PERSPECTIVES ENVISAGING EMPLOYEE LOYALTY-A

CASE ANLYSIS

Dr. D.N.S.KUMAR
Professor and Associate Director,
Centre for Research-Projects,
Christ University,
Hosur Road, Bangalore – 560029.
Tel: +91 80 40129018, Fax: +91 80 40129000
Mobile: +91 9342266072
Email: dns.kumar@christuniversity.in

Dr. Nandini Shekhar

Assistant Professor,
Centre for Research – Projects,
Christ University,
Hosur Road, Bangalore – 560029.
Tel: +91 80 4012 9019, Fax: +91 80 40129000
Mobile: +91 9880542671
Email: nandini.shekhar@christuniversity.in

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 PERSPECTIVES ENVISAGING EMPLOYEE LOYALTY-A

CASE ANLYSIS

ABSTRACT

It is difficult for companies to gauge how much effort they should put into promoting loyalty,

given the mobility of workers today. In another dimension, many studies have proved the

connection between loyal employees and business success. This study attempts to throw some

light on both employee loyalty to organizations and vice versa. The pertinent case analyses

perceptions among various employees with respect to loyalty towards Polyhydron Pvt. Ltd, Belgaum,

India. An interview schedule containing 40 items was used to collect data from the different strata of

employees. Results indicated a significant effect of organizational variables on employee loyalty. The

study also builds a case with appropriate variables while exploring various ways to enhance the

employer’s loyalty towards the organization and its employees, interlinking perspectives from view point

of both employer and employee and highlights its benefits.

Key words: Employee loyalty, employer’s loyalty, employee perceptions, changing perceptions of loyalty.

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 PERSPECTIVES ENVISAGING EMPLOYEE LOYALTY

-A CASE ANLYSIS

*D.N.S.Kumar
**Nandini Shekhar
I. INTRODUCTION:

Employees‘ perceptions of their organization drive employee commitment to the job, as well as

to the organization. This, in turn, commitment drives employee loyalty. Loyalty is ―the

willingness to make an investment or personal sacrifice to strengthen a relationship‖ (Reichheld,

2001). Although business ethicists have theorized frequently about the virtues and vices of

employee loyalty, the concept of loyalty remains loosely defined. Hart and Thompson (2007)

say that loyalty is an attitude that resides in the mind of the individual and is an individual-level

construction of perceived reciprocal obligations.

In other words, the various perceptions that indicate high employee loyalty are - a) A willingness

to remain with the organization (Solomon, 1992), b) Productivity that exceeds normal

expectations, i.e., goes beyond the call of duty (Mowday, Porter & Steers, 1982), c) Altruistic

behavior (Laabs, 1996) and d) Reciprocal, i.e., the employee's loyalty to the organization must be

matched by the organization's loyalty to the employee (Solomon, 1992). So in short, employee

loyalty is more than just tenure with the same organization. It is about wanting to be there too.

______________________________________________________________________________

* Professor and Associate Director, Centre for Research-Projects, Christ University, Hosur Road, Bangalore – 560029.
Tel: +91 80 40129018, Mobile: +91 9342266072. Email: dns.kumar@christuniversity.in
** Assistant Professor, Centre for Research- Projects, Christ University, Hosur Road, Bangalore – 560029.
Tel: +91 80 4012 9019, Mobile: +91 9880542671. Email: nandini.shekhar@christuniversity.in

Electronic copy available at: https://ssrn.com/abstract=1961430

Traditionally, Management gave employees a sense of "family," of job security. In exchange,

workers gave up the right to question authority, to criticize the company, or to do their jobs in

any way but the "one right way" approved by the organization. Orders were handed down the

bureaucratic chain of command, to be followed precisely, and then released to the next level.

