Creating Loyal Employees Is About More Than Just the Paycheck

With the Great Resignation in full swing, it’s hard to believe that in January 2020, employee loyalty was at an all-time high since the 1980s and 1990s. According to a working paper published by the National Bureau of Economic Research, workers were willing to stay with employers for longer periods of time. In other words, loyal employees were part of a growing trend.

Fast forward three years later. Employers are now suffering from the economic fallout of the pandemic, which led to a dramatic turn in the economy, resulting in a volatile labor market. Complaints don’t always center around low wages. Lack of advancement opportunities and feelings of disrespect are all common sources of low employee retention rates. While some industries have since recovered, employee loyalty and retention remain top of mind for many business leaders.

Being in touch with your employees’ feelings gives you a better chance of keeping your best workers. Doing so reduces the costs of onboarding and increases employee satisfaction and productivity. As a leader, you should enact policies that encourage the creation of loyal employees. However, knowing what those strategies are and practicing them well can become a challenge.

In this article, learn about the meaning of employee loyalty, the types of qualities a loyal employee exhibits, and some of the best ways to gain the loyalty of your employees.

What Does Employee Loyalty Mean?

When employee loyalty is present, it means workers at a business are willing to stick with the company through thick and thin. They do so because they feel respected and receive the recognition they deserve. Loyal employees believe that they receive fair compensation. Even more than that, they have a firm belief in the vision and mission of the organization.

Employee loyalty indicates high employee satisfaction. According to one study, the more satisfied an employee is, the more committed they are to an organization. This, in turn, leads to more positive contributions to the company. The researchers of this study found that employee loyalty was not affected by how well the company was doing financially.

Qualities of Loyal Employees

When a good employee leaves, it can be devastating to a company. Not only do you miss out on their excellent work, but you also suffer a financial cost for bringing in someone new. According to research from Work Institute, companies may end up spending up to 33 percent of an employee’s annual salary just to replace them. 

In purely financial terms, it pays to keep your best workers around. Putting aside the money involved, there are other reasons you need to reduce employee turnover and work to help your employees stay loyal. The following are some of the best qualities of loyal employees.

High Productivity

When an employee is loyal, it usually means they’re happy to work for you. That high satisfaction translates as working hard to meet their goals. Researchers at the University of Oxford looked at call center employees to see how the happy workers compared to the unhappy ones. They found that happy workers had 13 percent higher sales numbers than unhappy employees. They did this in the same amount of time, meaning they were far more productive. The same can hold true in other types of jobs. Whether working in sales, customer service, human resources, or anywhere, if your employees are happy, they’ll get more work done.

Less Concerned With Salary

In a surprising survey, more than a third (36 percent) of workers said that they would be willing to give up $5,000 of their salary if it meant they’d be happier at work. Compensation is important, but many workers, especially the most loyal ones, want to enjoy what they do above all else.

Longer Dedication

Employee retention has long been seen as a key to business success. Simply put, happy and loyal employees are going to stick around longer. Research from the iOpener Institute discovered that a happy worker will stay at a company four times longer than someone who is unhappy. A loyal employee wants to dedicate themselves to an organization, which means becoming a seasoned worker there.

Fewer Sick Days

A happier, more loyal employee will take fewer sick days than someone who doesn’t like their job. Gallup conducted a survey which found that happy workers take almost four sick days every year on average. On the other hand, the same survey showed that unhappy employees take an average of more than 10 sick days each year.

How Leadership Influences Employee Loyalty

Employees don’t become loyal and happy in a vacuum. While some have the self-motivation to put in their best day in and day out, regardless of what management does, most respond to their company’s leadership and the policies they put in place. Indeed, business leaders need to show loyalty to employees if they expect employees to show loyalty in return.

Some of the attributes effective leaders possess that positively influence loyalty include:

• Development-Focused: Leaders who support their employees’ development can increase loyalty to the company. For example, a LinkedIn report found that 94 percent of employees would stay at a company longer if the employer invested in their career development.
• Transparent: A survey from Edelman discovered that 81 percent of employees believe trust and transparency are vital factors in an employer-employee relationship. A leader shouldn’t keep secrets from the rest of their team. Great leaders show trust in their employees and are upfront about issues, problems, and successes.
• Emotionally Intelligent: Leaders who demonstrate high emotional intelligence will have a greater understanding of who people are and how to respond to a variety of situations.
• Service-Oriented: People can instill a loyal following by practicing servant leadership. This essentially puts others’ needs as a top priority. Servant leaders are always looking for ways to help other people.
• Vision-Centered: A leader also needs to have a vision that they live by. They strive for it, and every action they take leads them closer to it. When others see this, they gain confidence in the leader.

