The Decline of Employee Loyalty
A new HRI survey helps confirm what many have suspected for some time: that the loyalty and commitment of U.S. workers to their organizations has declined in recent years. The survey also indicates that most HR professionals believe a large part of the answer to this problem is to make work more challenging and to improve employee-supervisor relationships. These strategies are considered much more effective than becoming the highest-paying employer in an industry.
Fully 77% of the 165 HR professionals responding to the survey – all from organizations with over 1,000 employees – said that the loyalty and commitment of their workers had either decreased somewhat (58.5%) or decreased substantially (18.9%) over the last five years. Less than a third of respondents rate the loyalty and commitment of their workforce as very high (4%) or high (27%). Most (58%) rate the loyalty of their workers as medium, and 11% say it's low or very low.
The fact that so many HR experts believe there's a decline in employee loyalty and commitment may bode ill for organizations, especially given the importance they attach to these qualities. The vast majority (94%) of respondents said employee loyalty and commitment are either very important (52%) or important (42%) to their companies. What's more, they believe these qualities will become even more critical in the future. Sixty percent of respondents said loyalty and commitment will be very important five years from now, and another 34% said these qualities will be important.
Why is so much importance attached to the loyalty and commitment of the future workforce? The number one reason, cited by 81% of respondents, is "sustained growth." Apparently, few respondents believe that their firms will be able to thrive in the future marketplace if employee turnover is high and commitment low. Specifically, turnover can be destructive to the all-important customer relationship; 76% of respondents said a committed workforce will be a major factor in enhancing customer service. Loyalty and commitment will also play a crucial role in increasing productivity (cited by 68%) and improving quality (cited by 59%).
The decline in loyalty is making it harder for many HR professionals to do their jobs. The problem becomes starkly apparent in survey responses about retaining "key talent." Twenty-two percent of respondents said it has become very difficult to attract key talent, and another 27% said it has become difficult. In short, nearly six in ten of these organizations are having a tough time keeping employees with the most important skills and talents.
About two thirds of respondents say their firms have a strategy in place or under development that is designed to improve the loyalty and commitment of workers. Among the strategies mentioned are those geared toward improving employee communication and enhancing development and training programs. Improving leadership and management skills among supervisors is also a priority in a number of firms. One respondent notes, for example, "Current focus is on education and training of managers, who in reality control most of the retention levers we can put in place."
The importance of such approaches was reinforced when respondents were asked to rate a list of strategies in terms of their importance for attracting and retaining a highly motivated, loyal and committed workforce. Nearly three quarters (73%) said that maintaining good worker/supervisor relationships was very important, followed by creating a challenging work experience (71%), ensuring open and honest communication (65%), providing outstanding training and education opportunities (52%), and creating pay systems that reward increased employee contributions and allow workers to share in the firm's success (44%). But being the highest-paying employer received the lowest rating of all, with a mere 2% saying it is very important.
Of course, it's impossible to know whether even the most enlightened of strategies will be able to slow or reverse the perceived decline of employee loyalty and commitment. On one hand, if restructurings truly erode loyalty and commitment, then the U.S. economic slowdown of recent months – which has been marked by layoff announcements in many large organizations – may drive down employees' sense of commitment. On the other hand, a weaker economy could also reduce voluntary turnover rates because employees have fewer employment options. However, employers should recognize that a large generation of young workers will be entering the U.S. workforce in coming years, about the same time that many talented Boomers start taking early retirement. Since young people tend to switch jobs more frequently than older ones, employers may be faced with increasingly severe turnover problems over the next two decades.
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Fully 77% of the 165 HR professionals responding to the survey – all from organizations with over 1,000 employees – said that the loyalty and commitment of their workers had either decreased somewhat (58.5%) or decreased substantially (18.9%) over the last five years. Less than a third of respondents rate the loyalty and commitment of their workforce as very high (4%) or high (27%). Most (58%) rate the loyalty of their workers as medium, and 11% say it's low or very low.
The fact that so many HR experts believe there's a decline in employee loyalty and commitment may bode ill for organizations, especially given the importance they attach to these qualities. The vast majority (94%) of respondents said employee loyalty and commitment are either very important (52%) or important (42%) to their companies. What's more, they believe these qualities will become even more critical in the future. Sixty percent of respondents said loyalty and commitment will be very important five years from now, and another 34% said these qualities will be important.
Why is so much importance attached to the loyalty and commitment of the future workforce? The number one reason, cited by 81% of respondents, is "sustained growth." Apparently, few respondents believe that their firms will be able to thrive in the future marketplace if employee turnover is high and commitment low. Specifically, turnover can be destructive to the all-important customer relationship; 76% of respondents said a committed workforce will be a major factor in enhancing customer service. Loyalty and commitment will also play a crucial role in increasing productivity (cited by 68%) and improving quality (cited by 59%).
The decline in loyalty is making it harder for many HR professionals to do their jobs. The problem becomes starkly apparent in survey responses about retaining "key talent." Twenty-two percent of respondents said it has become very difficult to attract key talent, and another 27% said it has become difficult. In short, nearly six in ten of these organizations are having a tough time keeping employees with the most important skills and talents.
About two thirds of respondents say their firms have a strategy in place or under development that is designed to improve the loyalty and commitment of workers. Among the strategies mentioned are those geared toward improving employee communication and enhancing development and training programs. Improving leadership and management skills among supervisors is also a priority in a number of firms. One respondent notes, for example, "Current focus is on education and training of managers, who in reality control most of the retention levers we can put in place."
The importance of such approaches was reinforced when respondents were asked to rate a list of strategies in terms of their importance for attracting and retaining a highly motivated, loyal and committed workforce. Nearly three quarters (73%) said that maintaining good worker/supervisor relationships was very important, followed by creating a challenging work experience (71%), ensuring open and honest communication (65%), providing outstanding training and education opportunities (52%), and creating pay systems that reward increased employee contributions and allow workers to share in the firm's success (44%). But being the highest-paying employer received the lowest rating of all, with a mere 2% saying it is very important.
Of course, it's impossible to know whether even the most enlightened of strategies will be able to slow or reverse the perceived decline of employee loyalty and commitment. On one hand, if restructurings truly erode loyalty and commitment, then the U.S. economic slowdown of recent months – which has been marked by layoff announcements in many large organizations – may drive down employees' sense of commitment. On the other hand, a weaker economy could also reduce voluntary turnover rates because employees have fewer employment options. However, employers should recognize that a large generation of young workers will be entering the U.S. workforce in coming years, about the same time that many talented Boomers start taking early retirement. Since young people tend to switch jobs more frequently than older ones, employers may be faced with increasingly severe turnover problems over the next two decades.
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