Loyalty Matters: Strategies to Increase Retention and Boost Your Business

On average, an employee stays with their employer for only about four years, according to the U.S. Bureau of Labor Statistics. Some statistics indicate that Generation Z employees average just over two years.

Gallup data puts the cost of voluntary turnover at a trillion dollars a year for U.S. businesses. When you figure it costs, on average, one and a half to two times an employee’s salary to replace them, you can see that the cost adds up fast. Moreover, this number only accounts for the direct cost of turnover. Indirect costs include the loss of institutional knowledge, decreased productivity, and, often, negative impacts on employee morale.

It is clear that declining loyalty has become a costly problem employers need to address. So, what can you do about it?

While you cannot force employees to stay with your company, nor would you want to, you can build loyalty. Employee loyalty means commitment to the organization. It influences an employee’s willingness to stay and their desire to positively contribute to the organization.

Here are five factors that influence employee loyalty:

Culture and Work Environment
Employers must create an environment that fosters inclusivity, collaboration, and open communication, which means providing a psychologically safe environment. Employers can promote psychological safety by modeling psychologically safe behavior and training leaders to do so. This means ensuring employees feel comfortable speaking up and contributing their thoughts, ideas, questions, concerns, and even mistakes without being punished or humiliated.

Compensation and Benefits
Employers should regularly review their total rewards. A total rewards philosophy ensures that compensation and benefits align with your organizational strategy. Aligning your total rewards with your strategy and soliciting input from employees about what type of benefits are most valued can help employers create a competitive and comprehensive offering. Doing so supports employee well-being and demonstrates that you value your employees. Remember that benefits aren’t always tied to pay or health care. Other benefits might include retirement plans, discount programs, education benefits, and pet insurance.

Development Opportunities
Providing employees with opportunities for growth through ongoing feedback, training, mentorship, progression paths, stretch assignments, job shadowing, and career coaching can help them see a future with the organization. This investment is more likely to lead to employees seeking opportunities internally instead of externally.

Ability to Balance Work and Life
Employers can foster a sense of loyalty with employees through workplace flexibility. Flexibility is one of the most sought-after offerings an employer can provide. While flexibility can be provided through remote work, compressed workweeks, and flexible scheduling, true workplace flexibility involves leaders learning how to become flexible in their approach to how and where work gets done. Employers Council’s HR consultants are available to our Consulting and Enterprise members to discuss workplace flexibility and other strategies for balancing employee and business needs.

Recognition and Appreciation
Typically, rewards involve some cost to the company and provide a financial benefit to the employee. Rewards may include pay for performance, bonuses, equity awards, and stock options. It’s important to note that rewards should align with your compensation philosophy.

On the other hand, recognition is a form of appreciation that is intended to provide a psychological benefit. Keep in mind that monetary rewards are not always the ultimate motivator. Recognition could look like employee appreciation programs, recognition boards or shoutouts, thank-you cards, and paid time off. While there may be some nominal cost, typically, it is not a cash or cash-equivalent award. The key to successful rewards and recognition is personalization — everyone is motivated differently. Have you asked your team what motivates them or how they’d like to receive recognition? If not, this is the first step.

Your employer brand is the sum of your employee experience, and your employee experience drives loyalty. To increase loyalty, employers must develop a culture that embraces employees’ physical, mental, and financial well-being by supporting them with a thoughtfully developed total rewards strategy and an environment conducive to flexibility, growth, and development.

Employers Council has numerous resources and services to help you with employee retention, professional development, workplace culture, and your total rewards program. Here are two ways to learn more:
• Explore our training catalog.
• Access our compensation planning services.
Employers Council members enjoy discounted rates on training courses and have access to our library of whitepapers and sample handbooks. Click here to learn how to become a member.