Is loyalty dying?
As the business landscape continues to evolve, and the gig economy gains steam, it's a question that comes up more and more often. Average tenure amongst employees is gradually shrinking, and due to the extreme cost of turnover, retention is becoming a great concern for many organizations.
Some workplace experts like Lynda Gratton claim that the age of employee loyalty is already dead; however, in an excellent New York Times piece, "The Shifting Definition of Worker Loyalty," Phyllis Korkki explains that it may not be so simple.
Employee loyalty isn't simply a forgotten relic of business past, but its definition is actively adapting to fit a changing business landscape. To some, this shift comes as a major challenge. Korkki explains:
For some baby boomers, this shift has been hard to accept. Many started their careers assuming that they would be rewarded based on long tenure. Now they are seeing that structure crumbling around them...
Although once unilaterally valued, tenure is losing its stature in the modern workplace.
The devaluation of tenure and security
In the past, many employee-employer relationships operated on a mutual understanding, a loyalty pact. The employer would provide long-term job security, healthcare, pensions, and other benefits to the best of their abilities. In return, an employee would provide their best work and their undying loyalty, day in and day out, for their foreseeable working life.
The nature of this arrangement began to change in recent decades. The pact between employees and employers became less ironclad.
Wharton management professor Adam Cobb is quoted in Knowledge @ Wharton's "Declining Employee Loyalty: A Casualty of the New Workplace" explaining that:
Firms have always laid off workers, but in the 1980s, you started to see healthy firms laying off workers, mainly for shareholder value...You would also see cuts in employee benefits—401(k)s instead of defined benefit pensions, and health care costs being pushed on to employees. The trend was toward having the risks be borne by workers instead of firms.
This shift in liability was a strong impetus for a new kind of employer-employee relationship—one in which each is looking out for their own best interests. That's not necessarily a bad thing though, because in an ideal situation, these two goals aren't mutually exclusive.
The emergence of this new approach and philosophy regarding work has shown itself as a well-documented generational divide.
Although there are always exceptions, many workers who grew up and matured in a more historical business environment of job security and tenure tend to follow that paradigm, whereas a younger generation of workers adhere to a more individualistic approach.
Neither approach is necessarily better than the other, but understanding the interplay between those underlying differences is a valuable advantage for any manager.
Loyalty and engagement
There's a crucial connection between loyalty and engagement, but the two aren't synonymous. You can have an employee with a long tenure who isn't fully engaged, yet is 'loyal' in the sense that they're not looking for other employment. You can also have an employee who truly believes in the mission of your organization, who is extraordinarily dedicated to their work, but has only been around for a year.
Which would you expect to have a more positive impact, and perhaps more importantly, which would you prefer to have on your team?
Lauren Keller Johnson's article "Rethinking Company Loyalty" in Harvard's Working Knowledge covers this topic from an extraordinarily thoughtful perspective: maybe we need to re-evaluate the meaning of 'loyalty' in the context of modern business.
Instead of thinking of loyalty in terms of how long someone is willing to stick around with your company, it might make more sense to consider how dedicated or an employee is to the organization while they're there. An employee who came into your organization, did extraordinary work and helped advance its goals, but was ultimately lured by a different calling wasn't disloyal.
As Keller Johnson explained, "[e]mployers can promote company loyalty by helping people grow out of their jobs—ideally, into new ones within the company."
Few things are more striking examples of this new approach to employment than the percentage of the workforce that falls under "contingent" labor.
In his Dollars and Sense article "The Rise of the Gig Economy" Gerald Friedman details not only the increasing percentage of contingent workers, but also takes a moment to disambiguate the term. He explains that "contingent" work "includes independent contractors, temporary workers, on-call workers, and workers provided by contract firms, contingent workers made up over 11% of the labor force in 2005."
Contingent work comes in many different forms, and isn't limited to low-paying, entry-level, or temp work. Software engineers, financial analysts and physicians can all fit this category. Friedman also mentioned in his article, higher education institutions have demonstrated a significant spike in contingent employment in the form of non-tenured, or adjunct professors in their faculty.
Technology and an entrepreneurial spirit
Technology is another major driving force behind the changing business landscape. Modern tools like Upwork, Etsy, and TaskRabbit allow individuals to embrace their entrepreneurial spirit, build their own brand, and market their services online.
NYU School of Business Professor Arun Sundararajan discussed this trend in his Guardian article "The ‘gig economy’ is coming. What will it mean for work?"
These services allow for the flexibility and autonomy that modern workers routinely emphasize as crucial to their engagement in study after study. They're able to decide when they want to work, and how they want to go about it.
With all this momentum, it's difficult to ignore the "gig economy," but it's also important to remember that it's still only one part of a greater whole.
Using this understanding
Employee loyalty truly matters to the success of an organization—Timothy Keiningham and Lerzan Aksoy did an excellent job of driving this point home in their article for Monster, "Why Managers Should Care About Employee Loyalty."
Inspiring loyalty and retention really comes down to one question: are you providing the most compelling option to earn an employee's loyalty?
If another company or micro-entrepreneurship opportunities can offer an employee a more fulfilling experience, that's where they'll gravitate. Not because they're disloyal, but because it's in their best interest.
Luckily, you can provide many of these things in your own organization. The details and specific approaches to each of these will differ with each company, whether due to size, budget, culture, or any number of things; however, the important thing is to think about your organization's unique approach to providing them.
Provide work that is meaningful
There are no special "purpose professions." Finding purpose in the work you do, or sharing the purpose in the work you're providing for others, is an active practice. It doesn't matter if you run a car wash, or an international corporation—you can find purpose in the work you do. If you can't, there's a deeper problem than retention.
Provide flexibility and autonomy
Whether you're offering the flexibility to take a needed break mid-day or pick kids up from school, or you're giving employees the autonomy to take initiative in determining how to approach a project, you're providing a crucial element that modern employees have come to expect more and more.
Provide development opportunities
Some employers have the fear that by helping employees grow and providing development opportunities, they're simply grooming them for their next position at a different company. However, employees need that room to grow—nurturing that growth is something that you can do to inspire their loyalty.
Provide recognition for great work
Recognition is a strong factor in employee engagement, which is closely tied with loyalty. An employee's loyalty is often closely tied to their team, sometimes more than to the organization itself. This is one of the reasons peer-to-peer recognition strategies are so impactful.
Whether or not the gig economy truly disrupts the status quo of the global workforce, there is a revolution happening in the way that employees engage with their work, and with their employers. Building a work environment around that understanding can help inspire better engagement, lower retention, and a loyal team.
Check out our Guide to Modern Employee Recognition to learn more about recognition's role in nurturing employee loyalty: