Building Loyalty - motivating and keeping employees

A survey on worker loyalty reveals that employees will give their all--and stay--at companies they find deserving. Here's how to win their devotion.

Novel fringe benefits may bring you more job applicants but they aren't likely to inspire worker loyalty unless your employees feel a sense of pride in their work.

That's the key finding in the latest installment of United States @Work, a comprehensive survey of worker attitudes conducted annually by Aon Consulting Worldwide's Loyalty Institute.

Instead of adding pet-walking services or on-site dry-cleaning services, companies struggling with high turnover in this era of tight labor markets may want to reconsider their compensation packages and their workplace environment, said David L. Stum, Ph.D., president of the Loyalty Institute. The Ann Arbor-based research company is an arm of Chicago-based Aon Consulting. "Organizations need to take a good, hard look at the basics before launching new and trendy benefits and other human resources practices," he said. "Start by ensuring that you offer a safe, secure work environment and equitable compensation and benefit packages. These are your foundation, and there's no sense building upon a foundation if it's faulty."

Beyond that, Stum encourages managers to build a sense of spirit and pride in the organization because workers who feel that their companies are succeeding in this area feel more committed to their jobs. Additionally, when a worker's sense of being valued and belonging exceeds expectations, that employee is nearly seven times as likely to strongly recommend the organization as one of the best places to work, Stum said.

This back-to-the-basics advice for corporate America is based pioneering research Stum took on a decade ago in the area of worker loyalty. A business management psychologist by training, Stum began asking employees to describe their idea of job commitment so that he could better understand what keeps workers from jumping ship.

"We knew the old social contract of work for life was dead and that the landscape of corporate America born in the 1950s had changed dramatically," he said. "I wanted to do something that went beyond employee happiness and employee satisfaction because to me, those concerns are superficial measures that are the outgrowth of a paternalistic, adult-to-child employer-employee relationship. The American worker has grown up and is demanding an adult-to-adult relationship."

In the last several years, the issue of worker commitment has become all the more important because the stakes of keeping workers continue to rise.

"The cost of replacing an employee in today's market is roughly one half of that person's annual salary--a figure that doesn't include the loss of intellectual capital that results from each departure," Stum noted.

Since Aon's United States @Work survey was first conducted in 1997, analysis of the findings has uncovered some surprisingly fundamental practices that can help management navigate the current retention crisis, which has been brought on by the tightest labor market in 30 years, he said.

The good news for employers is that even if employees now expect to change workplaces several times during their working careers, they still are prepared to "give their all" to companies they consider deserving. And management can do something about that, Stum said.

"American companies have fueled the 'Me, Inc.,' attitude of the last decade because they have not given employees a reason to he committed to the organization," he said. "We have a new work order in this century. But unless employers build pride in their organizations, employees will continue to be lured away by small pay increases and glitzy benefits. Employers are going to continue to experience tight labor markets and rising employee expectations in what they want in their employer-employee relationship."

Stum began working with the employees of more than 200 of his corporate clients in late 1980s to develop his measure of employee commitment, known as the Aon Loyalty Institute Workforce Commitment Index. Participating firms included Borders Group, Inc., Chrysler Corp., Ford Motor Co., IBM, Kimball Office Furniture, Little Caesars, McDonald's, Medisys Health Group, and Northwestern Mutual Life.

"We came to understand that by looking at how workers themselves defined job commitment and loyalty, we could better define what qualities make some companies more attractive than others," he said.

Stum interviewed workers in a series of focus groups to figure out what characterized a committed employee. "What we came up with were six characteristics--six behaviors, if you will--that workers said indicate to them a loyal worker," Stum said. "A committed worker is one who is a team player, who is willing to make personal sacrifices for the good of the company, who believes in the company's product, who will recommend the company as among the best places to work, and who is prepared to stay at the company for at least the next several years, even if offered a modest pay increase elsewhere."

