, that’s probably appropriate given the nature of work today. Here’s the equation I believe will form the basis of trust between corporations and workers for decades ahead: The organization will provide interesting and challenging work. The individual will invest discretionary effort in the task and produce relevant results. When one or both sides of this equation are no longer possible, the relationship will end.”

Loyalty has often been linked with job security, which is now much a thing of the past. Bill Taylor, cofounder of the business magazine, Fast Company, and coauthor of the book, “Mavericks at Work,” says, “organizations are not a source of security but they are a source of identify.” Loyalty he argues will be a result of a person identifying with the company’s values and practices.” The common thread of modern loyalty is to be loyal to something bigger than your. Taylor says, “People do their best work when they identify themselves as part of a team or a project.”

So what is the root cause? It starts with the executives themselves. Frederick Reichheld, author of Loyalty Rules! argues that loyalty is still the fuel that drives financial success-even, and perhaps especially, in today’s volatile, high-speed economy-but that most organizations are running on empty. Why? Because leaders too often confuse profits with purpose, taking the low road to short-term gains at the expense of employees, customers, and ultimately, investors. In a business environment that thrives on networks of mutually beneficial relationships, Reichheld says, it is the ability to build strong bonds of loyalty-not short-term profits-that has become the “acid test” of leadership.

The workplace has changed. The old social contract is a distant memory. Organizations must learn that their needs and the needs of their employees are interrelated. In our modern global economy, it is not capital assets that will determine the success of an organization, but rather the intensity of motivation of its employees to continually change and improve to meet or set the next standard. Employees who are emotionally involved with the organization are far more productive than those who are emotionally withdrawn.

Organizations must view employees as an asset rather than an expense. They must provide employees with an opportunity to grow in value to the organization, recognize the importance of the personal needs of employees, help them balance work and family and focus on satisfying the customer or client. In progressive organizations, a new kind of relationship, grounded in mutual trust and respect, is emerging. This new social contract is developed out of realistic expectations on both sides. Paternalism is changing to partnerships. Employees expect to be treated fairly, to delver professionally, and to have meaningful, challenging work. In return, employees owe the organizational their willingness to participate in business growth, ideal development, customer service and organizational transformation.

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