Exploring the Nature and Motivations Behind Company Loyalty

For businesses looking to increase sales, maximize profits, reduce turnover, and boost productivity, employee loyalty isn’t just something to consider; it may impact virtually every aspect of success for companies big and small, from large senior care enterprises to boutique retail shops. But what constitutes employee loyalty among today's workforce may be different than traditional definitions of the concept, such as the connection between the company and the person working for it. Among younger generations particularly, loyalty is often more closely related to the job at hand. Instead of focusing on fostering relationships, even employee loyalty has become a somewhat transactional experience.

For brands worried about attracting and keeping quality talent, shifts in company culture and employee expectations can be crucial to uncover. For a more personal look at the fine print often associated with company loyalty, we surveyed over 1,000 full-time employees for their perspective. Read on as we break down how age, company size, relationships, compensation, and working environment can impact employees and their sense of loyalty in the modern workforce.

“That which isn’t good for the hive, isn’t good for the bee,” a quote often attributed to the Roman emperor Marcus Aurelius, the phrase lives on as a critical way of understanding community and culture nearly two thousand years later.

With regard to company loyalty, our survey found employees who self-identified as loyal to their employers were 36 percent more likely to agree with Aurelius’ expression when asked. Compared to the 62 percent of employees who considered themselves disloyal, nearly 85 percent of those committed to their employers believed in the message behind the motto.

A new definition

If the framework that characterizes company loyalty is evolving, it’s worthwhile to examine how employees today define it. More than anything else, 63 percent of employees associated company loyalty with tenure and 61 percent suggested the support associated with loyalty might not necessarily be a two-way street.

As popular as these opinions were, they did not qualify as universal. When asked for their personal opinions on the definition of employee or employer loyalty, these are some of the responses we received: One millennial working for a small to midsize business said loyalty means looking out for the best interests of the company, while another working for a large business said loyalty means representing the company favorably outside of work.

In return, employer loyalty was often described as focusing on relationships and understanding, particularly by Gen X employees and baby boomers. As one respondent said, loyalty means going above and beyond to respect employees’ work/life balance.

Even though many employees (63 percent) agreed it was possible to be loyal to a company that didn’t return the same sense of support, doing so may be an important key to unlocking a deeper connection between the two. Compared to loyal employees, 90 percent of disloyal employees suggested their companies were disloyal in return. In contrast, nearly 87 percent of loyal employees felt the businesses they worked for showed the same level of faithfulness.

More than a number

Big businesses may be more likely to become household names, but many would argue that small businesses — from dental practices and accounting firms to restaurants and retail shops — are the engine of the U.S. economy. Responsible for creating 60 percent of job growth, small businesses are often perceived as innovative and flexible in their mission. Although big businesses may have more resources available to establish employee benefits, it is possible that size may occasionally get in the way of success (at least where loyalty is concerned).

Our research found company loyalty decreases dramatically as company size increases. Compared to just 76 percent of full-time employees loyal to their large companies, we found nearly 85 percent of people working for small businesses felt the same. However, what that loyalty means may vary from industry to industry. Unlike marketing and advertising, where a high company loyalty equated to a relatively high expectation of tenure (16 years), some industries still saw high turnover despite having earned employee devotion.

Additionally, more than 80 percent of people in IT and data processing identified as loyal, and expected to stay at their current job for 13 years. The same was true of people working in medicine and health care, who were nearly as likely to be loyal and still only intended to stay with their employers for 13 years. For other industries, the inverse was true. Just 77.3 percent of people working in manufacturing identified as loyal to their companies but still expected to stay employed for 19 years.

A rising trend

What defines the employee-employer dynamic may be changing, and millennials may be spearheading the shift. While only 1 in 4 loyal employees described the connection between employees and employers as transactional (as opposed to relationship-driven), that sentiment was stronger with younger employees.

Nearly 36 percent of millennials cited the employee-employer relationship as being transactional, and close to 66 percent said they succeed only when their personal contributions succeed. Another 59 percent of millennials also admitted to thinking about their needs over the companies when searching for a new job, a trait shared by only 49 percent of Gen X employees and 36 percent of baby boomers. By 2020, millennials are expected to account for 46 percent of the working population, making their perspective on company loyalty especially relevant to employers trying to establish effective company culture and success.

A human touch

While there isn’t one singular factor that can determine company loyalty, we asked respondents to pick one aspect that plays the biggest role. The answer was almost always the same: the people.

Particularly among already loyal employees (disloyal often favored culture and environment), as well as millennials and those working for small- to medium-sized businesses, the people around them were the biggest contributing factor to loyalty. People are among every company’s most valuable assets, and this way of thinking often emanates from the top and flows down through lower levels of the business. For some organizations, this can mean finding new ways to measure (and reward) employee performance, in addition to ensuring the proper management team to help communication, company success, and culture. This is particularly critical in serve-heavy businesses, such as home health care or senior living.

