Rethinking the Company Loyalty Concept

Posted on January 10, 2019

Loyalty. We hear the word often, particularly in the context of brand loyalty. Airlines have mileage programs for frequent fliers, stores have member discounts for frequent buyers. Companies are trying hard to attract and maintain loyal customers.

But what about company loyalty?

There was a time when people worked for the same company for their whole careers. It was a time when the success of the organization and the success of the individual were closely aligned. Today that seems like a fairy tale. Since the 1970s, the average tenure has declined as people have shifted their loyalty from their employer to their career development. Does that mean companies should give up on trying to create a loyal workforce?

Over the last decade, this is a question that has been hotly debated among recruiters, talent development professionals, and executives. On one hand, it has always been possible to replace people who leave. Pouring money and time into retention efforts when you know people are likely to leave for a better opportunity within a year or two seems like a waste. Why not just focus on keeping an active pipeline of candidates instead? On the other hand, recruiting and replacing workers, especially skilled workers, is also expensive. It takes time to onboard new hires, it lowers productivity while they get up to speed, and you lose valuable institutional knowledge with each person who turns over. Why not try to keep the people you have?

The retention question is especially challenging in organizations that have a large population of frontline workers. These jobs may be viewed as stepping stones for people who are looking to gain some skills, and then move up to a higher skill, higher paying job. If that job doesn’t exist within the organization at the time, these workers are very likely to go outside the organization to find their next move.

Frontline workers may also have problems with attendance or performance as they struggle to find reliable transportation or balance childcare or elder care. How can HR respond to these types of issues? In many organizations, the answer is simple: They don’t. They terminate the underperforming employee and move on to the next applicant, and the business accepts the replacement cost because they don’t see any way to prevent it.

As the job market tightens, it becomes even more expensive and challenging to time find that replacement talent. More and more, organizations are rethinking their approach to loyalty and finding ways to double down on retention strategies.

Which brings us back to the question of whether it is possible in today’s workforce to create company loyalty.

When we think about the idea that workers are now more loyal to their career development and opportunities to grow than to their employer, we start to see a solution to the problem of retention. If companies find ways to create learning and growth opportunities for their workers, those workers will stay longer. Starbucks and McDonalds have found success with their college funding programs. It’s not always about finding growth opportunities within the company, but rather its about investing in the future of each individual. When there is alignment between the success of the company and the success of each employee, it creates a tighter bond between the two.

Beyond career opportunities, companies are finding that it makes sense to focus on some of the issues that frontline workers face when they are not at work. By providing resources to help solve childcare issues or housing challenges, they help employees stabilize their ability to come to work for every shift, and to focus on the work rather than outside stress.

Loyalty has changed. It’s no longer about individuals staying in one job for their whole careers. But if we build on the same principles of aligning individual success with organizational success, we can find ways to attract and retain the workforce we need, even in a tight labor market.


Topics: labor shortage absenteeism impact investing workforce development employee retention career training

 

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