Have you ever considered employee loyalty to be an essential component of your business? The truth is, it’s vital. Employees who are committed to the company are more likely to do their jobs well and remain with the company long-term — which makes them extremely valuable to a company’s success.
Employee retention and loyalty go hand in hand. The relationship between an employee and their employer is meant to be a mutually beneficial one. Harvard Business Review, however, postulates that the balance between the two is weakening. Such imbalance may even be at the root of quiet quitting, as more employees decide to stop going “above and beyond” for a company that doesn’t seem to reciprocate.
…while going above and beyond can come at a cost for employees, in a healthy organization, these costs are typically counterbalanced by benefits such as increased social capital, well-being, and career success. The quiet quitting trend suggests that employees are increasingly feeling that this exchange has become unbalanced: Employers are demanding additional effort from workers without investing in them enough in return.
Anthony C. Klotz and Mark C. Bolino, Harvard Business Review
Employee loyalty can be hard to measure, but it’s easy to see its effects on your business and organization. It’s crucial to know how much loyalty you have from your employees so that you can take steps to ensure it doesn’t decline or erode over time — as this will negatively impact your business operations, hurting its ability to grow and thrive. Moreover, it hurts your people — who are investing their time and talents into the success of your organization.
Here are some of the most effective ways to measure employee loyalty, along with some strategies for building and improving this important factor in your organization’s success.
What is employee loyalty in a company?
In personal relationships, loyalty is a simpler concept — or at least, easier to visualize. We think of friends, family, and loved ones as being loyal when they protect our best interests. We know that these people won’t bad-mouth us, steal from us, or try to harm us in any way.
What do those behaviors look like when applied to the employee/employer relationship? Does it mean that employees won’t speak ill of the company? What would you consider to be “harm” to the organization?
What is employee loyalty in a company?
Employee loyalty is the extent to which employees are committed and involved with their organization. Employees who are loyal are less likely to quit, look for another job, or speak negatively about their employer. They work harder and are more enthusiastic about their roles.
Loyal employees help a company create a better environment for themselves as well as for their co-workers. They are more likely than other employees to stay with an organization or return after a leave of absence. Loyal employees work harder, have lower absenteeism rates, tend not to change jobs often, are more productive on the job, and provide better customer service while they are at work.
The challenge is, there’s really no quick route to building employee loyalty. It comes from a consistently balanced relationship and trust. While incentives like higher pay or promotions can be used as rewards for loyal employees, they’re not a replacement for a solidly established relationship.
What factors contribute to employee loyalty?
The three main factors that contribute to employee loyalty are company loyalty, employee satisfaction, and employee engagement.
Company loyalty is the degree that employees have positive feelings about their employer. Generally, loyalty is high when employees feel well compensated and have adequate employee benefits. Employers can increase employee loyalty with wellness perks, investments in personal development, and by contributing to meaningful causes. When team members feel that their company shares their personal values, they’re more likely to stay.
BetterUp measures this sentiment towards companies with a figure known as the eNPS, or employer net promoter score. During the pandemic, companies that demonstrated concern for their employees’ wellbeing saw dramatic increases in eNPS.
Employee satisfaction has been shown to correlate with high levels of job performance. When employees are satisfied in their roles, they’re feeling sufficiently challenged by the work they do and the compensation they receive. They enjoy working with their teams and feel supported by their leaders.
Finally, employee engagement is the degree that employees are involved with their work on a day-to-day basis. When employees are highly invested in their work, they spend more time in a flow state. They tend to do more creative, innovative work and report higher job satisfaction.
These three factors combined lead to an increase in employee retention. Not only does that mean happier employees, but it means less time and money spent trying to find new staff members and a lower turnover rate. Loyalty is built over time, so every employee that stays with your company has a positive ripple effect on the organization.
How to check employee loyalty
You won’t really know how your team feels about your leadership if you don’t ask. The best way to measure employee loyalty is to conduct periodic opportunities for your staff to share feedback. Ideally, feedback (in all directions) is a strong part of your company culture.
