The Loyalty Challenge: Insights to Enhancing Organizational and Employee Loyalty

EFFECTIVE EXECUTIVE NOV.2009

ORGANIZATIONAL LOYALTY

The Loyalty Challenge: Insights to Enhancing Organizational and Employee Loyalty

-- Wendy Phaneuf

Evolutions in work attitudes and organizations have created a challenge for organizational leaders – how to view, promote, and encourage employee loyalty. This article examines the magnitude of this challenge, the evolving nature of employee loyalty, and the benefits of a loyal, contributing workforce. It also offers proven strategies to address the loyalty challenge that primarily focus on strengthening the capability of leaders to create work environments that foster employee engagement, development, contribution, and recognition.

Management experts concede that success in building team trust, commitment, and loyalty has become more challenging than ever. Working in the field of employee loyalty provides me daily with opportunities to speak with employees and consult with organizational leaders to address the issues underlying the loyalty challenge.

Employee loyalty – the elusive organizational value of a committed, contributing worker

At one time, employers were assured of loyalty simply by providing a stable job position. Today, things are far more complex and loyalty is being redefined from measures of the number of years or hours on the job toward the value and contribution an employee brings to the organization.

Countless surveys and research studies cite responses from employees that reflect a diminishing sense of obligation and loyalty to their organizations. Work cultures and values are changing and young, talented workers are being encouraged to be loyal to themselves before being loyal to their employers. Personal connections and relationships are not being formed in the way they had in the past and many workers speak of increasing distrust of their supervisors and the senior leaders of their organizations.

Loyalty Redefined

Before addressing the loyalty challenge, it is essential to remember that what makes workers loyal today is very different than the factors that encouraged commitment in the past. At one time, employees felt that if they were loyal to their organizations, their organizations would be loyal in return. Rampant downsizing, corporate restructu-ring, inconsistent management practices, and poorly managed organizational change have broken the `trust bond' with many employees – further reducing their commitment to existing and future employers.

Traditionally, this `trust bond' relationship was based on the premise that an employee's loyalty could be measured by the amount of time he or she spent on and in the job. Long hours and long service meant a loyal employee – one who was willing to make personal sacrifices for the betterment of the organization. It won't come as a surprise to know that this model of employee loyalty has dramatically changed.

Increasingly, employees view organizational loyalty as a matter of "I give my full commitment to the job while I'm on the job." Progressive leaders do not equate loyalty with longevity and hold the view that it is quite possible that someone who has been with the organization for 20 months can make a greater contribution than an employee who has been working for the organization for 20 years.

To address the loyalty gap, organizational leaders must shift their mindset to this new reality.

No longer can leaders depend on an employee's "sense of loyalty" to meet the organization's goals. This sense of loyalty is hard to measure and even harder to create in a time where workers are constantly reminded to be loyal to themselves. Rather than worry about a "sense of loyalty", leaders who can appeal to an employee's "sense of value" will find themselves rewarded with strong commitment and contribution.

This mindset shift can begin to turn the loyalty tide in favor of everyone involved in the employment relationship. This doesn't mean perfection on the part of employees and organizations. In fact, it can be the opposite. As loyalty increases, so does tolerance and the likelihood of forgiveness when we fall short of the goal.

The Solution: Creating the Conditions for Success

At the core of employee engagement and loyalty is a belief in the minds of employees that their contribution is valued by their organization and leaders. When employees feel that what they do matters, they are far more likely to reciprocate by committing to the organization's goals and giving fully of their talent, time and creativity to meet those goals. The value of a workplace based on trust, commitment, and loyalty can't be over-estimated. Benefits abound – productivity, focus, and innovation are the natural by-products of employees who trust their leaders and feel valued. Add to these benefits the avoidance of costs stemming from poor morale, reduced productivity and turnover, poor quality and mistakes – the hallmarks of organizations experiencing challenges with loyalty.

