Loyalty is first and foremost about reciprocity. Employees should have the feeling that the organisation wants the best for them, and as a result they will continue to do their best and not look for another job. Employee loyalty is thus above all determined by how the organisation has arranged things and the way this is conveyed to the employee.
What is employee loyalty?
loy-al-ty (n.)
1 a feeling of allegiance
The principles of loyalty1
- When policy is executed, the employee should have a central role. If an organisation shows that it is doing its best for the employees, this will create a feeling among employees of reciprocal obligation. You should also give your employees the feeling that they are being treated fairly: equal pay for equal work.
- The employees should trust that you as employer want the best for them and do not only act out of self-interest.
- If your organisation pays little to no attention to the private lives of the employees, conflict can arise. Employees who take part in other activities outside of their work, which they feel committed to (hobbies, sports, studies), have more trouble finding the right balance between their work life and private life. Conflict between the two has an impact on employee loyalty. The reverse is also the case: if the organisation shows understanding for the employee and can help the employee find the right balance, his loyalty will only increase.
The importance of loyalty
Organisations are highly dependent on employees’ loyalty; it is important for organisational success. Even so, organisations are rather sceptical about the extent to which employees can really be loyal. There is a well-known saying that goes: ‘If you want loyalty, buy a dog.’2
In itself, it is not strange that the extent of employee loyalty is declining. In the past, organisations and employees really looked out for one another. Employers offered the security of a job in exchange for commitment and loyalty. There was still a concept of ‘life-time employment’.
Today, both employers and employees think more about themselves. Employers are under more pressure from shareholders to perform well and as a result cannot always offer job security. Despite this, organisations should continue to focus on employee loyalty and attempt to increase it, because it has a positive effect on attendance, the risk of absence and organisational citizenship behaviour.3
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In times of economic progress and a shortage on the labour market, the importance of loyalty for organisations is getting ever greater. On the one hand the competition for talent is increasing. An organisation naturally wants to retain talented employees. On the other hand, more and more is being invested in employee development. These developments mean that turnover is becoming more expensive.4
In times of economic downturn, the immediate necessity of employee loyalty is less clear. However, it is still vitally important. True, employees will stick to your organisation in economically rough periods, but do they have the right motivation? Slacking on important issues for employees will not influence an organisation in the short term, but in the long run, it may have a devastating effect on your talented workforce. They will be the first to leave when the opportunity arises.
During economic strife it is good and often necessary to re-evaluate your staff in order to see where you need to cut back in order to become healthy again. But, this does not mean loyalty is less important. It remains vitally important in the places it will hurt most to lose employees: among your talent pool. Periods of economic boom can often mask problems within organisations which are only uncovered during economic downturn, so it is just as important to have a continuous, reliable supply of information.
The difference between loyalty and commitment
Committed employees are more likely also to be loyal employees, while loyal employees do not by definition have to be committed. A loyal employee is happy to (continue to) work for the organisation, as is a committed employee. However, employee commitment goes a step further than loyalty.
Loyalty stems from ‘being loyal to the organisation because the organisation wants the best for you’. The employee will also express his enthusiasm about the organisation to friends or acquaintances. A loyal employee stays at the organisation as long as the organisation is good for him. This does not automatically mean, however, that he is also committed to the organisation and identifies with the organisation’s goals.
Committed employees want to continue working for the organisation because they support your organisation’s strategy and objectives. They identify with your organisation and want to do their best, because they feel at home there. Employees who feel as if they fit into your organisation are also more likely to be loyal to your organisation.
- Roehling,et al (2001) The Relationship between Work-Life Policies and Practices and Employee Loyalty: a Life Course Perspective. Journal of Family and Economic Issues, Vol. 22, 141-170
- Kerr, S and Von Glinow, M.A. (1997) The Future of HR: Plus ca Change, Plus c’est la Même Chose. Human Resource Management, Vol. 36, 115-119
- Schalk, R. and Freese, C. (1997) New Facets of Commitment in Response to Organizational Change: Research Trends and the Dutch Experience. Journal of Organizational Behavior, Vol. 4, 107-123
- Roehling et al (2001) The Relationship between Work-Life Policies and Practices and Employee Loyalty: a Life Course Perspective. Journal of Family and Economic Issues, Vol. 22, 141-170