Happy employee, happy work

The formula for establishing successful company loyalty may be complicated and ever-changing, but the results of that labor are often easily identified by employee satisfaction. Compared to just 1 in 10 full-time employees who self-identified as loyal to their employers but were still either not at all or only slightly satisfied with their work, nearly 78 percent of loyal employees considered themselves either moderately or extremely satisfied at work. In contrast, more than half (57 percent) of disloyal employees were unhappy with their jobs or only marginally happy.

Employer loyalty may be as important (or even more so) to employee satisfaction. Close to 86 percent of respondents who perceived their employers were equally loyal to them described themselves as either moderately or extremely satisfied at work, an increase over those where loyalty didn’t go both ways.

Far-reaching effects

Quality employee benefits are often described as being an integral part of building a culture of loyalty and commitment. That relationship is typically linked to employee retention, positive work habits, and boosted productivity. And while a strong portfolio of both traditional and non-traditional benefits certainly can improve morale, we found it was the quality of their work environment that had the strongest impact on employee-employer loyalty.

More than almost anything else, it was a sense of teamwork (66.4 percent) that loyal employees identified in relation to positive support of their company. Not only can effective teamwork make for a more productive working climate, but it can also increase innovation and drive company growth. Combined, the benefits of teamwork made employees we surveyed more than twice as likely to be loyal to their companies. Other factors including sense of purpose, an opportunity for personal growth, meaningful relationships with superiors, and the opportunity to help the community were more than twice as likely to be present in businesses where the employees felt loyal to their companies.

In some cases, having quality employee benefits had little or no impact on increasing company loyalty. Disloyal employees were more likely to have health insurance and almost equally as likely to have paid vacation time. As we discovered, paid time off, dental insurance, and a 401(k) plan were among the benefits more often associated with companies where employees didn’t consider themselves loyal.

A working ultimatum

Employee turnover isn’t just a hassle in terms of the time it takes to find, train, and implement replacement employees; it can be an extremely costly process for businesses big or small. By some estimations, it can cost companies twice an employee’s salary to put someone else in their position. Perhaps even more importantly, employee turnover can be extremely disruptive to company planning and forward momentum.

To help reduce higher rates of turnover, it can be helpful to know what employees seeking alternative employment value over those at a lower risk of leaving their jobs. Nearly 71 percent of full-time employees actively looking for a new place to work wanted higher salaries, and nearly 48 percent wanted better benefits. While these factors may not immediately lead to company loyalty, employees looking for new jobs were more than twice as likely to have a desire for the respect and recognition that could be missing from their current place of employment.

The end of the line

Establishing employee loyalty and trust take time, and once that trust has been violated, it can be extremely difficult to rebuild.

Instead of working overtime to re-establish their loyalty, there’s an opportunity for companies to avoid negatively impacting employee relations in the first place. According to our survey, nearly 59 percent of respondents said being insulted by their employers was the biggest deal breaker. Following verbal abuse, it was a lack of appreciation for their contributions (42.2 percent), failing to listen to their concerns (39.4 percent), and denying them a promotion or raise request (29.6 percent) that had the most negative impact on a company's ability to establish loyalty.

A new standard

When it comes to building employee loyalty, getting the efforts right can be tricky. Full-time employees we polled didn’t value compensation or paid time off until they were already looking for a new job.

And while historically the employee-employer dynamic was viewed as more of a relationship, younger generations of workers may be taking a more transactional approach to the idea of company loyalty. While there’s no guarantee that building loyalty between a business and its employees will reduce turnover, it can certainly play an important role in how happy people are with their jobs and their performance.

No matter how many employees you’re managing, Paychex has the insight and solutions you need to manage their benefits, provide proper HR representation, and onboard new hires quickly and efficiently. At Paychex, our mission is to help alleviate administrative burdens so you can focus on providing the engagement, human touch, and company culture your employees are looking for in the workforce.

Methodology

We collected survey responses from 1,002 full-time employees. Fifty-eight percent of our participants were male, and 42 percent were female. Participants ranged in age from 18 to 74 with a mean of 36 and a standard deviation of 10.2. Participants that were not full-time employees at the time the survey was conducted were disqualified and excluded. We weighted the data to the 2010 U.S. census for age and gender. Hypotheses that were statistically tested are noted in the project.

The data we are presenting relied on self-report. There are many issues with self-reported data such as selective memory, telescoping, attribution, and exaggeration. In this survey, self-report is most problematic in respondents’ reported company loyalty, as loyalty can mean different things to different people.