Presented by: Karen Gauthier Fewer Than Half Of All Employees of U.S. Based Companies Now Consider Their Employer Worthy Of Their Loyalty Presented by: Karen Gauthier Did you know that fewer than half of all employees of U.S. based companies now consider their employer worthy of their loyalty? This was a finding from the Walker Information & Hudson Institute “National Employee Relationship Report” May 2002.

Situation Employee Loyalty: does it exist? In today’s world, with mergers, down sizing, and the emphasis on profitability for shareholders, you have to wonder if employee loyalty or organizational loyalty even exist. The emotional connection our parents felt with their organization who offered them lifetime employment and security are not the same today. I Have experienced my own company in transition for several years. Upper management changes, the lack of an acting President for three years, down-sizings. I felt like I was seeing changes in employee attitudes. I became concerned that the committed ness I once saw in the company was waning.

Loyalty Matters Because: Better overall company performance Lower recruitment and training costs Higher levels of citizenship Satisfied customers Because of this concern, I selected loyalty as my research project so I did some reading about loyalty. Prior research showed that the one factor management can leverage in its search for profits is the loyalty and commitment of employees. Loyal employees result in: Better overall company performance Lower recruitment and training costs Higher levels of citizenship Satisfied customers

Research Question Can Company A, through its employment practices, encourage employee loyalty? I will be using the pseudonym-Company A to stand for my organization, a mid-size Minnesota manufacturing company with about 300 employees. Approval of my research project was given with the condition that the company not be identified. My research question is:Can Company A, through its employment practices, encourage employee loyalty. The research will help determine whether the energy and resources Company A is investing in employees is being well spent in terms of loyalty building.

Operational Definition Employee loyalty is defined in terms of active behaviors that demonstrate pride in, and support for the organization. Employee loyalty is more than just fulfilling the duty of an honest day’s work It is more than just job satisfaction. It is an mutual commitment. For the purposes of this study, I chose this definition I found in my reading. Employee loyalty is defined in terms of active behaviors that demonstrate pride in, and support for the organization. These “loyal” measurement behaviors were taken from an article titled The influence of empowerment and job enrichment on employee loyalty in a downsizing environment by Niehoff, Moorman, Blakely and Fuller (2001) How Did I Assess Loyalty? I assessed what are thought to be critical elements in employment practices according to Frederick Reichheld, a leading loyalty researcher, in his book Loyalty Rules (2001)

Eight Critical Elements of Management Behavior Loyalty begins with the integrity of senior management Trust from employees Respect for employees Honest and open communications Mutual concern and caring Responsibility to employees Accountability of employees Growth opportunities given This list consists of those 8 Eight Characteristics that I investigated to help me answer my question. These start with management but become a 2-way interaction. Loyalty begins with the integrity of Senior management. Integrity – Behaving in an ethical manner. Following through on commitments Trust- consistency between words and actions. If there is a lack of confidence in management turnover rises, and cynicism will set in Respect- treating people with dignity and respect, showing them their opinion counts Honest and open communications-Unvarnished sharing of information about company performance and initiatives. Encouraging two-way information sharing. Mutual concern and caring-a Gallup Organizational survey showed that having a caring boss is more valued than money or fringe benefits by employees. Responsibility- Management responsibility towards workers, valuing people ahead of short term profits. Employee’s feelings of personal investment are generated by their own sense of responsibility towards the company Accountability-Conveying clear expectations of performance. And making people accountable for their actions. Acknowledging how people are contributing to the overall success of the company. Helping non-committed employees leave helps the morale of productive workers. Growth-giving people a change for advancement, showing people where advancement opportunities lie. Making sure people have the right tools and resources for doing their work. Guiding people into roles that fit their strengths.

Organizational Leadership Loyalty centers on the integrity of management behavior The chief executive has a strong influence on the company culture Business loyalty, whether it be the loyalty of customers, employees or investors, centers on the integrity of the senior leadership team and its ability to put its principles into practice. There is agreement among experts that that employee loyalty starts with the chief executive who has a strong influence on the company culture

Survey 38 question survey Distributed to all employees on open enrollment day Hats given to first 100 people completing survey Immediate response Captured responses from 206 employees, a 66% response rate To obtain my research data I surveyed the corporate employees. I Distributed a 38 question survey to all employees on open enrollment day Hats were given to first 100 people completing the survey This insured immediate responses Captured responses from 206 employees, a 66% response rate.

Sample Questions 1. I understand the company’s goals and objectives  Strongly  Agree  Neither agree  Disagree  Strongly Agree nor disagree disagree 2. I trust the company leaders to act with fairness and integrity 3. The company values people over short term profits 4. Management listens to employees’ concerns

Positive Responses Integrity Customers can rely on Company A to deliver outstanding quality service and value. 75% agreement Caring and Concern My supervisor is willing to hear honest feedback from me. I received many Positive Responses These elements received the highest ratings Integrity Customers can rely on Company A to deliver outstanding quality service and value 75% agreement Caring and Concern My supervisor is willing to hear honest feedback from me 75% agreement