Today, the traditional view of loyalty no longer applies. Recent changes in the business world

and in the workforce require a different approach. Workers can no longer expect lifetime, or

long-term, employment. Nor can they expect stability. Change has become a fact of corporate

life to be accepted and dealt with. What separates the mediocre organization from the good

organization is the ability to manage changes. What differentiates the good organization from the

superior or great organization is managing both the changes and the people involved.

II. THE CHANGING PERCEPTION OF LOYALTY:

Thirty years ago, loyalty was viewed broadly as an employee feeling of attachment to an

organization (Buchanan, 1974). This attachment was later connected to specific behavior such

as supporting an organization and the individuals in it (Niehoff et al, 2001), and practicing good

citizenship (Rusbult et al, 1988). Such attachment was also thought to be evident when an

employee passed on an attractive position with another organization (Logan, 1984) or simply

remained with one organization for some length of time (Reichheld, 1996).

Much of the recent attention to loyalty has been prompted by discussions of the changing nature

of the employment relationship (Grosman 1989; Pfeiffer 1992; Haughey 1993). The role and

limits of loyalty have also featured prominently in debates about issues such as downsizing

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(Hecksher 1995; Stroh and Reilly 1997; Clancy 1999; Orlando 1999; Niehoff et al. 2001) and

whistleblowing (Larmer 1992; Duska 2001).

Relevant work-related loyalties relate to the whole organization, a supervisor, coworkers, or the

job. Employee loyalty (typically synonymous with commitment) to the organization has

sometimes been viewed as an attitude (Meyer & Allen, 1991). However, it is not so much an

attitude (or thought component) that is important in organizations, but rather it is the bottom-line

action component. Some of these behaviors are simply prescribed aspects of the employee‘s

written job description, e.g., working safely, adhering to rules, following orders, maintaining

quality of output, and taking care of company property. But other behaviors are based on

unwritten policies or norms of the organizational culture, e.g., staying late to complete a project,

participating in extracurricular activities, contributing to company charities, offering suggestions,

and remaining with the organization.

As a result of market revolutions, the emergent organizational view is more transactional,

flexible, open to renegotiation with a special focus on profits and cost, innovation, continuous

improvement and added value. In opposition to this, the past form was mainly cemented on

stability, security, predictability, promotions on seniority, compliance with authority, trade

unions and collective representation. Another difference is how the past form advocated growth

within the company, whereas nowadays it seems that one has to take individual responsibility for

one‘s own career growth, be it within the organization or outside it, aiming mainly at saleable

skills. As a result of improvements in technology, high competition, privatization, short-term

contracts, outsourcing, down-sizing and restructuring, global nature of work and fluid markets

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leading to uncertainty, this shift in the market was inevitable in the 21st century. So, loyalty at

work may not mean ‗forever‘. Maybe, what we need is a redefinition of loyalty.

Recent studies show that loyalty is giving one‘s best when one is attached to a particular

organization. Loyalty to the current organization and furthering one‘s career are not always

mutually exclusive and are in fact in most cases closely related. The very skills one needs to

acquire for his/her career growth may also be essential for the current company. Therefore,

employers can foster loyalty, by encouraging career development and helping employees to

master new skills required for their progression, ideally within the same company. What is

undesirable would be to have de-motivated employees who may be present at work physically

but not in terms of productivity and energy. This is especially the case when job-dissatisfaction is

chronic and contagious in a way that it affects the others around. Limited career progression is

not the only cause that hinders loyalty. Furthermore, monotonous work routines, high stress

levels and dictatorial management styles are factors that can get in the way. Experts note that

providing variety, calculated risk-taking and the freedom to make decisions can endanger

extensive loyalty. Besides, we all know that for most employees‘ loyalty is prompted and

reinforced by personal relationships. Hence, maybe focusing on employee relations is crucial in

promoting loyalty.

III. EMPLOYER’S INITIATIVE TO FOSTER LOYALTY:

Employers, on the other hand, are encountering a far more skeptical workforce, with a different

set of expectations and demands. Employees today no longer believe that top management will

guide their career progression. Workers are creating their own career paths, and, in most cases,

consider job-hopping a normal route to professional success. Today's employees are educated to
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expect that they may work for as many as twenty different companies - in perhaps four or five

different careers - over the course of their professional lives.

