From the May 1998 issue of Entrepreneur

Is employee loyalty a thing of the past? That's the belief of most managers nowadays. Want proof? "Most people change jobs every two to four years," says Roger Herman, owner of The Herman Group, a management consulting firm in Greensboro, North Carolina.

And the statistics worsen. In 1996, when Walnut Creek, California, personnel expert Ethan Winning surveyed 742 employees in six different industries, from high-tech to insurance, a staggering 67 percent told him their loyalty had decreased. "There's no doubt that loyalty is in trouble," says Winning.

Managers could scarcely expect other results. More than 4 million jobs have been "downsized" (read: eliminated) just since 1989, according to numbers collected by Challenger, Gray & Christmas Inc., a Chicago outplacement firm. "It should come as no surprise to management that employees feel unconnected to companies that have seemingly shown little regard for their well-being," says James Challenger, president of the firm.

"Downsizing changed all the old rules," adds Herman. "It fundamentally altered the employer-employee relationship. Employers once preached job security. The message of downsizing was that corporate loyalty to employees is dead. Therefore, employee loyalty also died."

Or did it? Granted, employees have every reason to be skeptical about a company that promises long-term security and asks for loyalty in return--that's no longer a believable deal. But just because the old reasons for loyalty have evaporated, does it follow that the loyalty itself has disappeared?

At least one source says reports of the death of employee loyalty are premature: "Employee loyalty isn't dead. It's simply taken new forms in today's job market," says Liza Fiore of Interim Services Inc., a Ft. Lauderdale, Florida, firm that specializes in job placement.

Don't be too quick to scoff: Interim has research findings to back up its optimism. Working with Lou Harris and Associates, it polled America's workers on their fundamental attitudes, and a strong trend emerged. "About 20 percent of today's work force are what we call New Loyalists," says Fiore. "These workers express high loyalty--41 percent say they are among their employer's most loyal employees--but they don't insist on long-term job security in return." In fact, 94 percent of the New Loyalists told pollsters that just because an employer can't offer long-term job security, that's no reason not to go out of their way to help them.

Come again? Strange as it may sound, a defining characteristic of the New Loyalists is precisely that they don't demand job security as the price for their loyalty. But they do have a price. "The New Loyalists will be loyal to a company as long as they continue to receive what they need to grow," says Fiore. In other words, keep giving New Loyalists opportunities to expand their skills, and they're very content.

Just how do New Loyalists define what loyalty to their employer means? "It's not about how long you stay with your employer but the contributions you make while you're there," says Fiore. Chew on that. While no small business can honestly guarantee lifetime employment to its employees, almost any entrepreneur can give workers plenty of room to grow on the job. That's because the entrepreneurial company's lean staffing and flexible organization typically result in generous opportunities for ambitious workers. And who wouldn't celebrate workers who come to the job with the attitude that they want to contribute in many different ways?

On The Hunt

Want to fill your employee roster with New Loyalists? The good news is that finding them is getting easier, according to Interim's predictions. "We estimate that by 2000, 40 percent of all employees will be New Loyalists, and they'll be the majority by 2002," says Fiore. "What makes this trend so important is that it transcends generations and genders. It truly represents a revolution in the work force."

While finding New Loyalists may not prove too tricky, keeping them could. That's because New Loyalists have no compunctions about leaving a job if it fails to meet their needs. Think hard on that last point. Frankly, many businesses flounder when faced with New Loyalists. "Their attitudes are very different from what traditional management has expected of employees," says Fiore.

Impose a rigid organizational hierarchy that sets strict limits on employee growth, and you're sure to turn off New Loyalists. "There's a real disconnection between employee expectations and employers," says Fiore. "If you want to keep New Loyalists on your team, you've got to give them the opportunities and the freedom they demand."

Providing a flexible, growth-oriented environment is just the beginning. You need to do more to fuel continuing commitment by New Loyalists to your company. Survey the experts, and they offer critical steps for maintaining worker loyalty, among both New Loyalists and more traditionally minded workers on your payroll:

  • Treat your people well. "The golden rule applies to work as well as to the rest of life. Create a workplace that's friendly, one where you don't look over your employees' shoulders," urges Herman.

How will you know if your people feel well-treated? "Ask them," says Herman. "The best way to know is to develop an open relationship that lets people feel comfortable communicating with you. Ask them, too, `How can I help you do a better job?' "

  • Let workers see the results of their labors. "People really want to see that their work is important and has payoffs," says Herman. When good news comes in from customers, for instance, spread the word. And keep working to let employees know that what each of them does truly matters--to the business and to your customers.
  • Hire smart. "Hire people who are motivated to build things and who want to commit to sharing in the excitement of building a venture," says Mark Rice, professor of entrepreneurship at the Lally School of Management and Technology at Rensselaer Polytechnic Institute in Troy, New York. "You need to hire people who will thrive in your environment." Not all job candidates are suited to a fast-paced entrepreneurial company. Find the ones who are, then watch their loyalty grow as the excitement around them keeps them inspired.

Granted, that isn't easy in today's tight job market. (See "Labor Pains," April.) But if you want people who will be assets to your company, you'll probably have to sift through a lot of candidates before settling on the ones who will become your New Loyalists.

  • Go the extra mile--and farther--for your employees. In today's workplace, you have to set a precedent: Show your concern for and commitment to your people, and they'll reciprocate.
  • Give people challenging responsibilities. Let people grow by trying new tasks, even wholly new jobs within your company. The more you challenge today's employees, the longer they'll stay aboard.
  • Train your employees. Fiore indicates there's a clear connection between worker longevity on a job and the training they've received. It seems ironic: The more skills you teach your workers, the more easily they'll be hired by competitors--but the more apt they are to stay with you. "If they're learning, they're growing. And that means their satisfaction is likely to be high," says Fiore. "Our study showed that employees who received training were much more likely to be with the same employer five years later."
  • Establish conflict resolution mechanisms. Face it: In a high-performing entrepreneurial environment, good workers will occasionally butt heads. Sometimes the collisions can be loud, and even bitter. Don't let hurt feelings undermine a worker's loyalty to your business. "Build in mechanisms that facilitate reaching constructive resolutions to conflicts," says Rice.

What kind of mechanisms? Perhaps teams can sort out conflicts; perhaps the job should be yours. Either way, don't ignore them--that's how resentments solidify. Deal with them swiftly, and problems will likely evaporate.

Follow these steps, and you're well on your way to building a loyal work force. But Rice offers one last tip: "Succeed," he says. "Success is the best reward for employees who have been loyal and who have committed themselves to helping build a winner."

Put your business on the track to growth and success--and let employees enjoy at least a taste of the financial rewards--and you'll find yourself surrounded with your own band of loyalists. And that's just the fuel you need to move up to the next level of success.

Robert McGarvey writes on business, psychology and management topics for several national publications. To reach him online with your questions or ideas, e-mail rjmcgarvey@aol.com

Contact Sources

Challenger, Gray & Christmas Inc., 150 S. Wacker Dr., #2700, Chicago, IL 60606

E.A. Winning Associates Inc., (800) 823-6366, http://www.ewin.com

Interim Services Inc., (800) 900-INTM, http://www.interim.com

The Herman Group, (800) 227-3566, http://www.herman.net