How to Build Total Loyalty Among Your Employees

Does your organisation have a problem with employee loyalty? Diminished loyalty can appear in several forms. The most obvious is high turnover, of course, but that can be less obvious when the economy is less certain. Not everyone who would rather work elsewhere is able to find a job with a different employer. An author writing for the Society for Human Resource Management (SHRM) reports that in 2012, only 42 percent of American employees held a strong sense of loyalty for their current employers. Employees without a strong sense of loyalty generally don’t make any extra effort, either for customers or for coworkers.

There are more than only a few advantages of having loyal employees. Some of these include greater organisational knowledge, greater productivity, better customer service, greater employee engagement, closer attention to the needs of the business, and of course, lower employee turnover rates. Loyal, committed employees take ownership of their jobs and they make it their responsibility to resolve conflict, improve processes, increase fiscal efficiency, boost morale and contribute to all of the positive aspects of organisational activity.

Building Loyalty

Survey employees to find out what’s important to them. This seems to be rather elementary, but the number of companies who don’t do this is nothing short of astounding.

Report survey results to employees and then act on those results. Employees can grow weary of the management idea du jour. Surveying employees indicates that the company cares about them and that they have a voice. Never hearing anything about the results or not seeing any changes negates everything positive that the company gained through asking for employees’ opinions in the first place.

Engage employees in new ways. It can be difficult to engage employees in the business outside of their normal responsibilities but senior management can get creative and find some gratifying results. Though middle managers groan about meetings, including factory workers, retail clerks and other “front line†employees on management committees sends the message that the employer values its workers beyond only the labor they provide. Including front line employees in those meetings also can provide great insight for management.

Provide meaningful recognition. Providing meaningful rewards and recognition has been problematic literally for decades. Dean Spitzer, one of the world’s leading experts in performance management, wrote in 1996, “Despite unprecedented efforts to motivate employees, employee motivation is at an all-time low. And, despite the enormous investment in rewards, recent studies show that the majority of hourly employees and managers in the United States report feeling ‘unrewarded.’†And that was in 1996, long before the Western world’s economic meltdown slightly more than a decade later. Management guru James Champy wrote in 1998 that monetary bonuses are very nearly ineffective, cost too much and waste too much management time.

Diminish the “silo†effect. Including front line employees in plans and decisions serves to diminish the “us versus them†mentality that exists in so many manufacturing and service industries. Including lower level employees in decision making processes lets those employees know they’re important to the organisation and their perspectives can provide management with insights it otherwise would not have.

Some Examples

The Chubb Group of Insurance Companies

The Chubb Group’s senior management was baffled at the high rate of turnover it was experiencing in the early 1990s and surveyed employees to find out why. Management’s purpose was to reduce the cost of turnover. At the time, it cost about 97 percent of an employee’s annual salary to replace him. Currently that figure is closer to 150 percent, so the point is still highly relevant. The survey revealed that one of the leading reasons for turnover was employees’ difficulty in dealing with child- and elder-care responsibilities while working full time. Chubb’s leave policy was such that employees could not take an hour or two if a family member had a doctor appointment. Rather, the employee had to take an entire day off to meet that responsibility. A few experiences of that sort over the course of a year left employees with no appreciable holiday time and it was more costly for the company to pay an entire day’s salary while losing an entire day’s work from the affected employee.

Chubb’s management believed it had spent more than $3 million to replace 50 employees who over the course of two years had left the company for child care reasons alone. Wisely, Chubb’s management realized that although its many remaining employees carried no replacement costs, it was greatly concerned that their presence for purely financial reasons would be reflected in their contact with customers and thereby have the same effect as would that of disrupted continuity stemming from employee turnover rates. Company leadership also was concerned that reduced motivation among these employees could negatively affect the performance of those working with them.

Employees and management danced a waltz of survey, analysis, action and review for two years. Leadership made changes, allowed employees time to become accustomed to those changes and then surveyed employees to discover the true value of those changes. Turnover plummeted and productivity increased dramatically. Even better, Chubb came to be known as an employer of choice, one that truly cares about employees. This position means that those seeking new jobs come to Chubb early in the search because they want to work there. That gives Chubb first right of refusal on the best talent available.

Georgia-Pacific

One of the many businesses owned by Koch Industries, Inc., Georgia-Pacific supplies paper consumer goods and residential building materials based, all based on wood handling and processing. Some of the jobs are rife with danger but the company stresses safety at all times. It explicitly tells employees on a regular basis that if at any time any one of them believes that unsafe conditions exist they should shut down the process they work in until the issue is resolved. Georgia-Pacific maintains a relatively flat management structure so that no front line employee is very far away from top management where s/he is employed. The company went through massive layoffs following the collapse of the housing and financial markets in 2008. Understanding its role in the local economies of the many small towns in which it operated, management’s response was to keep one or two operations functional at each site and for diverse sites to purchase their material needs from each other. Virtually all of the remaining employees have experience in most – if not all – of each site’s former operations. In one small town, only 40 employees remain of the more than 400 who worked there prior to 2008. The most junior of those employees has nearly 20 years’ service, however.

The site’s work is dangerous and dirty. The company pays reasonable wages but not stellar ones. It does provide attractive benefits and does not ask employees to share costs. Still, nearly all employees are production workers without much hope of advancement. The company includes one or two on every single committee it maintains: safety, health and wellness, industrial hygiene and others. Appointment to these committees is not incidental. Production workers are valuable members who have true voices. Every quarter, management cooks and serves lunch to production workers. The most recent centered around steak and chicken, grilled to perfection on-site by the site’s most senior members of management. There are always a few speeches during these affairs. Members of management in all departments convey to employees how well they’re doing and how much customers – and management – appreciate their efforts.

Charles Koch, CEO of Koch Industries, Inc., insists that all Koch companies operate by and practice the ten points of Market-Based Management®, the management philosophy that Charles Koch developed over more than 40 years. In addition to the obvious business goals, MBM requires integrity, principled entrepreneurship, humility, respect and fulfillment. Every employee is trained in the ten principles and every employee – at all levels – is expected to operate within them. When conflict arises, all concerned must respond in humility and with respect. As a result, conflict doesn’t last long. Employee longevity does.

**The text above exceeds your maximum word count so the following references – and this statement – don’t change the cost of your order. I’m including them so you can include them if you wish or simply go read them.JM**

References

Champy, James (1998, March 9). Bogus bonuses: it’s time to admit that annual cash bonuses are about as effective as the old Christmas turkey in affecting employee behavior. (It would be better to give employees a sense that they are part-owners of the business). Forbes, 161, p. 175.

Graham, Baxter W. (1996, May). The Business Argument for Flexibility. HR Magazine, 41, 104.

Koch, Charles G. (2007). The Science of Success: How Market-Based Management Built the World’s Largest Private Company. (Hoboken, NJ: John Wiley & Sons).

Miller, Stephen (2012, March 22). Employee Loyalty Hits 7-Year Low; Benefits Promote Retention. Society for Human Resource Management (SHRM). Retrieved from http://www.shrm.org/hrdisciplines/benefits/articles/pages/loyaltylow.aspx#sthash.jQzYKwhg.dpuf.

Spitzer, Dean R. (1996, May). Power Rewards: Rewards that Really Motivate (Employee Incentives). Management Review, p. 45.

Sylvester, John (2013, August). Time to get serious about staff loyalty. HR Magazine. Retrieved from http://www.hrmagazine.co.uk/hro/features/1078179/time-staff-loyalty.