Earlier this year MetLife’s ninth annual Study of Employee Benefits reported only 47 percent of employees surveyed feel very strong loyalty to their employers. Just three years ago the same survey showed 59 percent of workers felt very strong loyalty. Surprisingly, more than half of the employers surveyed during that same period reported a belief that employees were just as loyal as always. Clearly there is a perception gap about worker loyalty, and it is widening.
The implications of this loyalty gap could be significant for chief learning officers. If organizations come to accept that employee loyalty is a thing of the past, efforts to align workforce development with business objectives and market realities could fail before they get off the ground. Indeed, long-term initiatives to cultivate an educated, dedicated and capable workforce are likely to fail unless CLOs partner with chief human resource officers and other C-level executives to validate the importance of loyalty and reinforce its impact on the organization.
All Hands on Deck
The challenge of building or rebuilding employee loyalty is significant. The recession that began in 2007-2008 has lingered and continues to stifle employment. Stagnant job growth may be keeping workers in positions they’re actually anxious to leave.
Some studies suggest loyalty is declining because employees have become unhappy in recent years. High unemployment, demanding working conditions, limited advancement opportunities and declining compensation all have contributed to a frustrating workplace environment. The obvious conclusion is that unhappy workers are disloyal workers.
A survey released in July by Mercer, a global outplacement consulting firm, reported nearly 21 percent of U.S. workers have a negative view of their employers and have become disengaged from their jobs, even if they are not actively seeking another position. If they are disengaged or disgruntled, they will be inclined to leave once the economy improves. But there may be more deep-seated reasons for the loyalty decline.
Younger workers, especially millennials, simply may not share the same sense of loyalty that characterized members of the traditionalist (World War II) generation. Even when compared with generations closer to them in age, millennials seem to differ in their commitment to employers.
A survey conducted by the Pew Research Center last year found 39 percent of all employed millennials said it was very likely, and 27 percent said it was somewhat likely they would switch careers sometime in their working life, compared with 55 percent of Gen Xers and 31 percent of baby boomers. Some 57 percent of younger workers said it was not very or not at all likely that they would stay with their current employers for the remainder of their working life. Among Gen X workers those numbers are virtually reversed; a 62 percent majority say it’s likely they will never leave their current employer, while only 16 percent expect to someday be working for someone else.
Essentially, CLOs will be establishing learning and development processes for employees who may jump ship for better jobs at the first opportunity. Organizations that don’t forge strong loyalty ties with their employees risk the disruption and expense associated with high turnover.
The Nature of Loyalty
Loyalty is a fundamental human characteristic defined by unfaltering allegiance or faithfulness, and there are many kinds: loyalty to country, a sports team, parents, siblings, spouses or children. Let’s not forget consumer loyalty to the products and services. Most of the Fortune 500 companies owe their success to the enduring power of customer or brand loyalty.
But employees are not quite like consumers. They want to be loyal and to have their loyalty cultivated and appreciated by employers, but not all employees perceive loyalty the same way. Workers from different backgrounds will have different ideas about what it means to be loyal, as well as what factors make them feel more or less loyal to their employers.
In July 2011, consulting company KEYGroup conducted an Internet poll of 224 employees from different organizations in which members of four generations were asked, what makes you loyal to your organization? Responses by each generation revealed several differences in what drives employee loyalty. One hundred percent of the members of the mature generation selected belief in the mission of the organization. Some 46.8 percent of baby boomers also cited belief in the mission of the organization as a major factor, but 41.3 percent identified challenging work as a loyalty driver. Nearly 53 percent of Generation X responders cited career advancement opportunities, while 57.9 percent of the millennial generation chose likable co-workers as their primary source of loyalty.
Although it’s difficult to draw broad conclusions based on a small poll, CLOs should consider differences in loyalty across the generations when planning learning and development initiatives. For example, younger, entry-level employees may need professional mentoring and career development support; Gen X mid-career employees may require executive coaching to strengthen leadership skills for the next career progression; and baby boomer and mature employees may be interested in knowledge-sharing opportunities as they contemplate or plan how to fulfill their legacy.
How to Build Employee Loyalty
Increasing employee loyalty is an elusive objective, one difficult to quantify. An organization could attempt to buy employee loyalty with a fat salary and benefits, but without deep pockets, leaders risk getting into a bidding war. Further, since the economy isn’t in top form yet, big paychecks and signing bonuses are unlikely.
Employers aren’t without options as they try to win their employees’ loyalty, however. Traditional employee rewards may be limited, but there are three things learning leaders can do to increase employee loyalty:
1. Create an engaging workplace: Cutting-edge employers offer their employees an environment as steeped in fun and creative energy as it is productive. The cubicle farms and library-like atmosphere that once dominated large organizations have been replaced with TVs, dart boards, high-technology gadgets, nap rooms and communal workspaces. It may seem unproductive and distracting to some employers, but highly competitive and creative organizations try to create a high-energy, high-output workspace.
For example, in August 2010, AOL purchased a 225,000-square-foot facility in Silicon Valley to attract tech-savvy designers and programmers capable of expanding its brands. Brad Garlinghouse, president of AOL’s Applications and Commerce Group, said, “The space you work in is a reflection of the kind of company you are. You get innovation from working in a space that’s very open and doesn’t have offices, where people can work together and play together.”
