Why Employee Loyalty is Crucial and How You can Build it

What comes to mind when we think of loyalty in today’s business world?

Customer Loyalty?

What comes next?

Loyalty from employer to employee or employee to employer?

To all aspiring and current leaders, founders, managers and entrepreneurs, I say this- 

Actively build employee loyalty. Pandemic or not, that is one thing that keeps your company in the game. And while this sentiment may be obvious to large organizations, it is worth a refresh to any organization that has over 10 – 15 employees.

In my opinion, employee loyalty is a significant differentiator and can generate competitive advantage for an enterprise. So, how do you build it?

Build a meaningful company culture 

Yes, this is a no-brainer, but let's be clear where cultures are created. Expecting employees to work 12 hours a day every day of the week because everyone else in the industry does it doesn’t create culture. Creating and fostering an environment where employees feel motivated to do it themselves because they see that there is an outcome – whether financial, emotional or otherwise – is the genesis of a winning culture. This is a good example of employee engagement and putting employees first. A year ago, I was invited to address a fintech startup on their 2nd year anniversary. I don’t think I have seen so much positivity and energy in a group of employees – many of them had joined over a year ago. The CEO, who is a close friend, told me that one of the company policies was mandated vacation / leave. Anyone could give 48 hours notice and take up to a week off twice a year. The concept was so alien to employees coming from competitors but they loved it when they got used to it. It forced them to plan, co-operate or delegate where necessary and set up processes and systems such that they worked in their absence

Encourage risk-taking, but don’t set people up for failure 

 A good employee will know when they are being pushed out of their comfort zone. They will also know when this is being done with positive intent and when they are being set up for a task that is well beyond their stretch capabilities. This is common in sales. The manager asks the employee to go for a “soft stretch target”. One thing leads to another and the soft target is now a hard target. And the employee suddenly sees their bonus disappear along with their trust. On the flip side, encouraging a developer to learn a new language or tool and have them work on a project on that tool is a good example of investing in the employee and building loyalty.

Recognise the employee’s needs and aspirations beyond just a “resource” 

This is easier for large organisations with dedicated HR and Learning professionals to appreciate. Don’t project your mindset on your peers and employees. It's easy for a founder / investor / CEO to expect a certain level of commitment from the employees. But know that it is also easy for the employees to expect the same level of compensation from the organization. It is important for organizations to recognise the mental and physical well-being of their employees. In many ways, this is a function of culture. A 25 year old software developer may be okay with late night pizza dinners and a certificate of appreciation, but she won’t be so impressed when she is 35 years old and is thinking about the EMI payment for the house she just bought or the new car she has been eyeing for a while. A salary increase or a surprise bonus will do wonders here. Motivation could be non-financial in many cases and companies should recognise that. Maybe the Finance & Accounts team needs to be called out and recognised for their hard work in ensuring the books were closed in time or that the audit went off without a hitch. Did they get a 10000 rupee gift card or a surprise video message from the CEO to their parents? And if anyone is wondering, all these are actual examples I have seen of good employee loyalty in an organisation.

Attrition is inevitable, conflict is optional 

There is a reason many adults prefer to leave their favourite food item for last – it's nice to have a pleasant feeling when the meal is done. In the same way, people remember how they were treated when their services were completed – either by themselves or by the employer.  Good employers tend to make the exit process as uncomplicated as possible. Everyone understands that the last date may have to be worked around customer commitments and company constraints. But, some of the best companies go a step beyond in simplifying the exit experience – something as simple as clearing all dues within a few days, providing necessary relieving documentation etc. And of course, it helps if the manager / leader reiterates the value the employee delivered. While people have lost jobs during COVID, some companies like Uber and AirBnB created an employee board where other companies could get access to details of the employees they let go, some others provided generous severance packages and access to recruitment consultants. Yes, these are grand gestures and maybe due to the pandemic. But, the essence of the experience stays the same

Creating an employee-centric mindset may not come naturally to organisations. It is easy to focus on the customer and on the market. But, the employees can be a tremendous force multiplier. And employee loyalty can create a committed core that can help generate and sustain growth in these uncertain times.