Wendy Phaneuf is a global expert in employee motivation and loyalty, and a professional speaker, trainer and author. She is also the founder of The Training Source and www.LeadingforLoyalty.com — a one-stop information source that helps organizational leaders create work environments where employees thrive and perform at their best each day. When she established The Training Source in 1997, Wendy addressed a gap in the market – to assist organizations and their leaders to improve work environments and boost employee engagement and loyalty. Along with her team of highly experienced and skilled consultants and trainers, she offers creative, practical solutions to common workplace issues –decreasing employee morale, diminished productivity, team inefficiency and employee loyalty challenges. She has worked with hundreds of national and international organizations across a broad spectrum of industries and has also consulted extensively with public sector, Government and non-profit organizations and their leaders. Wendy was honoured with the "2006 Woman Entrepreneur of the Year award" for her dedication to providing exceptional programs and services to her valued clients.

The effectiveness of organizational leaders, managers, and supervisors is the lynchpin in creating an environment that fosters trust and employee loyalty. Senior leaders should assess the capabilities of their leadership team and take actions to strengthen those in positions of authority and team leadership.

To an overwhelming degree, diminished loyalty results from ineffective decisions and actions taken by leaders within the organization. The following issues are often cited as the main causes therein:

• Inconsistent management practices

• Unclear work expectations

• Perceived unfairness or favoritism

• Unresolved team conflict or avoidance in dealing with conflict

• Lack of information necessary for the employee to do his or her job

• Poorly communicated change

• Limited or unconstructive feedback

• Insufficient recognition or praise.

Of course these issues may be different depending on the specific circumstances, but these are common themes in my discussions with thousands of employees and leaders. Working in the field of employee loyalty provides me with regular opportunities to encounter many hardworking and progressive employees with promising careers ahead of them who are also very dissatisfied in their current positions and hence, actively seeking new opportunities.

It is a mistake to underestimate the effect of leadership performance on the employee's working experience. In most cases, the quality of the relationship with an employee's immediate manager is the most powerful determinant of job satisfaction. Employees who work for someone who is professional, communicative, positive, and respectful are more likely to adopt a similar approach and enjoy their work. Sadly, the reverse is equally true.

The correlation between management effectiveness, leadership strength, and loyal, committed employees is most easily identified with the best and brightest of the organization's workers who are more likely to equate their employment experience with the perceived quality of their leaders. The consequences of poor leadership cost organizations directly and indirectly. Poor productivity aside, the greatest cost of disengaged employees can be measured in terms of negative impact on co-workers, lost opportunities, and time and money spent to improve staff morale.

So how can an organization address these costly leadership gaps? The following key strategies can help to enhance the strengths of leaders, managers, and supervisors as well as solidify the collective capabilities of an organization's entire leadership team.

Invest in Leadership Development

All too often organizations promote or move people into leadership roles without providing adequate preparation or development. Equip front-line leaders with communication, feedback, and relationship building skills that are essential for success. Most struggling leaders are struggling because they are unskilled in these vital leadership techniques. Training leaders to communicate clear expectations, provide relevant feedback, and foster strong relationships is the single best investment you can make toward improving employee loyalty.

Leadership skill development is an essential, but only the basic, first step. Beyond training supervisors and managers in the fundamental tools of employee engagement and development, senior organizational leaders can enhance the strength of the collective leadership team by modelling positive leadership behaviors themselves. In doing so, they can create a work culture that centers on the building blocks of employee loyalty.

Leading organizations are increasingly providing support and coaching for leaders, managers, and supervisors as they work to increase trust and employee loyalty. Coaching helps a leader to define priorities, develop strategies for improvement, and take action. In some cases, senior leaders or human resources professionals can provide this service internally, or an organization can hire an external coach to provide this support.

In the `busyness' of the business, it is easy to slip into operational mode and not pay attention to the things that really contribute to stronger trust and better relationships with employees. Coaching ensures that the leader stays focused on what is important and uses progressive techniques in dealings with staff.