Why does an employer have to care about employee loyalty? The reason is - Employees are a

vital resource for nearly all organizations, especially since they represent a significant investment

in terms of locating, recruiting, and training let alone salaries, healthcare plans, bonuses, etc.

Anything less than a loyal, productive worker will cost a company; which is why performance

goal setting and review are so important for weeding out the ‗bad‘ ones; or for providing

additional training and support to those who can be developed or rehabilitated.

Loyalty is a two way street. If a company wants its employees to be loyal, they must earn it by

creating a stable and challenging workplace. Opportunities abound for organizations that take

the initiative in creating realistic guidelines for mutual loyalty in the workplace. But this requires

a new definition of corporate loyalty and new expectations on the part of workers and leaders.

The collapse of old traditional loyalty opens opportunities for a new, enlightened form of loyalty

based on shared values and goals, and mutual caring and respect. Organizations can benefit by

tapping into the commitment of their workers. Employees yearn to feel emotionally connected to

their work. It is the right time to address these mutual needs and to redefine loyalty in ways that

will serve both organizations and employees. Also, loyalty is important because it determines

whether the actions taken by and the behaviors of employees will be positive or negative for the

organization. That ultimately is what will drive customer loyalty and business success.

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 EXHIBIT – 1. GREATER EMPLOYEE LOYALTY TRANSLATES INTO GREATER CUSTOMER

LOYALTY AND INCREASED REVENUE

Source: www.loyaltyresearch.com

The above exhibit depicts the effect employee loyalty has on customer loyalty and ultimately, on
business success.

IV. TOOLS ADOPTED BY VARIOUS ORGANIZATIONS TO RETAIN EMPLOYEE

LOYALTY:

Since each employee is a unique individual, no single approach works for everyone, but the

following are general pointers to show that organizations can, with some changes, manage to

keep and harness its human resources in a comparatively more successful manner than the rest.

1. Offer more than just a job: Employees who view their current job as part of a rewarding

career path with their employer are naturally more motivated in their work. They may also be

more likely to view necessary but tedious parts of the job in the context of the bigger picture.

2. Appropriate Compensations: While you can't buy loyalty, you can destroy loyal ties if

you're not paying someone what he or she is worth.

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3. Empower employees: Providing a channel for employees to communicate ideas and influence

company practices gives them a stake in the business' success and promotes team spirit.

4. Invest in training and development: If you invest in your employees, they are more likely to

invest in your company. They'll also have a better understanding of your organization's business

goals and practices, which can likely translate to improved performance.

5. Share your vision: Communicate your company's direction and decisions. Employees feel

trusted and are more trusting when they know about company decisions.

6. Challenge employees: Experience says that setting and meeting high expectations makes

employees feel more positive about their jobs.

7. Recognize and reward often: Employees appreciate positive feedback and tend to be more

productive after receiving it. Additionally, a productive employee tends to inspire and motivate

co-workers by example.

8. Find common ground: Align employee career development with company goals.

9. Get to know your employees: An employee's relationship with his/her boss and coworkers is

one of the most important factors in determining how loyal that employee is. Treat employees as

individuals and look for ways to foster solid relationships.

V. METHODOLOGY OF THE STUDY:

The sample size was 100%, that is, all the 87 employees working at Polyhydron Pvt. Ltd (PPL),

Belgaum, Karnataka, India from various departments participated in the study. Polyhydron

manufactures Hydraulic Radial Piston Pumps, Industrial & Mobile Hydraulic Valves and

Accessories. Preliminary discussions were held with Mr. Suresh Hundre, Managing Director

PPL followed by discussions with the employees regarding the interview schedule. Sufficient
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internal checks were maintained on the study group and data collation was done with utmost

care, but some rounding up of the results was done for ease in tabulation while the analysis.

