We all know that employee loyalty is important, but oftentimes we forget how employee loyalty is connected with customer loyalty and how loyal employees contribute to the success of the entire business.
“Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers.” (Putting the Service-Profit Chain to Work, Harvard Business Review, 1994)
What Is Employee Loyalty and Why Is It Important at Work?
Employee loyalty refers to the dedication, commitment, and allegiance exhibited by employees towards their organization, resulting in long-term engagement, productivity, and a willingness to go above and beyond in their work
Employee loyalty is crucial in the workplace as it fosters a sense of stability, trust, and mutual benefit between employees and the organization. Loyal employees are more engaged, productive, and committed to achieving organizational goals. They contribute to a positive work culture, enhance team collaboration, and are less likely to seek opportunities elsewhere, reducing turnover costs. Moreover, loyal employees become brand advocates, attracting top talent and positively influencing the organization’s reputation and success.
Leadership and Loyalty
There is a strong relationship between employee satisfaction and employee loyalty and between employee loyalty and customer loyalty and, ultimately, profitability. So what is the secret to fostering employee loyalty and preventing employee turnover? Effective leadership.
In fact, according to a survey conducted by Korn Ferry, 33% of employees plan to look for a new job due to being bored and needing a new challenge.
Leaders who genuinely care about their people—who are “plugged in” to their organizations and listen to their employees for suggestions on how to improve—will develop corporate cultures that naturally support the concept of the Service-Profit Chain. By no surprise, employees who trust and respect the leadership of an organization often feel more empowered and motivated to do their best, which reduces employee turnover and its costs.
Those costs, particularly when layoffs are involved, can include low morale among stressed employees, and widespread distrust of the company by employees, according to the American Psychological Association’s 2014 Work and Well-Being Survey.
Metlife had similar findings in its 2011 Annual U.S. Employee Benefit Trends Study, which reported that employee loyalty was at a 3-year low. However, the study’s 2017 findings, titled “Work Redefined: A New Age” focused on what companies can do to inspire loyalty: “With so much change, employees are looking for more stability, protection, and a safeguard against disruption. If they can find it in their employer, they’ll show their appreciation through loyalty.”
Much of the report examines what kind of benefits inspire employee loyalty in the workplace, but even great benefits can’t make up for a poor work environment, so it’s more important than ever for leaders to embrace and implement changes that encourage loyal employees who uphold your brand’s values.
Factors That Influence Employee Loyalty
- Organizational culture and values
- Leadership and management practices
- Career development and growth opportunities
- Recognition and rewards programs
- Work-life balance initiatives
- Employee well-being and support
6 Tips for Fostering Employee Loyalty
These tips, which are drawn largely from the experience of customer service reps (CSRs), are widely applicable since in the end we all ultimately serve the customer.
1. Give Employees the Tools They Need
Develop tools that allow employees to quickly look up the answers to common problems, share best practices and solutions with each other, and contribute to the company’s knowledge base. Train employees in soft skills as well, like de-escalating a situation, and feeling and expressing empathy.
2. Give Employees the Time They Need
Think about voice of the customer (VoC) for a moment, and how often feedback comes from a post-interaction customer satisfaction survey, whether it’s an automated phone call or email.
Now think about how much customer service is outsourced to call centers, which work effectively in keeping calls short. One call center explained the need for time limits this way: “Companies account for customer service as a cost center, not a profit center, and companies need to keep costs down.” Talented, hard-working employees with great people skills might be forgiven for hearing this as, “You cost us, and the only value you have is your ability to keep costs down.”
This is hardly a way to build loyalty, and the pressure to keep calls short contributes to the call center industry having the highest turnover of industries worldwide. (In a 2016 post Talkdesk, a provider of call center solutions, reported the yearly turnover as 30-45%, double or triple that of all U.S. industries in 2013.)
3. Change How You Account for Customer Service
A better way to think about customer service and build employee loyalty is to think about how many customers your employees talk with and interact with each day. That gives them valuable perspective on customer wants, needs, frustrations, and satisfaction. Think about ways to record and gather that perspective, and how you can use the data to improve your services, products, offerings, and, especially, profits.
4. Measure the Right Things
Remember that not all projects take the same amount of time. Strict time limits or quotas may discourage talented employees from taking on difficult tasks. Quality Assurance and Training Connection (QATC) reported that one company saw a significant increase in retention by designating more resources and adjusting performance expectations a little for a particularly stressful call type. Think about the knowledge and experience the company held onto by keeping those employees. (Not to mention the cost savings.) QATC’s article ends with a table breaking out the line items behind the oft-quoted cost of about $6,500 to replace a non-supervisory employee.
5. Solicit Employee Feedback
How does an employee show loyalty? Through open communication. ATB Financial, which has appeared repeatedly on Achievers’ 50 Most Engaged Workplaces list (and most recently as one of The Elite 8), encourages its employees to logon to the recruiting site Glassdoor and leave anonymous reviews of the company. The chief people officer’s response to fears that employees might leave nasty reviews? “Then we’d better get a hell of a lot better,” Lorne Rubis told the Financial Post. “I’d much rather know and have the courage, strength, and conviction to allow for the data to be free-flowing than to worry about what kind of governance we put on that.”
6. Study What Other Companies Are Doing To Build Employee Loyalty
Achievers compile an annual list of 50 Most Engaged Workplaces by looking at eight categories: Leadership, Communication, Culture, Rewards and Recognition, Accountability and Performance, Vision and Values, and Corporate Social Responsibility. A good place to discover what other companies are doing is the citations for The Elite 8, the top companies in each category.
InMoment was honored to appear as one of the 50 in 2011 as Mindshare Technologies, and we’re tremendously proud to have employees who are engaged, passionate about their work, creative, and committed to providing the highest quality of internal and external service. At the heart of our company is a phenomenal leadership team that has created a culture where people work hard, care about each other, are innovative, and fun to be around.
By constantly improving from our employee feedback, we were recently awarded the Top 50 Most Engaged Workplaces in the United States.
Ready to improve employee loyalty and satisfaction in your company? See how InMoment can help you increase employee loyalty in the workplace and boost business success.