A key element of leadership training and development must occur in the early stages – when a new leader is introduced to the organization or to the supervisory role. By extending onboarding to the leadership group, an organization can solidify the long-term success of new leaders. While most organizations provide some form of orientation to new employees, many overlook the needs of new leaders and those who have been promoted or transferred into leadership roles for the first time.

The best practices in onboarding include extending support to leaders; specifically, first time leaders new to the supervisory role and experienced leaders new to the organization (including executives).

The transition from employee to leader can be one of the most exciting and difficult career moves. One of the challenges often faced by new leaders is the power shift that occurs when they become the supervisors of former co-workers. While the new leader may have strong technical or job expertise, offering training, mentoring, and coaching can help them avoid struggles around the people issues. Supervisory or management training supported by coaching and mentoring to support new leaders is strongly recommended as they establish relationships with their team.

Often overlooked in onboarding are experienced leaders who are new to the organization, particularly those at senior and executive levels. These leaders possess strong technical and functional competence and bring well-developed leadership skills. However, they can benefit greatly from support in learning the organizational culture, identifying key stakeholders, and understanding the nuances of key processes and management tools.

New leaders bring fresh ideas and practices with them that can serve as a catalyst for positive change. Through onboarding, you can encourage this innovation while still ensuring consistency in management practices throughout the organization.

Leadership and executive onboarding must be tailored to meet the needs of the individual. An organization should work with new leaders early in the process to discuss their needs and arrange for appropriate onboarding support. Best practices demonstrate that leadership and executive onboarding can include strategies such as: mentoring by another leader at an equal or more senior level; training and coaching from Human Resources and other support functions in how to use management tools; accompanied site visits to various business divisions and company locations; informal meetings with groups of employees and team leaders; and opportunities to meet key customers and stakeholders.

Considering their scope of influence and their ability to impact organizational success, it is important not to overlook the value of including leaders in your organization's onboarding activities.

Collectively, these leadership training and development efforts will clearly demonstrate to employees that the organization is committed to the success of its leaders.

Incent and Reward Positive Leadership Behaviors

Reinforcement ensures behavioral change. By making relationship building, employee engagement, and recognition the base requirements of a leader's job, an organization is more likely to see a commitment from supervisors, managers, and team leaders in this area. This begins with job definition. Each leader's job description should explicitly state the importance of leadership. Rather than focus on success in functional responsibilities alone, a balanced approach that highlights the importance of fostering and recognizing employee contribution can be far more effective.

To carry it a step further, one of my clients has instituted a process to measure employees' assessments of the leader's strengths in employee engagement, communication, and recognition. Employees are randomly surveyed to assess their immediate and senior leaders at various points throughout the year and the compiled results are shared with these leaders. This creates a platform for leadership coaching and improvement.

Beyond feedback and the ability to prove themselves as leaders, their supervisors, managers, and team leaders have far more to gain – 40% of the leader's annual bonus rides on the results of these assessments. As an industry leader and a highly profitable company, this component of the annual bonus equates to thousands of dollars for an individual leader. This organization clearly understands the benefits of strong leadership, positive leadership performance, and happy employees and has taken action to ensure measurable success in this area of their business.

Strengthen Management Communication

Ineffective and insufficient communication lies at the root of many of the issues that undermine employee loyalty. Particularly in times of change and uncertainty, employee loyalty becomes vulnerable to the negativity and fears that seep into the workplace. This has increasingly become a priority as organizational leaders struggle to communicate through changes stemming from the current economic turbulence. Employees witness changes and fluctuations in the business, hear rumours, and can easily get caught up in hearsay. The simplest changes can fuel a fire of speculation about the future, productivity can begin to slide, and employee engagement and loyalty often suffers.

More than ever, it is essential to ensure that the organization's leaders are communicating effectively at all levels. Organizations can increase the likelihood that engagement and loyalty don't fall victim to the changing times employees are facing by strengthening the abilities of their leaders to build trust and communicate.

Leaders with strong communication skills can address the information needs of their employees by:

• Inspiring employees to pursue organizational goals

• Being clear about job expectations

• Sharing information relevant and necessary for employees to do their jobs

• Listening effectively and ensuring open, two-way communication

• Being forthright and honest in delivering constructive performance feedback, and

• Engaging employees in planning, decision making and problem solving processes.

