Is concern over employee loyalty keeping you up at night? You’re not alone. Here’s one recent scenario:
An executive team at a large healthcare system was locked in an intense strategic discussion. Higher than anticipated turnover — particularly in non-clinical early career roles — was threatening the organization’s ability to deliver on its operational, patient care, and revenue targets. Managers across the system were struggling to stave off competing job offers, not just from nearby healthcare facilities, but also from unexpected poachers such as DoorDash and Uber.
As the discussion devolved, one of the executives grew exasperated. She blurted out, “Where’s the loyalty?”
Right question. Wrong mindset.
How Labor Became Liquid
To understand what’s happening with employee loyalty, it’s helpful to look at the nature of jobs over time. An ongoing evolution of economic and demographic shifts has loosened the modern labor market.
500 years ago, if you learned a trade, you had a job for life. In some cultures, your work was so central to your identity that it became your surname. That legacy continues today. Do you know any Bakers, Coopers, or Fletchers?
Fast forward to the turn of the century, when decades-long job stints were still relatively common. However, in 2020, the pandemic paved the way for “Great Resignation,” which triggered a series of shockwaves that continue to reverberate through our workplaces.
Along the way, technology has also played a significant role in liquifying the labor market. Online job sites and powerful search engines brought convenience and visibility to the job search process. Communication and virtual meeting tools have accelerated the prevalence of remote and hybrid work formats.
Employee Loyalty in the “New Normal”
Now, the so-called ‘new normal’ of post-pandemic work finds workers spending 30% less time at the office. And with the rise of remote and flexible work, employers who used to compete only with geographic rivals now find themselves bidding against a far-flung roster of alternatives.
Social and professional norms have evolved as well. When I entered the workforce some 30 years ago, recruiters and hiring managers were trained to look for evidence of “job hopping.” Stints of two years or less were suspicious and required a candidate to thoroughly explain their erratic employment behaviors. Were they incompetent, uncommitted, or both? SHRM observes that this arbitrary 2-year tenure “is becoming the exception, not the rule, especially among younger workers” for a variety of reasons.
The economic headwinds of 2023 have somewhat masked the fact that we are experiencing a prolonged, indefinite talent shortage. By 2030, Korn Ferry estimates that this global shortfall will eclipse 85 million people, a population roughly the size of Germany. This means top talent with highly desirable technical skills will enjoy an unprecedented level of career freedom for the foreseeable future.
However, this year’s same headwinds carried another more troubling consequence. As companies shifted from growth at all costs to more streamlined operations, downsizers collectively shed hundreds of thousands of jobs. The Forbes Layoff Tracker continues to tally large-scale cuts at Amazon, Citigroup, Pfizer, and others.
As a result, workers who have been directly affected, and those who had to console freshly out-of-work friends and family members, began asking themselves a now familiar question: “Where’s the loyalty?”
Pausing the Pendulum
For as long as I can remember, employers and employees have swung back and forth between opposing positions of leverage. Macroeconomic factors, technology advancements, and shifting preferences have combined to reinforce these two extremes. Either:
- A “seller’s market” where employers are able to squeeze candidates, or
- A “buyer’s market” where candidates return the favor by taking advantage of employers as much as they’re able.
Today’s headlines are equally likely to feature a renewed Return to Office (RTO) mandate or an organized worker walkout at some manufacturer, pharmacy chain, or Hollywood studio. Is anybody actually winning anymore?
A recent report from consultancy Oliver Wyman says 70% of Gen Zers who consider themselves “loyal” to their employers are either actively or passively seeking a new job. Considering all we’ve been through — and are still navigating — is it any wonder that both sides are confused and frustrated?
Here’s what I recommend: Faced with this kind of liquid labor market, it’s time to set aside outdated power dynamics and pursue a novel form of partnership. How can we accomplish this? It’s up to employers and leaders to make the first move by striving to regain employee loyalty.
5 Ways to Build Employee Loyalty
1. Invest in Professional Development and Internal Mobility
The most desirable workers are hungry to acquire new knowledge and develop new skills. Our world of work is changing fast, and they know it. They want to remain relevant and consistently increase the value they can bring to their organizations. At the same time, post-pandemic forces have led some workers to develop novel professional interests in the name of personal growth and shifting priorities.
While pondering professional development investment, some employers wring their hands worrying that they’ll spend real dollars only to watch slippery laborers walk out the door. This is understandable. But consider the alternative. What if you don’t invest and they stay?
Savvy employers see a silver lining. By aligning burgeoning employee interests with emerging organizational needs, an entirely new candidate pool opens up. In many ways, promoting and reassigning current employees is far less risky and time-consuming than bringing unknown talent into your organization and its culture.
