Sunday, January 13, 2013

Is Employee Loyalty a Realistic Business Proposition in the 21st Century?

Prior to the early to mid-20th Century most of the world was used to lifetime employment and where Britain, for example, had such a strong manufacturing industry that lifetime employment was the norm and generations from the same family would work for the same company, rarely leaving their community.
It was during the sixties and seventies that the norm changed and ‘career advisors’ were recommending people to have moved jobs three times before their thirties, suggesting that this gave them greater exposure to different business methodologies across different firms (which was sound advice as long as the organisations were reputable); and during this time the concept of lifetime employment became the exception rather than the rule.
But it’s not clear why the concept of employee loyalty should have been lost with the change in employment practices, as career development shouldn’t stop employees and organisations working in an environment where employee loyalty can exist (while they are with the organisation).
Thirty years ago Japanese style management was being taught in business schools across the world, where lifetime employment and employee loyalty was the norm and where the positives of ‘encouraging’ and ‘building’ employee loyalty was considered a competitive advantage for the West to incorporate back into their business models.
In fact it makes sense for organisations and employees to work together to create an organisational culture that encourages a natural loyalty to the organisation during their tenure at the company. Someone who is loyal is more committed, more content and more dedicated than the alternative working environment.
Organisations should accept that employees will leave to gain further experience, maybe in a different function, or a different industry or a different geographic location; but that doesn’t mean that the ‘talent’ won’t come back again with a new set of skills later in their career, in fact maybe that’s exactly what some organisations should be encouraging. Further a ‘loyal’ employee that leaves for further experience and development elsewhere, can still be a great ambassador for the organisation or organisations they have worked for – not just speaking highly of their products and/or services, but encouraging other ‘talented individuals’ that this is an organisation they should want to work for.
The foundation of customer service proposes that offering loyal service gives an organisation the advantage, not only to be able to fulfil their customers’ present needs, but also the ability to anticipate their future needs. This ability to anticipate presents the firm with the opportunity to surprise and delight customers on a consistent basis thereby reinforcing to the customer, the firm’s service loyalty and subsequently affecting a responsive and sustained patronage.
In fact Jay Kandampully wrote way back in 1998 that one of the greatest challenges facing organisations today is the ever-growing competition, the continuous increase in customer expectation and customers’ subsequent demands as service improves. Moreover, customers are becoming increasingly critical of the quality of service they experience. Customer demand and competition are forcing firms to cut loose from the traditional customer satisfaction paradigm, to adopt proactive strategies which will assist them to take the lead in the market-place.
And I suggest that what is true for the customer is also true for the employee – they have greater expectations and demands than ever before; and are becoming increasingly critical of their employers.
Employee loyalty can be developed in a mature business culture that accepts that employees will migrate for various reasons in today’s global business environment; and rather than frowning upon it they should embrace it and where possible include migration paths within the career development strategies for their most talented employees, as a minimum.
Employee loyalty may not seem a natural concept in today’s fast paced and uncertain world – but the basics that allow loyal relationships to develop are solid business principles that organisations should want to see as part of their organisational culture.
Employee loyalty often doesn’t get off the starting grid as organisations and employees fight over the ‘chicken and egg theory’ – i.e. who will make the first moves to allow loyal relationships to be formed; and it takes a strong and confident leader to make the first move. But that’s exactly what’s required if the organisation is going to reap the significant performance and cultural rewards that a firm of ‘loyal’ employees generates.
So one question you should consider in 2013 is how loyal are my employees and do we have an environment that encourages loyalty?
Kandampully, J. (1998). Service quality to service loyalty: A relationship which goes beyond customer services. Total Quality Management, Vol. 9, No. 6, p.431- 443.


