Repairing Employment Loyalty: Modern Approaches to an Outdated Dynamic

What has happened to employee loyalty?

Generation X and Baby Boomers were brought up in a time where one of the key markers of success was a person’s tenure at a company. Some people even retired at the companies they started their first job at. During this time, employment was a transaction based on mutualism - an employee offered their time, skill set, and experience to the company in return for compensation that allowed them to support themselves and their families. They were provided with pensions, benefits, and perks. Back then, security and retirement was ensured by the company, now it has become a personal responsibility of the employee.

The loyalty perks that these generations came to expect have since been removed or tapered by many companies, fracturing the unspoken social contract of loyalty for longevity and security. Corporate retirement plans such as pensions and RRSP matching are no longer a standard of compensation packages and employers have been slow to increase salaries to meet inflation and cost of living leaving employees feeling under supported and undervalued. Add in the increasing regularity of layoffs in the job market and the mandatory call backs to office and you have a workforce filled with resentment, uncertainty, and insecurity around their job, company, and career.

This precarious environment has resulted in a generation that has come to view themselves as replaceable or disposable in the employers eyes. They feel that the loyalty that companies feel entitled to has no longer been extended to them. This claim has been evident in the discourse amongst executives and hiring managers around “job hopping”, criticizing those who do not stay at a company for an extended period of time (usually less than two years, sometimes even five). This has created a narrative that those who regularly change positions and companies are flaky, unreliable, and easily bored when in actuality most are just aware that if their employer isn’t able or willing to properly compensate them for the value, experience, and skills another employer will. What we are seeing is a generation taking their power back, putting their interests first, and prioritizing themselves amongst companies that no longer offer security or advancement.

Why care about employee loyalty and satisfaction?

Research increasingly shows that turnover can cost a business anywhere from 150-200% of the employee’s salary (depending on the role). This includes the time, resources, and cost of hiring, onboarding, and training a new person. These expenses are costly and can potentially be damaging for organizations.

When leaving, the individual takes with them valuable knowledge and experience within the organization that may leave a gap in your team that is difficult to fill, negatively impacting workflow and disrupting productivity. Team members may have to pick up the slack left behind, creating animosity and resentment at their increased workload in turn affecting employee morale. Whether they are discussing their frustrations with others or they have developed a poor attitude, unhappy employees can have a lasting negative impact on the workplace.

Where do we go from here? Modern loyalty perks.

It is overly simplistic to say the quick fix to this disruption in the employment ecosystem would be to go back to offering the loyalty perks of the past. Pensions, RRSP matching, and corporate retirement plans can increase an organization’s overhead significantly and depending on the size, stage, and cash flow of the company offering these types of perks it may not be financially possible. That doesn’t mean there aren’t other ways a company can build loyalty and longevity with their employees.

Equity

Equity is a great way for employers to stay competitive in the job market. It can be used as a part of a compensation package to attract, retain, and incentivize top talent. Employees are given ownership in the company and more likely to be invested in the long term success of the organization, working towards a common goal.

Job Mobility & Flexibility

Work life balance isn’t an employment trend, it’s an expectation. Workplace flexibility (remote/hybrid work, flexible hours, etc.) allows employees to do their job while also being able to pursue their passions outside of their 9-5 giving them a sense of empowerment and fulfillment.

Growth & Development Opportunities

Offering your employees opportunities for mentorship, mentoring, upskilling, regular check-ins, feedback, recognition, and rewards allows individuals within your organization to enhance and advance their skills and experience without going elsewhere.

Change How You Hire - If you aren’t able to offer loyalty or a long term commitment to an employee then don’t hire like you can. There is an increasing amount of fractional workers in the job market. Utilize them for hourly, contract, and part time work when necessary.

Stay Updated

It is important for companies to educate themselves on compensation expectations in the job market and whether their current packages meet those expectations. This allows employers to maintain a competitive edge when attracting new talent as well as retaining existing employees. If an increased salary cannot be offered, other perks can be utilized to increase the overall compensation of employees and help bridge the gap between what you can offer and what the market is expecting.

Transparency, Curiosity, & Open Communication

It isn’t fair to assume everyone has the same needs or expectations from employment. While some people are looking for compensation mainly in the form of salary, others are interested in benefits packages and equity. There are also  certain employees who value a title over compensation. Not everyone values or prioritizes the same things. Having open and transparent conversations around a role's requirements and expectations as well as an employee's expectation and requirements will allow your company to find the best fit for the job. The employee will also be able to determine whether your organization is the right place for them.

Company Culture

All of the above perks contribute to a company’s culture. Is it a great place to work? Is the job satisfying? All these aspects contribute to employee engagement and longevity.

Taking a thoughtful approach by implementing relevant perks and initiatives will help address and repair a company’s relationship with its employees. It’s important to understand how to create an environment that supports, motivates, and fulfills your team in order to effectively build trust and commitment. These measures not only enhance job satisfaction but also demonstrate a genuine investment in employees' well-being and growth. These strategic perks not only benefits workers by providing them with a positive workplace environment but offer company’s the engagement and dedication that they are looking for.