Companies talk a good game about employee loyalty, but according to a recent survey, many organizations really aren’t paying much attention to it.
by Sam Davis
June 5, 2015
Employers have long valued their employees’ loyalty, since those loyal employees could be trusted to do their best.
But in recent years employee loyalty, like pensions and mainframe computers, has become a dinosaur. It’s clear that loyalty has been on the decline.
New research from the American Management Association (editor’s note: the author works for the association) titled “Is Employee Loyalty Still Valued?” reveals that after nearly two decades of cutbacks, restructurings, organizational changes and overwhelming workloads, that more than 1 in 2 managers — 52 percent — see their employees as less loyal than five years ago. After all, the concept of lifetime employment is no longer feasible for many organizations. So if loyalty is indeed like a dinosaur, it appears to be stuck in a tar pit and headed for extinction.
What Does Loyal Behavior Look Like?
In the American Management Association’s terms, loyalty is defined as steadfastness, constancy and dedication to something or someone outside of oneself.
Employees can express loyalty through
many different behaviors, including:
• Thinking critically but fairly about the ideas and plans of others.
• Providing helpful feedback in a caring way.
• Acting to support the plans and desires of others.
• Respecting people’s positions, rights and authority.
• Fighting for the best interests of the team and the organization.
• Giving credit where credit is due.
• Accepting responsibility and accountability for results.
• Living and standing up to the values of the organization.
• Protecting the reputations of people not able to protect themselves.
Loyalty is not:
• Blindly adhering to a policy that may be unethical.
• Doing whatever management says when it’s known to be wrong.
• Lying or covering up inappropriate behaviors.
• Making decisions based primarily on self-interest.
Source: AMA training curriculum on “Achieving Leadership Success through Loyalty”
Or, is it just another phase of the evolution of the employee-employer relationship? The same AMA study found that many organizations still seek to make employee loyalty a core part of their culture. When presented in terms of whether promoting such loyalty is a “major focus” at their companies, respondents provided a mixed picture.
One in five respondents said “yes,” loyalty is a major focus at their organization. Some 56 percent said “no, not a major focus, but valued nevertheless” and only 24 percent reported “no, it was never valued nor a major focus.”
But let’s take a look at loyalty and see if it still has a place within the organization.
Loyalty often reflects senior leadership’s attitude because cultural values, which are frequently driven by the upper echelons of management, demonstrate what behaviors they value and reward in employees. The AMA study, which includes responses from 1,213 North American senior-level business, human resources and management professionals and was completed in December 2014, shows that many respondents believe their senior leadership should value and cultivate employee loyalty.
Loyalty is important to leadership because it ensures that people at all levels in the organization are respected and there is greater consistency in both word and deed. As Rensis Likert, an American educator and organizational psychologist, said, “The greater the loyalty of the group toward the group, the greater is the motivation among the members to achieve the goals of the group, and the greater the probability that the group will achieve its goals.”
A lack of loyalty can clearly be detrimental and result in loss of trust, higher absenteeism and turnover, shoddy work, gossiping, the formation of cliques and, in extreme cases, incite a mutiny.
That evolution, if you will, finds organizations moving away from talking in terms of employee loyalty and toward employee engagement — a broader term that includes commitment and advocacy for both the job and the employer.
It may be that management today is ambivalent about promoting employee loyalty and whether it still sees it as an ideal. After years of the breakdown of the implied lifetime employment contract between employees and employers, today’s leaders may be embarrassed to use loyalty as a frame of reference and feel more comfortable with promoting instead the broader yet elusive concepts of engagement and disengagement.
Not surprisingly, respondents were also asked to gauge their own organization’s loyalty to its employees, and the findings reflect a similar decline. Fully 42 percent believe their organization is less loyal, and 45 percent indicate it is about the same as five years ago. Only 13 percent believe their organization is more loyal compared with five years ago.
Yet despite loyalty’s supposed death march, the survey findings also make it clear that organizations are keenly aware of the dangers of weak employee loyalty. Asked about the impact of declining loyalty, respondents cited low morale (84 percent), high turnover (80 percent), disengagement (80 percent), growing distrust (76 percent) and lack of team spirit (73 percent).
Along the same lines, respondents were quick to identify the positive signs that employees have strong loyalty to the organization. These indications are directly related to business performance, so loyalty ought not to be disregarded; its merits are evident.
Given this fact, it is not surprising that the AMA study also found that 46 percent of senior leaders believe loyalty has a direct relationship to profits. Managers understand loyalty brings out higher levels of contribution and effort, along with pride and respect for the company.
Promoting loyalty is not the same as encouraging employees to blindly follow. Diversity of opinion and a devil’s advocate role are crucial to critical thinking. While there are tangible business benefits in cultivating loyalty, the same may be said for promoting a loyal opposition. As a leader or manager, there are several benefits of having loyal opposition from within the team as this can stimulate critical decision-making, prevent group-think, draw out different perspectives and discourage the sycophants.
Stemming the Decline in Loyalty
Though loyalty may seem like an old-fashioned notion, don’t go building a wing for it in the natural history museum just yet. What can organizations do to stem the decline in loyalty? Develop a productive manager-employee relationship to foster loyalty. Employees first need their basic needs met, such as fair compensation, a safe and nontoxic work environment as well as opportunities for career development.
Coaching, job skills training and learning opportunities show that the company is serious enough about employees to invest in their future. Managers should engage employees in decisions about their work and give input into the how, why and what they do. This will go a long way toward helping employees become more personally invested, interested in the outcome and rewarded by their work.
And let managers know; they need to set an example by demonstrating their own loyalty. They should support the decisions of leaders and not criticize them publicly or otherwise subvert their authority. They need to protect employees from unwarranted attacks and criticism.
They should also stress the importance of honesty, quality and customer service. The aim should be informed loyalty, not blind loyalty. Honest debate ought to be encouraged, and individuals helped to understand that people can disagree in an agreeable way and still support the decisions made.
Managers need to give clear reasons for decisions. If there is disagreement, they must step up and seek support and loyalty for the benefit of the organization.
The Future of Employee Loyalty
When asked to look to the future, respondents were generally pessimistic. Only 20 percent expect employee loyalty to grow in importance, while 34 percent say it will remain a core value for their organization. But 46 percent believe employee loyalty will probably decline.
But there are reasons why loyalty will remain a core value for many organizations, at least as part of the broader goal of employee engagement. Devoted employees know the business, focus on the job and are less alienated and more committed. Loyalty and engagement aid people at all levels because employees then work with the best interests of the organization in mind.
A lack of loyalty can infect an entire enterprise and cause increased absenteeism and turnover. Loyalty provides real business benefits, and the value loyalty brings to an enterprise is far from dead.