The interview schedule consisted of a number of questions that the respondents had to answer in

a set format. Close-ended questions were asked to the respondents, and they picked a rating on

the scale of 1 - 10. The responses for the close-ended questions were exhaustive and mutually

exclusive. To achieve the best response rates the questions flow from the least sensitive to the

most sensitive, from the factual and behavioral to the attitudinal, and from the more general to

the more specific.

The ratings were associated with the result are as follows:

Rating of 9 and 10 – Very much

Rating of 7 and 8 – Somewhat

Rating of 5 and 6 – Neutral

Rating of 3 and 4 – Not very

Rating of 1 and 2 – Not at all

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 VI. RESULTS AND ANALYSIS:

The results are presented below in a tabular format for ease of interpretation.

Table 1: Employee responses expressed as a percentage of the total.

No. CRITERION Employee responses expressed as a percentage

(%) of the total
Very Somewhat Not Neu Not At All
Much Much tral
1. Take pride in being an employee at PPL 87 12 1 - -
2. Comfortable with the company policies 54 26 3 8 9
3. Ethical business practices at PPL 60 25 11 3 1
4. Comfort level with PPL management 63 21 - 1 15
5. Cooperation among workers and management 84 12 - 1 3
6. Grievances 18 10 3 2 67
7. The grievances taken care of 66 17 10 - 7
8. Possibility of being with PPL even if given better salary 34 15 - 21 30
outside
9. Sharing and caring attitude in the organization 59 28 - 6 7
10. Preparedness to share company losses 58 24 2 11 5
11. Willing to go for a job rotation 68 13 0 11 8
12. Sufficient time for family/personal life 68 22 0 3 7
13. Personal goals being met 37 30 10 7 16
14. Find the job pressurizing 9 19 4 7 61
15. Incentives and awards for a job well done 39 1 7 7 46
16. Would incentives enhance performance 68 17 2 7 6
17. Attention to work conditions by the employers 45 25 3 11 13
18. Satisfaction with the existing infrastructure 75 11 1 13 -
19. Knowledge of job-related information 66 28 6 - -
20. Importance of job security 64 22 0 3 11
21. Managers create a friendly working atmosphere 82 12 3 0 3
22. Pleasant informal work relationships 37 15 6 25 17
23. Good performance is recognized at PPL 45 19 5 11 20
24. Employees put a 100 percent in their work 70 21 1 7 1
25. Employees perception of good performance 38 27 3 26 6
26. Access to the top management is easy 75 18 2 4 1
27. Employees want to give their best to job 73 17 0 20 0
28. Employees take pride in performing the job 79 10 1 1 8
29. There is freedom to schedule your own job 31 24 2 6 37
30. Satisfied with employee focused business plan 60 24 2 7 7
31. There is creative freedom at PPL 62 25 1 3 9
32. Very little flexibility while performing a job 28 19 3 14 33
33. Satisfaction with the administration 53 30 2 11 4
34. Employees give unafraid to give suggestions 63 18 2 3 14
35. Willingness to accept any kind of job 66 18 4 4 8
36. Congruence between interest of employee and orgn. 54 21 3 14 8
37. Glad to be in PPL 76 14 2 3 5
38. Employees benefited by joining PPL 70 23 5 2 0
39. Employees concerned about the future of PPL 83 11 0 3 3
40. PPL is the best organization in the region 83 12 3 0 2
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Statistical tools: We employed Factor Analysis which is a statistical approach that can be used to

analyze interrelationships among a large number of variables (40 in our study) and to explain these

variables in terms of their common underlying dimensions (factors). The data collected was further

subjected to a Principal Component Analysis. The relevant information from the SPSS output has

been shown below.

