Sliding loyalty causes retention headaches

Sep 25 2007 by Brian Amble Print This Article

Look around the average workplace and it's a sobering thought that the proportion of employees who are not committed to the organization and are likely to leave within two years outnumbers those who are truly loyal.

That's according to study of employee loyalty in American organisations published earlier this month by Walker information which revealed that just a third of employees can be considered to be loyal

Although the proportion of truly loyal employees – 34 per cent – is unchanged from two years ago, the percentage of employees categorized as "high risk" now exceeds those who are loyal, creating a widening gap for employers struggling to improve retention.

The Walker Loyalty Report for Loyalty in the Workplace, examining trends in both employee loyalty and business ethics, suggests that more than a third - some 36 per cent - of employees are at high risk of leaving within two years – an increase of five percentage points from 2005.

"Employers are faced with a situation where the number of employees causing a negative drain on the organization outweighs those who are working to positively support it," said Chris Woolard, senior consultant for Walker Information.

"With more than a third of employees classified as high risk, the results of our study signal concern as to how the negative attitudes often characteristic of this group will affect organizations – and their ability to compete successfully – down the road."

To make matters worse, the number of graduates who expect to stay with their first employers for more than three years is also on the slide.

As the latest College Student Career Confidence Survey by Right Management has highlighted, 61 per cent of college students expect to remain with their first employers for less than three years, unwelcome news for organizations that have just spent a fortune in time and money recruiting this year's crop of graduate hires.

The Walker Loyalty Report sheds further light on this, finding that workers in their 20s – "Generation Y" – are both the most loyal but also the most dichotomous, with 78 per cent classified as either truly loyal or at high risk of quitting.

Baby Boomers, meanwhile, ranked lower in loyalty – with just 32 per cent truly loyal – and followed Gen Y in the number of high-risk employees with 37 per cent.

"With the lowest number of trapped employees and the highest percentage of those deemed high risk, the implication is Generation Y workers are confident better opportunities exist," Chris Woolard said.

The Walker research also found that employee loyalty during the first 10 years on the job generally increases as employee tenure rises, but a large number are high risk.

Employees with a company for less than one year were the least loyal at just 26 per cent, while loyalty was highest (45 per cent) for those with six to nine years on the job. After a decade on the job, however, loyalty starts to diminish.

But the news isn't all bad for employers, with some improvements emerging in the experience areas most predominantly tied to loyalty. Fifty-eight per cent of those surveyed said their employers show care and concern for them – one of the leading drivers of loyalty – compared to just 54 per cent in 2005.

Within this category, 55 per cent agreed their employers were working to develop employees for the long term, up from 50 per cent two years ago.

Douglas J. Matthews, CEO of Right Management, said that it is vital to understand what motivates recent graduates if you want to keep them in an organization for more than three years.

"Career development opportunities are one of the top motivators. Giving them a chance to develop professionally and advance in their careers will foster higher levels of engagement, productivity, and retention."

It is a similar story later on in the career cycle. According to the Walker report, the top experience-based drivers of loyalty are fairness at work, care and concern, trust in employees, feelings of accomplishment, and satisfaction day-to-day.

And with Right Management estimating that it costs an average of 2.5 times an individual's salary to replace an employee in terms of recruitment, training, lost productivity and severance costs, the message is that it pays to help get new hires committed to their organizations - and keep them engaged in their jobs - as early in their careers as possible.

Older Comments

Why should they be committed to a company that treats them disrespectfully by rarely listening to what an employee cares about and if management does listen then almost never reasonably responding.

Whether or not employees are committed to their work is entirely a function of how they are treated by management. This is not rocket science, just simple humanity. No one likes to be ordered around and treated like a robot without feelings.

Managements are generally not interested in solving this problem because no one else is doing it and thus their competition is having the same problem.

Any company which causes its employees to feel a strong sense of ownership will experience huge gains in performance including creativity, innovation, productivity, motivation and commitment. Such a company would be able to literally destroy their competition.

Not to worry that such will happen, however. The vast majority of top level managers don't want to give up their authoritarian powers in favor of respecting their employees.

Best regards, Ben Author 'Leading People to be Highly Motivated and Committed'

Ben Simonton

I swear... CEOs and politicians have to be the two dumbest classifications of humans at times. Why in the WORLD would anyone be loyal to a company that does not care about its employees.

1) 40 hour work week is a myth. I'm 32 and on my third job since graduating college with my masters and CPA designation. I left public accounting after my fourth and last busy season in which I worked 70 hours per week for 9 weeks straight. At the end of the busy season, the staff were 'rewarded' (read 'insulted') with a $25 gift certificate to a half-assed chain restaurant. So, we put in all of these hours, or 'sweat equity' as the partners used to call it, for nothing. No structure, no promotions, and after we have years of work experience, they don't hire people under us for us to manage (thus we get little or no management experience). To date, the only 'management' experience I have is reviewing the tax returns of a contract tax preparer who made three times per hour what I made and did the job poorly. And you want us to be loyal? To 'get ahead' most of us who want to build a career are working long, long hours with little or no hope or reward in sight. After leaving public accounting for industry, I still work long hours, only this time, there's projects going on constantly, such that I haven't taken a week off in two years. For what? I'm still in the same position I'm in after 4 years with this company. At the same time I'm staying late and forgoing vacation, I see lots of folks leaving at 5. We're tired of being told that the way to get ahead is to work more hours. Put your money where your mouth is.

2) Layoffs. Every time a shareholder farts, companies lay off employees. A thousand here, three thousand there, etc. Why should we be loyal when at any time, we could be axed?

3) Greed. Executives don't even pretend to hide their greed. Why be loyal to someone who you know is only out for themselves. And these aren't Gen Xers or Gen Yers who are raping the companies so hard that they can't afford to stay in business or pay employees well. It's the Baby Boomers.

It's sobering? It's laughable. You want our generation to work hard and be loyal on long hours and low pay. You want loyalty, you have to EARN it.

Corporate communication. What a joke. When management makes decisions, it affects the entire organization. Execs and managers meet in secret, make a corporate plan, and then fail to communicate the important details of their plans to the people who actually have to do the work to execute the plans. The secret strategy meetings and utter lack of communication don't exactly foster loyalty. It creates a worker vs management culture, especially when the lack of communication creates crisis and even longer hours because they weren't able to communicate their 'vision' in time.

Most people are capable of being loyal. But you damn sure have to earn it first. Hiring someone is just the beginning.