From this information, he created a series of survey questions that make up his Workforce Commitment Index or WCI, a sort of Consumer Price Index on human resource issues, he said. Then he and his staff combed their data bases of employees to come up with a statistically valid sampling of workers across America, what Stum calls "the voice of the American Worker."

The 1,800 workers in his United States @Work survey are all over 18 years old and work more than 20 hours in non-military and non-government companies with more than 20 employees, Stum said. For this year's installment, workers were surveyed by telephone in the first quarter of 2000. In 1997, the first year in which the survey was administered, the responses were benchmarked at a WCI score of 100. That number represents a starting point, and every year since then has been measured against the 1997 loyalty response. Because 100 doesn't represent a percentage or "perfect score," responses can go higher than 100.

In 1998, the survey recorded an overall index of 97.8. In 1999, it rose to 100.3. This year the overall survey number dropped back to 98.8, giving Stum pause. "The fact that the number trended downwards this year is disturbing because of what is going on in the economy now," he said. "We expected that the index would be going up slightly each year, given that American organizations are growing globally and profits have been averaging a growth rate of 9 percent. If we had experienced a period of downsizing, then we would have expected the index to drop."

This see-sawing of his WCI index has left Stum to conclude that corporate America has more work to do in addressing the worker loyalty issue if it wants to stem the retention tide.

Getting beyond the overall numbers gives HR managers and their executive committees plenty of food for thought, said Lindsay Borden, vice president of administration, human resources for the Bob Evans restaurant and food-products businesses.

"We as HR directors know the drivers that produce worker satisfaction, but the usefulness of this kind of survey is providing backup for our own observations," Borden said.

Among other findings: Nearly 20 percent of American workers said they feel their pay and benefits are below their expectations. As you might expect, workers who earn the least, less than $20,000, also are the least committed to their jobs, scoring a WCI of 92.2. Surprisingly though, those who made more than $100,000 were not the most committed. They registered a WCI score of 101.4, compared to the 104.4 turned in by workers making between $65,000 and $74,999.

"This might suggest that defection at certain levels of management could be on the rise in the United States," Stum said.

The most committed group by age are workers 50 to 59, who scored 103.2. Those 18 to 29 were least committed, with a score of 93.1.

Among the 317 workers in the survey who had experienced company downsizing, the WCI registered a 93.4 score. Those in expanding companies scored a WCI of 101.

On the issue of employer trust, Stum noted that 13 percent of workers surveyed said they did not feel safe and secure at work. And that group scored 55 on the WCI. By contrast, those who do feel safe and secure recorded a 109 WCI score.

In the gender breakdown, men scored 97.5, lagging behind women slightly in overall commitment. Their score: 99.7.

The study showed that immediate supervisors have a very strong influence on helping build an employee's sense of pride and spirit in the organization. One in four workers didn't think their companies were doing a good enough job of developing managers and supervisors.

Stum's group has now gone beyond the WCI to develop a program to help HR managers and their companies take steps to create a committed workforce. Aon has come up with the "performance pyramid" of workplace practices, a five-level sequence of steps for evaluating a company's efforts on the commitment and loyalty front.

Level 1: Safety and security. The foundation of any good workplace is recognizing employees' need for a safe, non-threatening work environment.

Level 2: Rewards. Next in importance is equitable pay and benefits.

Level 3: Affiliation. The sense of identification and belonging to the organization is a critical step in building pride and spirit among workers.

Level 4: Growth. A company must create an environment where workers are being challenged and are learning new skills, and where employees feel they have a role in helping the company grow.

Level 5: Work/Life Harmony. Workers want to feel that their personal lives and work lives are in harmony.

While all five levels are important in building employee commitment and increasing retention, Stum said, the key is for HR managers and company executives to pinpoint the unmet needs in their organizations. "Improvement at that level will provide the greatest return on human resource and workplace-practice investment by increasing workforce commitment."

Contact Boston-area freelancer Caroline Louise Cole

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