Table 2: Results of Rotated Component Matrix

Factors PC1 PC2

v1 Pride in employment 0.898

v2 Policies 0.806 0.547

v3 Ethical practice 0.774 0.570

v4 Communication flow 0.828

v5 Cooperation 0.905

v6 Procedure of grievance 0.858

v7 Results of grievance procedure 0.885

v8 Retention efforts 0.921

v9 Sharing and caring culture 0.850

v10 Entrepreneurship 0.813 0.532

v11 Learning through job rotation 0.837

v12 Work life balance 0.898
v13 Personal goals compatibility org goal 0.644 0.727

v14 Organizational stress 0.886

v15 Rewards and recognition 0.938

v16 Performance linked rewards 0.899

v17 Welfare measures 0.655 0.706

v18 Human infrastructure 0.883

v19 Job knowledge 0.751 0.555

v20 Security 0.869

v21 Empowerment 0.927

v22 Open culture 0.877

v23 Performance linked recognitions 0.577 0.774

v24 Normative commitment 0.891

v25 Self appraisal of performance 0.546 0.797

v26 Open door policy 0.904

v27 Commitment 0.893

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v28 Pride in doing job 0.933

v29 Freedom to schedule work 0.902

v30 Employee focused business plan 0.857
v31 Supportive culture 0.872

v32 Flexibility 0.937

v33 Administration 0.790 0.556

v34 Upward flow of communication 0.838

v35 Attitude of learning 0.883

v36 Goal congruence 0.737 0.618

v37 Engaged employee 0.938

v38 Benefits 0.844

v39 Employee empowerment 0.929

v40 Competitive advantage 0.914

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 3 iterations.

The above Component Matrix shows a simple correlation coefficient (termed as Factor loading)

between a Principal Component (PC) and a variable. This loading gives a measure of the extent

to which a variable is involved in a PC. On analyzing and interpreting Table 2, it can be seen

that the variables can be grouped as two Principal Components (PCs), which explain 91.275% of

the total variability in the data (Obtained from SPSS output). Each of these 2 PCs correspond to

Eigen values >1. The PCs are extracted in a way such that PC1 explains the maximum

variability in the data and PC2 explains the maximum of the remaining variability. The highest

loading of each variable has been made bold (to facilitate understanding and maintain brevity of

the paper) in Table 2. Integrating the variables which have high loadings under each PC, a

suitable name has been given to each PC.

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Principal Component 1: PC1 – Employee Dependent

Eigen values >1.0 (32.106); Total variance explained = 80.26% variance.

Principal Component 2: PC2 – Organization Dependent

Eigen values >1.0 (4.404); Total variance explained = 11.009 % variance.

Since the first two factors were the only ones that had Eigen values >1, the final factor solution

will represent cumulative percentage of 91.275% of variance in the data.

Graph 1: Shows the Eigen values of PC1

Graph 1 depicts the employee dependent variables and their respective Eigen values. It explains
80.26% variance.

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 Graph 2: Shows the Eigen values of PC2

Graph 2 depicts the organization dependent variables and their respective Eigen values. It
explains 11.009% variance.

Major Findings:
Apart from the competitive advantage, the factors which help employees to be retained are:

1) Cooperation (0.905) which is team specific and the culture of the organization supports the

cooperation among employee which in turn lowers the turnover rate

2) Empowerment (0.927) of an employee makes him accountable as well as responsible

3) Open communication channels (0.828) lead to healthy workplace free of grapevine issues.

4) Pride in Doing a job (0.933), that is, mastering a task and then enjoying expert power can be

a very positive influential factor in case of employee loyalty. This is in accordance with the

findings of Schuler and MacMillan (1984), which show how companies can strategically gain

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competitive advantage, particularly through their human resources and human resource

management practices.

In organization specific variables, it is clearly evident that the organization reward and

recognition policy (0.938) is the key influential factor in case of the employee loyalty. This is

closely followed by flexibility (0.937). The organization culture (0.877) also plays a major

role in increasing employee loyalty.

