Work/Life Trends
The ROI of Employee Loyalty
By Marc Drizin, Vice President & Employee Loyalty Specialist, Walker Information

Much of my time is spent researching employee loyalty. A decade or so ago, many in the business community considered this subject interesting but not essential. Today, however, a growing number of companies are keenly interested in learning about employee loyalty. The reason is simple. Employee loyalty pays off in a number of important ways.

When employees perceive that they’re being treated fairly and with genuine concern, they are more likely to be loyal and behave in ways that benefit the company.

Employees who are loyal to their organization, for example, are much more likely to work harder; to meet and exceed customer requirements; to recommend the company as a good place to work; and to stay with the organization longer and resist other job offers.

These findings are strongly supported by data from our national studies on employee loyalty:

	Nine in ten loyal employees will recommend their organization as a good place to work, compared to three in ten who do not fall into the “loyal” category.
	Nine in ten loyal employees will “go the extra mile” for customers, compared to six in ten non-loyal employees.
	Ninety seven percent of loyal employees are highly motivated to do their work well, compared to 57 percent of non-loyal employees.

Loyal employees decrease an organization’s costs through reduced turnover and recruiting expenses, and they increase revenues through enhanced productivity and customer service. Clearly, then, it pays to know what drives employee loyalty. The fact is a variety of things drive loyalty, including providing ongoing training and development opportunities, fostering open and honest communication, and addressing employees’ personal and family needs.

In a recent national study conducted by Walker Information, employees identified the top five reasons they voluntarily left their jobs:

	Limited career options/training (22%)
	Better pay/benefits elsewhere (15%)
	Unethical business practices (9%)
	Conflict with supervisor (9%)
	Caring for loved one (8%)

I also spend a lot of time helping clients recognize and quantify the costs of not doing the “right things” for employees. One of the ultimate costs, of course, is turnover. A recent study by the Hay Group showed that the cost of replacing hourly employees is about six months of their earnings, while the cost of replacing salaried employees can be as high as 18 months of their salary. An average size hospital, for example, will spend nearly $5,000,000 every year replacing the one in five nurses that will leave voluntarily on an annual basis. That’s $18,000 every business day! And when hospitals don’t have enough nurses to take care of patients, they turn away business, close down critical care and specialty units, and see a decrease in both customer satisfaction and positive patient outcomes.

Taking steps to improve employee loyalty is not only the right thing to do, it’s the smart thing to do.