There’s a critical relationship here. A LinkedIn study found that “Companies whose employees excelled at developing skills in the last 12 months have a 15% higher internal mobility rate than companies whose employees lagged.” Considering how the traditional new-hire “honeymoon period” is quickly evaporating, you need to take a strong look at candidates on your current payroll.
2. Promote Worker Wellness
Millions of employees are still struggling to find their footing in a post-pandemic world. TikTok is now brimming with under-the-desk treadmill videos promising to offset the often sedentary nature of remote work, and as a society, we seem to be less active than ever.
Mental health has also taken a beating. In a recent workplace survey, the American Psychological Association found that 55% of workers agreed that their employer thinks their workplace environment is much more mentally healthy than it actually is.
This is an opportunity to move the employee loyalty meter. Entice people with a variety of wellness programs. Although physical health benefits have long been a staple of employee benefit packages, leading employers are now touting mental and financial wellness education and resources. Some even offer environmental and spiritual wellness options.
This emphasis on wellness represents a classic win-win. A Gympass study found that 85% of employees are likely to stay in a role if their company takes better care of their wellbeing. You can gain ground by ensuring employees are aware of available programs, and coaching executives and managers to encourage broad participation.
3. Bring on the Belonging
Strong social ties have always been important at work, but their role has never been more critical. The shift to hybrid and remote work has brought more than unprecedented flexibility. Cigna’s Loneliness Index estimates that social isolation at work is now costing employers $154 billion annually due to stress-related absenteeism.
Whether in the office or logging on from home, modern workers are seeking chances to gather and connect. Harvard Business Review has even picked up on the pivotal role of “work besties,” noting that “since the start of the pandemic, having a best friend at work has an even greater impact on important outcomes — like workers’ likelihood to recommend their workplace, intent to leave, and overall satisfaction.”
Team leaders and managers need to make time for social bonding in group and 1-on-1 meetings. While “old school” supervisors may find it counterintuitive, cohesiveness actually improves performance. In addition, HR teams should organize relaxed events where workers can simply mix and mingle. Employee resource groups (ERGs) are another mechanism that can boost belonging. These groups offer participating employees “a comfortable, safe, and active place to connect with others at their company who share their background, culture, interests, beliefs, or life experiences.”
4. Instill Purpose and Meaning
Millennial workers brought a heightened interest in social causes and sustainability to the workplace. Generation Z employees have further stressed their intention to make an impact beyond the bottom line. According to management consultancy, PwC, “While business leaders prioritize the commercial value of purpose, employees see purpose as a way to bring meaning to their work and understand the contributions they are making to the company, as well as society.”
It’s important for managers to help workers connect the dots between individual effort and the bigger win. But unfortunately, few managers are trained in how to do this.
Regardless, be sure to send a message to everyone in your organization that you’re taking a long view of your partnership by putting purpose at the top of the ledger. Draw inspiration from banking industry leader, Truist, whose Chairman and CEO openly tells candidates and employees, “We encourage every teammate to find and cultivate their personal purpose.” This is a welcome example of partnership at its best.
5. Listen Up and Follow Through
Taking an active interest in employee welfare sends a strong message that yours is a workplace worthy of long-term commitment. Employee listening tools often include some combination of annual, semi-annual, and pulse surveys. Throw in “town hall” style meetings, skip-level meetings, and anonymous suggestions boxes, and you’re suddenly awash in employee sentiment.
Survey software maker Qualtrics observes that with this type of employee input, “organizations can achieve a holistic view of the employee experience, and understand where to act to improve outcomes for all.” That last bit is the most important. After collecting the data, it’s essential to take action. Design an organizational or team-level response, ensure it’s implemented properly, and communicate the freshly-closed feedback loop to all employees.
Employee Loyalty Has Its Limits
By taking these steps, you can create employee loyalty and increase your chances of retaining your high performers for years to come. But there’s just one last step everyone should be prepared to take.
You need to know when to let go.
Employee loyalty is a worthy objective, but at some point, all partnerships come to a natural end. These are the terms of our world of work. A high performer will outgrow your organization. Or your own needs will require you to help a longstanding employee find a new home. Change is constant.
Knowing when to let go is important because, when it’s time to part ways you can approach the situation with compassion and understanding. You can remain confident that you’ve done your best to invest in your side of the partnership.
When you help a departing employee ensure an orderly transition, or you offer personalized assistance to help a displaced worker land on their feet, other employees notice. They’ll come to appreciate how you choose to work together before, during, and after an employment relationship.
This fosters goodwill that transcends the employment contract. And it’s what good partners do.
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