Discussion:

87% of the employees of PPL are very proud to be working for the company. This speaks

volumes about the management and ethical practices being followed by the company. However,

11% are not much aware of the ethical practices while 1% has no idea at all about these practices

in PPL. The Management needs to address these problems by conducting well managed

programmes that familiarizes new comers with the mission, vision and values of the company.

67% of the employees expressed no grievance against the management, while the remaining 33%

of the population of employees nurtured grievances in various degrees which need to be

addressed. Regarding the grievance redressal procedures, 66% of the employees were very

happy with the manner with which these were addressed. But still the company needs to do

much in this regard. Work-life balance is important for the development of a holistic personality

and 68% feel that PPL is trying to create this balance.

Up-down and down-up communication is very important in fostering loyalty and a sense of

belongingness in any company. A climate of mutual trust needs to be created and in this regard

the comfort level of interaction seems to be fairly satisfactory with 63% very much comfortable

while 15% were not at all comfortable.

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Cooperation among workers and management was at a high level of 84%. Also, there was

correlation between sharing and caring attitude in the organization and the preparedness by

employees to share in the losses of the company.

Job rotation has been recommended by management experts as a technique to relieve boredom

and overall skill development of the employee. 68% are willing to go in for job rotation while

the remaining 32% needs to be educated about the necessity to enhance their KSA (knowledge,

skill and attitude) and build confidence in them. Also regards flexibility while performing a job

only 28% feel that there is a great amount of flexibility given to them while 33% feel there is no

flexibility at all.

Meeting personal goals of the employees and aligning them with corporate goals drives loyalty

as is seen in our study, and hence needs management attention. 63% agreed that there is strong

congruence between the interest of the employee and the organization while 8% felt that there

was no congruence. Only 45% are completely satisfied with the work conditions and 75% with

the existing infrastructure. 66% were willing to accept any kind of job and 76% were glad to

have joined PPL for building their career. 70% felt that they had benefitted in many ways by

joining PPL. This talks of the image and reputation of the company.

The employees seem to be very satisfied with the job related information imparted by the

company. While 66% expressed complete satisfaction nobody expressed strong dissatisfaction.

The importance of job security cannot be undermined these days. 64% were agreed strongly on

this aspect while in answer to the question on sticking to PPL even if offered a higher salary

elsewhere, 34% expressed their willingness to stick on while 305 said they would not at all

continue in the present job if offered a better salary elsewhere.

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82% felt that managers do create a friendly working atmosphere and only 3% felt otherwise.

37% vouched strongly for the existence of informal work relationships while only 17% negated

them. Regarding creativity and freedom to schedule their jobs 31% feel there is a lot of freedom

to schedule jobs while 62% feel the presence of creative freedom to improvise on the job.

70% of the employees felt they are giving 100% to their job, while only 1% felt ―not at all‖. In a

related question 38% felt that they are performing well. Here there is scope for improvement on

both sides- the employer and employee. 60% are satisfied with the business plan at PPL which

focuses on employees as a stakeholder, while 7% are at the opposite end of the scale. 63% even

concurred that they can give suggestions and recommendations to the management without

hesitation. The organization needs to focus on the remainder of the employees who may have

constructive suggestions but fear airing them due to some imagined repercussions. The

organization needs to show that these suggestions will be considered and suitable ones

implemented.

Incentives and awards enhance and sustain performance and 39% feel PPL is doing a good job in

that area. It is interesting to note that 68% feel that they can better their performance if the

company would give sufficient incentives. This needs to be noted by the management. 45% also

felt that good performance is recognized at PPL. Future of an employee is linked to the future of

the organization. 83% are concerned and care a lot about the future of the organization. 83%

also feel that it is the best company to work for in the Belgaum region.