As mentioned, companies can aggregate employee feedback into a measure known as eNPS (employer net promoter score). In BetterUp’s research, however, we’ve found that several other characteristics tend to correlate with eNPS. For example, companies that enjoy a highly connected culture also tend to have higher eNPS. And companies that invest in their employees’ development and well-being also report high eNPS scores.
It’s a good idea to create clear channels for employees to communicate feedback and challenges with their leaders. When organizations are sincere about their desire to grow and transparent about the changes they’re making, it has a positive impact on employee loyalty.
Management’s role in developing employee loyalty
A manager is an employee’s most direct connection to the organization. And while people intellectually know that there is a difference between a manager and a company, the lines are often very blurry. A manager is responsible for implementing the policies of an organization and meeting its goals. When a manager exhibits toxic behaviors, a company that doesn’t intervene might be viewed as tacitly endorsing this treatment.
Either way, there’s no doubt that our experiences at work are influenced by our managers. And while a good manager might not “save” a poorly-run company, a great company will almost certainly be held back by poor management.
There are many different ways managers can go about developing employee loyalty. Here are some specific steps that managers can take to help:
- Encourage your team members by supporting them, praising their work, and giving them opportunities for growth.
- Look for opportunities to implement employee recognition programs, even if they’re just on a small scale. People love to know their work is seen and appreciated.
- Be honest and transparent with employees about company goals, work schedules, or any changes that could affect their jobs.
- Give employees the opportunity to voice their opinions on how things are going at work. Encourage them to take the lead in your one-on-one meetings.
- Share your own thoughts with employees from time-to-time, including ideas you have for the future of the company or what you think is working well now.
5 ways to build and encourage employee loyalty
In order to foster employee loyalty, it is important to create a company culture that values people. Employees should feel appreciated, respected, and understood. They should be offered opportunities for growth — both within the company and on a personal level.
To do this, it's important to understand what keeps your employees engaged. Some companies make themselves attractive by providing great benefits or a sense of community that makes people feel happy when they come into work each day. Other companies might focus on opportunities for professional development or allow employees more autonomy over how they do their jobs. One thing is clear: there is no one-size fits all approach for building employee loyalty. Each company will find success by doing things differently.
Here are a few best practices to build and encourage employee loyalty:
1. Evaluate your organizational structure
If you want your employees to be able to communicate effectively with leadership, it helps to have an organizational structure that’s correctly matched to your phase of growth.
In the early stages, a flatter structure might help every employee’s voice be heard. As you grow, a functional or matrix structure might be better, so that each person feels like a part of a team. If you have employees in a dotted line reporting structure, pay close attention to engagement and satisfaction levels. Whatever it is, get your team’s input on how well it’s working and what needs to change.
2. Conduct stay interviews
Many organizations conduct exit interviews, in which they ask employees about their experience as they’re leaving. Consider having stay interviews instead. Find out what your team members like and dislike about their jobs. Think about asking what they would be looking for in a new job (if they were to leave).
3. Show them the money
One of the top reasons employees leave their jobs is compensation. If your top talent is happy with their pay (and on par with the market for that role) they’ll have less reason to see if the grass is greener elsewhere. Salary won’t outweigh a toxic work environment. But if everything else is going well, it’s a major factor for most people in the decision-making process.
5. Invest in your people
Another key area employees look for? Opportunities for professional development and growth within the organization. When there’s ample room for growth, employees are much more likely to go the extra mile. They’ll want to do more, because they’ll see how it benefits them as well as the company. These investments have a long-term impact on both company performance and their career path.
Final thoughts
Like customer loyalty — or trust in any relationship — employee loyalty isn’t built overnight. It’s created by an employer consistently making their employees a priority. That means thinking about total compensation, how your values are reflected in the work you do, and employee experience. This process can’t be shortcut. But when you make investments in the relationship, these initiatives pay off with mutual respect — and authentic dedication to your organization.
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