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Why is Managing Employee Commitment & Loyalty Important? Firms compete for competitive advantage through their employees. Attracting & retaining highly.

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Presentation on theme: "Why is Managing Employee Commitment & Loyalty Important? Firms compete for competitive advantage through their employees. Attracting & retaining highly."— Presentation transcript:

1 Why is Managing Employee Commitment & Loyalty Important? Firms compete for competitive advantage through their employees. Attracting & retaining highly committed employees is key Difficult task because job changes are more frequent: * highly skilled employees have lots of options * dual career pressures * corporate decisions to expand and contract because of technological & economic changes

2 Why is Managing Employee Commitment & Loyalty Important? If mobility is the name of the game, we must learn to create commitment quickly (i.e., expect shorter employee cycle times within our firms) AND maintain commitment among stayers" who see people come and go Commitment entails feelings of loyalty, duty and psychological involvement to various targets: organizations, jobs, careers, unions, teams, even the work itself

3 Why is Managing Employee Commitment & Loyalty Important? Take an accountant: Loyalty could be to: ones employing organization (Deloitte) ones career (loves being a CPA) ones job (likes being audit manager) the work itself (derives pleasure from completed audit) Managerial focus tends to be on organizational commitment but commitment to other targets can also be successfully managed

4 Putting Commitment Back in the Workplace Why should organizations be concerned with employee loyalty? Why has commitment declined in recent years? What can we do to restore commitment?

5 Why should organizations be concerned with employee loyalty? Loyalty has declined. In a recent survey, only 45% said they felt strong, personal attachment to their employer and 34% felt any obligation to stay with current employer Many undesirable consequences associated with low commitment work environments

6 PROBLEMS IN LOW WORK COMMITMENT ENVIRONMENTS Organizational Performance Absenteeism Turnover (Customer Sat) * Half leave < 3 years Effort expenditure * Quality initiatives Theft Job dissatisfaction Willingness to be relocated

7 Financial Outcomes of Work Commitment Strategy to enhance 1996 ROI Performance TQM Downsizing or Re-engineering Employee Involvement (Commitment) Used 15% 15.4% 19.1% Did not Use 15% 13.4% N=216 Source: Lawler

8 REASONS FOR DECLINE IN COMMITMENT 1. Corporate America has not met its obligations to employees a. Downturns: layoffs, hours & compensation cut b. Mergers & Acquisitions: employees terminated c. Experiments with two-tiered pay systems d. Increased use of temps & contract employees 2.Societal values have changed & organizations have failed to accommodate these changes a. Importance of work ethic b. Work/family balance issues c. Diversity issues

9 MYSTERY VALUE EXERCISE Response options: Strongly disagree Disagree Neutral Agree agree (1) (2) (3) (4) (5) 1. Hard work makes a man or woman a better person. 2. Wasting time is as bad as wasting money. 3. A good indication of a persons worth is how well he or she does on the job. 4. If all other things are equal, it is better to have a job with a lot of responsibility than one with little responsibility.

10 REASONS FOR DECLINE IN COMMITMENT 3. The experience of paid employment has not met expectations of post-boomers a. Standard of living b. Flatter orgs and lower rate of advancement c. Career is not progressing according to plan (disillusioned by practice, employer impediments) 4. Growing numbers of jobs do not foster commitment a. Low challenge b. Few opportunities for growth c. Rising education levels among U.S. citizenry

11 How Can Commitment be Restored? It depends on what type(s) of commitment are deficient 1. Corporate America has not met its obligations to employees People are no longer loyal to employers? (low org. commitment) 2. Societal values have changed & organizations have failed to accommodate these changes Self-worth is no longer derived from paid employment? More value attached to family or leisure time than paid employment? (low work ethic & org commitment) 3. The experience of paid employment has not met expectations of post-boomers Disappointment with employment or career? (low career & org commitment) 4. Job does not foster commitment? (low job involvement)

12 AffectiveWork Organizational Ethic Commitment Endorsement Continuance Organizational Commitment Job Career Involvement Commitment FIVE BASIC FORMS OF WORK COMMITMENT

13 CONTINUANCE AFFECTIVE ORGANIZATIONAL COMMITMENT SIDE-BET Need to Desire to GOAL APPROACH continue continue CONGRUENCE (exchange working for an working for an APPROACH model) organization organization (limited alternatives) (goal congruence) Continuance Commitment vs. Affective Commitment

14 ORGANIZATIONAL COMMITMENT I. Continuance Commitment Definition: Loyalty to an organization based on accumulated investments that will be lost upon leaving Sample Too much of my life would be disrupted if I left my Measure: present organization. A changeable Attitude II. Affective Commitment Definition: The extent to which individuals identify with and have goals consistent with the organizations Sample I feel like Im part of the family at my organization. Measure: A changeable Attitude

15 WORK ETHIC ENDORSEMENT Definition: Extent to which one intrinsically values work as an end in itself Sample The most important things that happen in Measure: life involve work May be a Value or Personality Trait May vary with age or cultural group

16 CAREER/PROFESSIONAL COMMITMENT Definition: The importance of ones career Sample I like this occupation too well to give it up Measure: May be a Deep-Seated Attitude Resistance to change because of life-long dream to pursue and educational investment

17 JOB INVOLVEMENT Definition: The degree of absorption in work activity an individual experiences. Sample I live, eat, and breathe my job. Measure: May be a Very Changeable Attitude Can be affected by task assignments

18 Job Involvement Affective Organizational Commitment Continuance Organizational Commitment Career Commitment Work Ethic Endorsement Interrelationships Among Forms of Work Commitment

19 Restoring Work Commitment Work Ethic (difficult to change) Career Commitment Organizational Commitment Job Involvement (easiest to change) Handle via selection Lengthy socialization to instill/reinforce values Sponsoring continuing education Mentorship programs Pay-for-skill reward systems Development of career plans with HR staff Increase side bets Promote identity with firm; more we Training to improve (a) communication, team building, etc. (b) employee skill sets Policies to reduce home/work conflict Job design, enrichment Use of teams, participative decision-making More job autonomy


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