  1. Nigel, firstly let me preface my comment with an explanation. This comment is part of an assignment for my Business Ethics course in which we have to critically comment on a blog that is relevant to the course; hence it may be a little more in depth than a normal blog comment.
    You ask whether employee loyalty is a realistic business proposition in the 21st century. If this is the case then the company will also have a duty of loyalty to the employee. This can be supported by the premise that the employer and employee relationship is made up of them investing resources in each other over and above what is necessary and that mutual loyalty recognises this (The Open Polytechnic of New Zealand, p. 14). According to Duska, loyalty is “a state of being constant and faithful in a relation implying trust or confidence as a wife to a husband, friend to friend, parent to child”. He argues that loyalty is only owed to those with whom we have a special relationship, not just anyone that we have ties to. For example I am a member of my local triathlon club, but do I owe the members of the club any loyalty? As long as I pay my club dues, that is the extent of my responsibility to the club. My focus is on my own personal performance. The code and team jumping behaviour of sportsman Sonny Bill Williams in recent years could also be seen to call into question employee loyalty. Having played for a total of five teams in two different codes of sport, his loyalty to a particular employer (team) seems questionable (Myles, 2012). How can he be seen to be loyal to all of these different clubs when he is not even staying in the same sport? Loyalty and self-interest are not compatible because the very nature of loyalty requires that one’s own personal interests are set aside to some extent for the benefit of another and that this is reciprocated (Duska, p. 144). Is a company really capable of reciprocating this and putting aside its own self-interest in order to be loyal?
    Business exists to make a profit. The whole purpose of the employee is to aid the company in making that profit as Duska states, if you, as an employee, fail to produce or are surplus to the company requirements, then the firm will feel justified in dismissing you and ending your employment. Where is the loyalty in that? As stated above, loyalty requires that a person gives up something for another and expects no reward in return. Business is not sacrificing anything in their desire to make a profit. It can also be argued the other way. You state that a person can still be a loyal employee even if they have left the firm in that they can continue to sing the firm’s praises and be a good ambassador for the business. However is this really loyalty? In leaving, the employee is serving their own self interest whether it is for financial or career gain or even more altruistic reasons such as spending more time with family, or becoming a volunteer or missionary. The reason for leaving is still selfish and the company loses out, in that the knowledge, skills and experience the employee takes with them will take time to replace, thus temporarily reducing the firm’s profit making capabilities.
    You say that “it makes sense for organisations and employees to work together to create an organisational culture that encourages a natural loyalty to the organisation” (Brownbill, 2013). You feel that this creates an employee who is “more committed, more content and more dedicated than the alternative working environment” (Brownbill, 2013). Is this really loyalty – it seems to be very much in the interest of business rather than the employee and so is this not an duty of loyalty to the firm but a duty of responsibility to the firm to do the work required. In fostering a duty of loyalty to the company in its employees, a company is really serving its own profit maximising ends. Where is the loyalty of company to the employee?

    Cont. below (References)

  2. Dear Natalie

    Thanks for the great comments

    I think some of the basic business fundamentals and values have been lost somewhere along the line. A motivated workforce will always outperform a demotivated one - a loyal relationship between management and staff, will lead to greater openness and sharing of ideas, as well as voicing of concerns that again impact motivation and performance.

    Maybe I'm getting too old - but would bet a lot of money that leaders would love to have loyal staff and staff would love to work for 'loyal' organisations.

    So if the hypothesis is true we have to ask, why is there so much negativity around the concept. For anything to work you have to believe in it first - if you start off from the position that you can't have loyalty in today's world then you won't be disappointed as it won't happen. But if you believe then it can....

    I've found that loyalty and empathy/understanding work together - i.e. an organisation doesn't frown on an employee’s loyalty when they have to take an afternoon off to watch his/her siblings sports event - knowing the employee will put in the time to ensure their job/activities are still completed on time.

    My philosophy with staff at all levels has always been - I don't care if you take time off during the day to go to gym, shop, watch your kids do things - as long as the job gets done in terms of quality and timing.

    I've found that this has formed a strong loyal bond between us - which strangely wasn't a key objective in our start-up strategy but something that developed with our working philosophy, business and ethical philosophy and desire to set the example for others to follow. I haven't met anyone yet who frowns on loyalty; but have met loads who frown on lips sown to parts of a boss’s body - where in this case the two are mutually exclusive.

    I don't pay people to be at work 9 to 5, I pay them to get a job done that exceeds our clients expectations and as long as they do that I will support them in everything else.

    Imho it’s okay for a loyal employee to move on for their own development - in fact loyal organisations should expect it, as a pyramid structure by default means there are fewer opportunities for development as you move up the structure...

    Just like loyal customers move on because their circumstances change - so a mother who is loyal to a type of baby food, will only be loyal for so long from a purchasing perspective (but will be an ambassador for the rest of their lives, potentially) ....or a family whose circumstances and disposable income have changed forcing them to change (for the time being) - and then people who move from one location to another where maybe their loyal 'firm' isn't represented, like a restaurant for example....

    Imho whatever the rhetoric and cynical perceptions in today’s world I still believe that owners would like loyal employees and employees would like to work for a loyal company – both just have to be mature enough to make it happen and it starts from the top down

    Best wishes