Why Employee Loyalty Is Important
Why aren’t businesses doing more to keep their employees?
Especially given the following facts:
- It is cheaper to hire the right employee and retain her or him with higher pay, than it is continually lose employees and have to recruit and train replacements (Forbes)
- Loyal employees connect personally with loyal customers over a long period of time (Incentive Mag)
- Experienced employees know the ins and outs of the existing customer and the typical customer persona
Employee loyalty begets quality service, in turn begets customer loyalty.
Entrepreneur Richard Branson, who is celebrated for running incredibly successful companies built around happy workforces, writes “Your employees are your company’s real competitive advantage.
They’re the ones making the magic happen—so long as their needs are being met.”
Satisfied employees are simply more productive and more efficient.
They tend to work harder, contribute more, and call in sick less.
They feel empowered, appreciated, and are more loyal.
They stick around so companies don’t have to spend as much time and money recruiting and training new workers.
Happy employees also tend to rave about their workplace, which can often attract new talent. When job seekers are clamoring to work for a company, that company gets to choose the cream of crop to join their team.
When people know we truly care about them—and not just about what we can get out of them—they tend to go the extra mile.
Despite the obvious advantages of ensuring employee satisfaction, many organizations struggle with how to achieve that goal. According to arecent survey, only 61% of worldwide workers said they feel engaged at their jobs.
Loyalty to an employer isn’t always in the employee’s best interest.
One of the definitions of loyalty is staying with somethingeven when it goes against your self-interests.
Some studies have shown that employees earn a 10% -20% raise on average when taking a new job.
Meanwhile the typical in-house raise is somewhere around 3% -4%.
Once you factor in inflation and increased cost of living, that’s more like a 2% raise.
Another concern for loyal employees is good work is often punished.
Many companies have a tendency to abuse loyal employees by asking them to do more than their peers.
In other words, employeescando well by seeking greener pastures.
True or not, they’ll convince themselves there’s more money to be had, betteremployee benefits, a more appreciative culture, less risk.
It’s up to you to displace those fears with a culture of appreciation, growth, and transparency.
Cost involved in replacing a new employee:
If the company wants to hire a new employee as to replace with a disloyal employee, then the cost involved in it will be calculated. They can be calculated as follows:
- Cost spent on the person leaving
- Cost involved in hiring a new person
- Training given
- Lost productivity cost.
Studies have shown that every time a business replaces a salaried employee, it can cost between 6 to 9 months’ salary per employee.
For a manager making $40,000 a year, that would be $20,000 to $30,000 in recruiting and training expenses.
Other studies say the cost is even more – up to 213% of annual salary for highly educated executive positions. For example, the cost to replace a $100k CEO is as much as $213,000.
The secret to loyalty is to treat them well, pay them well, and give them success training / coaching not just on-the-job training.
If employee loyalty is not high, then we need to talk.