According to a June 2011 USA Today article by Jefferson Graham, AOL’s West Coast employees can draw on the walls, play pool and ping-pong, and come to work whenever they like. In return they are expected to create hot websites and dynamic mobile apps.
Employers don’t need to redesign the workspace to create an engaging learning environment. Jessica Trybus, the CEO of Etcetera Edutainment, is leading efforts to bring the techniques and technologies of the video game industry to training simulations.
In spring 2011 Etcetera developed a project for Westinghouse Electric Co. that helped thousands of manufacturing employees learn and incorporate human performance concepts into their daily processes. By applying these concepts to their daily tasks, or choosing not to, workers could better understand the balance between productivity and safety, and be empowered to make a difference.
In the case of safety, if one incident is avoided, it could mean hundreds of thousands of dollars or more in savings. In the case of productivity, avoiding incidents is beneficial, but passive, traditional training requires time off the job and is a waste of time and money if employees do not retain the knowledge.
“Game-based learning can be as effective as hands-on experience because it’s active learning, as opposed to passive, meaning the learner has to participate, making choices and dealing with the consequences of those choices,” Trybus said. “Game-based learning can deliver the effectiveness of flight simulation to many other tasks and occupations.”
2. Provide recognition and reward: Recognition not only acknowledges individual performance, it establishes cultural performance norms for others. Acknowledging an organization’s best employees or exceptional performance sets a standard for others to meet or exceed. It’s also an effective way to strengthen an organization’s mission.
Nash Health Care, a nonprofit hospital authority composed of five licensed hospitals totaling 403 beds in Rocky Mount, N.C., is both mission-driven and recognition-focused. In an effort to engage staff, retain talent and increase profitability, the leadership team conducts full-day leadership retreats every quarter. The intensive sessions help to further the organization’s cultural change process and emphasize senior management’s commitment to ongoing learning and development.
Before each learning and development retreat, Nash’s leaders nominate individuals or teams that have demonstrated high performance for special recognition in one of five scorecard areas or metrics. Each nominee is videotaped and acknowledged during the retreat. The winners are announced and presented with plaques and prizes before the retreat ends with a special tribute called a “Wow” factor. During the tribute a patient and the patient’s family attend the event to tell their personal story about the excellent care they received, after which the full care team is brought in to celebrate the success and receive their award. Laughter, tears and applause are common as Nash employees get to witness the human impact their dedication has brought to the patients and families they serve.
3. Develop opportunities for learning and growth: After decades of corporate downsizing, right-sizing, mergers and consolidations, the corporate pyramid is flatter than ever. There are fewer rungs on the ladder and employees strive to hang on to paychecks, rather than get to the top. Savvy organizations recognize the need to provide a workplace that fully engages employees and offers growth opportunities.
“The rate of organizational change has not slowed in recent years, and may even be increasing as businesses around the world continue to transition in response to economic changes,” said Lisa Rohland, director of learning and development for GlaxoSmithKline North America, a global research-based pharmaceutical and health care company. “It’s never good when employee engagement starts deteriorating, especially in times of downturn and transformation. Unfortunately, experts say that’s exactly what’s happening.”
Rohland said for employees to prosper and grow they need to be motivated and encouraged to reach their full potential. That will require learning leaders to employ some different, more creative thinking to provide employees with learning opportunities to aid development, improve engagement and promote business success. “Whether you are pushing your ready-now talent to do something new or helping your ready-soon players elevate their game, learning and career development is an essential ingredient in retaining employees and creating a motivated workforce; one that dramatically improves organizational culture, alignment, execution and performance results.”
Consider Genpact, one of the 2010 Very Best Learning Organizations according to the American Society for Training and Development. Genpact provides subsidized education opportunities, called Education@Work, by partnering with prominent universities across the globe to help young employees fulfill their career goals to achieve professional and academic qualifications. Genpact reports 6 percent attrition for employees in the program and 8 percent for post-program employees compared to similar industry attrition rates of 50 percent.
A Look Ahead
Future potential can be a powerful motivator of employee loyalty. When employees are given opportunities for learning and career development they feel valued and appreciated. Knowing the organization sees them as long-term members of the “family” helps maintain employee loyalty. But it is important for CLOs to link development with the required skills and competencies necessary for each career progression, as well as to include lateral experiences for overall growth and development.
Employees naturally seek challenge and growth. They can reach those goals outside the organization, but there’s no reason employees can’t enjoy new challenges and personal growth without the quid pro quo expectation that robust development plans, including stretch assignments, special projects, task teams and other opportunities, automatically lead to promotions.
Employee loyalty is changing in today’s challenging business climate, but it isn’t dead. Organizations that provide employees with an engaging work environment, innovative opportunities for personal development and recognition of employee contribution will be well positioned to retain talented, experienced employees.
Jan Ferri-Reed is president of KEYGroup, a speaking, training and assessment firm, and co-author of Keeping the Millennials: Why Companies Are Losing Billions in Turnover to This Generation and What to Do About It. She can be reached at editor@CLOmedia.com.