VII. SUGGESSIONS TO RETAIN EMPLOYEE LOYALTY:

Many studies show that employees are the most important resource any organization has and the

competitive advantage gained through the human capital is invaluable. Hence, organizations
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should aim at harnessing their employees, as they are important assets for success. To maintain a

highly productive workforce with long term commitment, organizations need to take the

following steps:

1. Aligning the career growth of employees with the goals of the company:

This is one of the most effective methods to enhance loyalty considering the fact that most

employees, specially the star performers, are more loyal to their careers. This ensures that

employee development is taken care off as well as the organizational goals are achieved. To

achieve this, managers need to help people identify links between their professional goals and

the company goals. Employees need to be made aware of the big picture and the organizations

vision and mission and need to be helped to align their growth in congruence with them.

2. Work design that involves a lot of variety and autonomy:

Various experts have said that jobs that provide variety and the autonomy to make decisions are

most liked and they involve a higher level of commitment and loyalty. Allowing people to take

ownership of projects gives them the opportunity to reach the peak of their potential and also

enhances their skills. A commitment to variety and freedom takes some organizational

discipline—at the very least; firms must let employees know they can exercise choice.

3. Focusing on relationships:

Employee loyalty largely depends on the work relationships they share with their colleagues,

superiors and the management. Employees who experience healthy and fruitful relationships at

work are very unlikely to leave their organization. Hence, by fostering healthy relationships at

work and focusing on building healthy relationships employers can enhance the employee

loyalty.
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4. Highlighting the link between the organizations missions and the employee’s values:

This is yet another measure that helps in enhancing employee loyalty. Highlighting the

connection between their values and the organization‘s mission makes them more committed and

determined to working for it.

5. Competitive reward and recognition policy:

The right mix of transactional reward and relational reward will help the organization to

understand the need to the employee which will help in retaining the employee for a longer time.

6. Grievance Handling Procedure:

The grievance handling procedure of the organization can affect the harmonious environment of

the organization. The grievances of the employees are related to the contract, work rule or

regulation, policy or procedure, health and safety regulation, past practice, changing the cultural

norms unilaterally, individual victimization, wage, bonus, etc. Here, the attitude on the part of

management in their effort to understand the problems of employees and resolve the issues

amicably have better probability to maintain a culture of high performance. Managers must be

educated about the importance of the grievance process and their role in maintaining favorable

relations with the union. Effective grievance handling is an essential part of cultivating good

employee relations and running a fair, successful, and productive workplace. Positive labor

relations are two-way street both sides must give a little and try to work together. Relationship

building is key to successful labor relations.

VIII. CONCLUSION:

Employee Loyalty is far too important for the success of the organization to rely on gut feelings

or on information that is not scientifically valid and objective. Given employees‘ impact and
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where they are in the chain of events – employee loyalty drives customer loyalty drives business

success – organizations should start with measuring and assuring employees‘ loyalty. It is well

documented that employees are a vital resource for nearly all organizations, especially since they

represent a significant investment in terms of locating, recruiting, and training let alone salaries,

healthcare plans, bonuses, etc. Also there is considerable expense for replacing an employee.

Employees need loyal employers. In an environment of mutual commitment, employees need

honest communication from management, challenging and empowering work responsibilities,

recognition and appreciation for their efforts, personal/professional development opportunities,

and equitable treatment. Also, when firms help workers acquire new skills that support their

professional advancement they often win those workers' commitment—and attract loyal new

employees. So, employers can promote company loyalty by helping people grow out of their

jobs—ideally, into new ones within the company.

It is important for managers and leaders of an organization to realize that in addition to these

tangible benefits, employees want to commit to companies, because doing so satisfies a powerful

and basic need to connect with and contribute something significant to the their organizations.

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References:

1. Buchanan, B., II. (1974). Building organizational commitment: The socialization of managers in work
organizations. Administrative Science Quarterly. 19, 533-546.
2. Clancy, John J. (1999). The Old Dispensation: Loyalty in Business. Farleigh Dickenson University
Press, U.S.
3. Duska, Ronald F. (2007). Whistleblowing and Employee Loyalty. Contemporary Reflections on
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