Negative Responses Responsibility/ Accountability The overall morale in the company is high. 14% agreement Growth In understand where the advancement opportunities are that may be available to me. 28% agreement The morale in my department is high. 36% agreement I also received a number of Negative Responses These elements received the lowest ratings Responsibility and Accountability The overall morale in the company is high 14% agreement Growth In understand where the advancement opportunities are that may be available to me 28% agreement The morale in my department is high 36% agreement

Employees Feel Accountable and Responsible for Company Success Accountability/Responsibility I feel as though I am being held accountable for results. 79% agreement Customers can rely on Company A to deliver outstanding quality, service and value. 75% agreement The following slides show my major findings. Employees feel accountable and responsible for Company success Accountability and Responsibility I feel as though I am being held accountable for results 79% agreement Customers can rely on Company A to deliver outstanding quality, service and value 75% agreement

Employees Feel Positive About Supervisor Relationship Caring and Concern My supervisor is willing to listen to hear honest feedback from me. 73% agreement I believe I am being treated fairly by my supervisor. 67% agreement I believe my supervisor is concerned with my well being. 65% agreement Employees feel positive about their supervisor relationship My supervisor is willing to listen to hear honest feedback from me 73% agreement I believe I am being treated fairly by my supervisor 67% agreement I believe my supervisor is concerned with my well being 65% agreement

Employees Say Their Work Is Challenging Growth Opportunities I have opportunity to learn new things. 73% agreement I am challenged in my day-to-day work. 69% agreement I feel as though I get the training I need to perform my job well. 48% agreement Employees feel their work is challenging Growth Opportunities I have opportunity to learn new things 73% agreement I am challenged in my day-to-day work 69% agreement I feel as though I get the training I need to perform my job well 48% agreement

Employees Say Communication is Lacking Open and Honest Communications Company A does a good job of keeping me informed about matters affecting the company. 42% agreement Management listens to employee’s concerns. 46% agreement Management addresses employee's concerns. 36% agreement Employees say communications lacking Company A does a good job of keeping me informed about matters affecting the company 42% agreement Management listens to employee’s concerns 46% agreement Management addresses employee's concerns 36% agreement

Employees Feel There is a Lack of Integrity and Trust I trust the company leaders to behave with fairness and integrity. 53% agreement Formal policies are enforced consistently. 42% agreement Overall there is a high level of cooperation between business units and departments. 35% agreement The overall morale in the company is high. 14% agreement Employees feel there is a lack of integrity and trust I trust the company leaders to behave with fairness and integrity 53% agreement Formal policies are enforced consistently 42% agreement Overall there is a high level of cooperation between business units and departments 35% agreement The overall morale in the company is high 14% agreement

Comparison to National Norms National Survey by WorkUSA2002 Only 39% of employees at U.S. companies trust the senior leaders at their firm. Company A 53% said they trusted company leaders to behave with fairness and integrity In order to get a sense how Company A is doing here is a comparison to some National Norms In Comparison to National Norms In a National Survey by WorkUSA2002 Only 39% of employees at U.S. companies trust the senior leaders at their firm. At Company A 53% said they trusted company leaders to behave with fairness and integrity A higher than average sense of trust is present

Comparison to National Norms 2001 National Survey by Walker Information 53% willing to recommend their firm to others looking for a job. Company A 66% were willing to recommend it as a good place to work. In Comparison to National Norms 2001 National Survey by Walker Information showed: 53% willing to recommend their firm to others looking for a job At Company A 66% were willing to recommend it as a good place to work So Company A employees feel more positive about the organization than employees elsewhere

Comparison to National Norms 1999 National Survey by Walker Information 24% of all U.S. employees plan to be with their current employer in two years. Company A 62% agreed that would likely be with the company in two years. A 1999 National Survey by Walker Information 24% of all U.S. employees plan to be with their current employer in two years. At Company A 62% were in agreement that it was likely that they would be with the organization two years from now. This is quite a lot higher than the national norm. Economic times may play a factor in this response.

Comparison to National Norm In Reichheld’s Loyalty Acid Test 45% of employees agreed that their company deserved their loyalty Company A 65% of employees agreed that their company deserved their loyalty Comparison to National Norm In Reichheld’s Loyalty Acid Test 45% agreed that their company deserved their loyalty At Company A 65% agreed that their company deserved their loyalty These comparisons to national norms speak well for Company A showing higher than average pride in and support for the company

The Results Do this company’s employment practices encourage employee loyalty? YES! Do this company’s employment practices encourage employee loyalty? Yes, there are correlations between perceived integrity of leadership, levels of communication, caring relationships with supervisors, challenging work and growth opportunities that seem to create pride in and support for the organization.

I Recommend Reinforcing Some Existing Practices Communicate Company’s mission Continue support and training for supervisors Foster a working environment that encourages interesting and challenging work Provide performance expectations and training I Recommend Reinforcing some existing practices: These are elements that already rated highly and should continue to be re-enforced Communicate Company’s mission/goals Continue support and training for supervisors Foster a working environment that encourages interesting and challenging work Provide clear performance expectations and training

I Recommend Some Opportunities for Change More open and honest communications Better sharing business goals and cooperative efforts Consistent enforcement of policies Provide clear understanding of advancement opportunities I Recommend Some Opportunities for change: These are elements that had lower scores and need additional effort More open and honest communications Better Sharing of business goals and cooperative efforts More Consistent enforcement of policies Conveying a clear understanding of advancement opportunities

Questions