Employee loyalty is inextricably linked to the quality of the relationship and the communication between employees and their immediate leaders. The more effectively an organization's leaders communicate, the higher the quality of performance and loyalty they will receive from their employees.

Make Employee Development a Leadership Priority

Chief among the work desires of high demand talent is the understanding that their employers are committed to investing in their professional training and development. Progressive organizations embrace a commitment to support employee development and reap the rewards in loyal, contributing staff.

The organization's leaders must play a vital role in reinforcing this commitment to employee development and encourage leaders to collaborate with employees in identifying skill gaps and areas where each employee needs training or ongoing development.

While all employees require ongoing development, top performers are essential for navigating organizations through change and uncertainty. In times like these, savvy competitors are constantly surveying the landscape for strong producers, leaving organizations vulnerable to losing their top performers, particularly if these individuals don't feel valued or invested in. Ensure that leaders are identifying strong performers and expressing confidence in their potential to move the organization forward. Leaders can secure the loyalty of these workers by investing in their development through mentoring and other opportunities to diversify their knowledge and experience.

A fundamental element of employee development is the onboarding of employees who are new or new to a role within the organization. Onboarding is only a beginning, but this critical step in the employment process sets the stage for long-term success and loyalty. Research shows that an investment in onboarding results in stronger work relationships, dramatic reductions in turnover of new hires, and employees being "up to speed" much faster. Leaders who focus on relationship building, communication, and employee development in the early stages are more likely to secure the "trust bond" and experience the benefits of committed, loyal staff. Leaders should provide the following essential support to orient, integrate, and provide ongoing support to new hires during the onboarding process:

• Helping the new recruit to build internal and external relationships;

• Communicating the organization's vision, goals, culture, and values;

• Ensuring that the new employee understands key business processes, policies, and procedures;

• Explaining short- and long-term performance expectations; and

• Providing regular feedback on progress, job performance, and results.

Above all, having leaders who are committed to their own professional development is the most effective way to prove that ongoing employee development is valued within the organization. Progressive organizations include the leadership group when planning training and development activities and in some cases, base rewards on the degree to which leaders develop their employees.

Ensure Frequent and Positive Employee Recognition

Substantive research has established a clear link between the frequency and quality of recognition and employee engagement, contribution, and loyalty. While many leaders understand the importance of providing quality feedback to employees when they contribute to the organization's goals, this practice is often overlooked. Chief among the reasons for this are two factors: leaders are short on time and they often lack the skill and knowledge of how to provide this vital recognition in an effective way. Traditionally, recognition and rewards have been used to acknowledge years of service or extraordinary efforts above and beyond the normal requirements of an employee's job. While it is important to acknowledge these milestones, top performers are more responsive to recognition that reflects the employee's specific contribution to the team and organization.

By building a recognition culture, leaders build and strengthen relationships with their employees and help create a "sense of belonging" in the mind of employees. This feeling of being acknowledged and appreciated can often be a deciding factor for employees when deciding on whether or not to stay with their organizations. In particular, younger workers and high performers have come to expect this type of feedback. Because of their career marketability, they are also most likely to leave the organization if they aren't feeling valued.

Organizations can solidify employee loyalty by ensuring leaders know how to provide regular specific, timely, consistent, balanced, and personalized recognition. This vital management skill is often overlooked in professional and business training. By committing to helping leaders become comfortable with giving recognition, the organization will ensure they are able to deliver this vital strategy in an effective way. Sincere, timely, and frequent recognition is essential for keeping engagement and loyalty strong both during good and difficult times.

To navigate the loyalty challenge, organizations must invest in expanding the capabilities of their leaders to engage, value, and reinforce the contribution of employees. With a commitment to strong leadership, organizations will reap the rewards – employees will remain committed to consistent performance and will be far more likely to reciprocate by being loyal to the organization.