7 Ways to Improve Employee Satisfaction

With these points in mind, it’s clear that employee loyalty is closely tied to employee satisfaction. Once you know how to increase employee satisfaction, loyalty will follow. The following are some of the best ways leaders can improve overall satisfaction among team members.

1. Give Recognition

Employees appreciate being recognized for the good work they do. Make sure to provide that recognition both privately and publicly. Doing so will instill a greater sense of loyalty in workers. When they don’t receive that recognition, they’re more likely to leave their jobs. According to an online survey from Achievers, 44 percent of workers cited lack of recognition as being one of the main reasons they were planning to make a switch.

2. Learn How to Communicate

It’s not enough to simply communicate with others—you need to know how to do so effectively. Helio Fred Garcia, author of The Power of Communication: Skills to Build Trust, Inspire Loyalty, and Lead Effectively, says leaders must always practice this vital skill. “Effective leaders see communication as a critical professional aptitude and work hard at getting it right,” Garcia explains in an interview. “Leaders need to be as committed to building their communication skills as they are to building their more quantitative skills.”

Read about the best ways to improve communication skills in “8 Communication Skills Top Performers Grow Throughout Their Careers.”

3. Encourage Criticism and Feedback

Employees should feel like they can speak their minds, provided they do so respectfully and with the intention of solving problems. While some workers may feel like they should stay quiet, if they see you encourage them to speak up, they’ll be more likely to do so. One way to do this is to directly ask for feedback. Ask about what you can do better and how the company can improve. Be straightforward but don’t put too much pressure on them since some may not have needed to critique their leaders before. 

Most importantly, feedback should be a regular part of the culture. As leadership coach Ed Batista advises, “Make feedback normal. Not a performance review.” If it becomes normal, people will be more willing to give and receive it.

4. Play Defense

In difficult situations, stress can dominate and people can become tense. In such instances, always defend your employees. If workplace conflict exists, devote yourself to finding the truth and hearing all sides. In cases of a dispute between an employee and a customer, don’t leave your employee out to dry. Even if the worker made a mistake, you should practice ownership and take responsibility for the mistake. Any corrections can be made in private. Once employees see that you’re willing to stand up for them, you’ll gain their loyalty.

5. Set Appropriate Expectations

Another way to improve satisfaction and engagement is by being clear about your expectations. Setting expectations includes connecting responsibilities to the overall vision of the company. Employees want to know what you expect of them. When you don’t define those expectations, they’re left to their own devices. That can lead to wasted productivity and a lack of progress. As you set appropriate expectations, employees can confidently move forward without second-guessing themselves. As John Maxwell wrote in The 21 Irrefutable Laws of Leadership, “If your people don’t know what to expect from you as a leader, at some point they won’t look to you for leadership.”

6. Be Impartial and Fair

If you give special treatment to certain employees and not others, you’re bound to create an environment full of distrust and resentment. People want their leaders to treat everyone fairly. There should be no favorites among the workforce. As long as you’re impartial in your treatment, no one will feel like they’re being taken advantage of. Maintaining neutrality, especially during moments of conflict, will ensure everyone sees you as valuing the truth and responding with a fair hand.

7. Provide Learning Opportunities

Most employees don’t want to be stuck in a rut. Instead, they want to grow in their skills and learn new talents. They’re not just looking to advance in their careers—they want to grow as people. This is especially true for millennials in the workplace. A Gallup survey found that 68 percent of employees would be willing to stay with a company for their whole career if the employer provided opportunities to develop their skills. The numbers were even more pronounced among millennials, where 87 percent identified growth and development opportunities as a vital part of a job. These numbers show that if you provide those opportunities, people will stay with you.

Strengthening Work Culture Means Becoming Vulnerable

The first step toward correcting problems related to employee loyalty is admitting those problems exist in the first place. For leaders and managers, it can be uncomfortable to acknowledge that employees aren’t happy, productive, or loyal. Doing so requires you to show vulnerability. Only by becoming vulnerable and leaning into this truth can you bring about real change.

How to practice vulnerability:

• Realize that vulnerability represents strength, not weakness.
• Be engaged in every moment.
• Share personal stories about your past experiences.
• Be honest about your emotions.
• Don’t use power and authority to exert control over others.
• Show that you’re open to feedback and constructive criticism.

Best-selling author and leadership expert Brené Brown has long been an advocate of showing vulnerability. As she teaches, leaders need to be authentic by “letting go of who we think we’re supposed to be and embracing who we are.” To learn more about how effective being vulnerable can be, read “Dare to Lead Proves the Power of Vulnerability.”