Friday, February 15, 2008

Can a Company Demand Employee Loyalty?

We know it is not enough to ask customers, "What's important?" The company must isolate the relative importance of different performance areas by determining the relationship between specific problems and customer loyalty. The key here is employees deal with customers successfully or not, and solve their problems effectively or not. So, a company must pro-actively pursue the achievement of positive, loyal trusting relationships with its internal customers. End of story!

Employees are advocates, ambassadors, champions and representatitves in delivering service and expertise to customers. A company must not leave this process to chance and hope good chemistry and good business happen. It must design operating structures and incentives to empower front-line staff to take the initiative to delight customers. Management also must take care to integrate and enervate employees in delivering value to customers, since they are most vulnerable to feeling dis-enfranchised and having low morale.

Employee Motivation

Congruent accountable organizations take seriously a number of unspoken questions. Why would employees be willing and wanting to delight the customer? Would each employee be willing to serve the customer, solve their problems and act in their best interests? The fact is, employees ask and answer the basic question, "what's in it for me personally," just as customers do. If you believe money is the only, or primary, motivator for employees to do good work, you are mistaken.

So, how can a company align its corporate goals with enlightened employee self-interest? What do employees want and how can a company earn their loyalty? Or, can a company just demand employee loyalty?

I like what Professor Robert Ewin, an associate professor of philosophy at the University of Western Autralia, noted in an article that loyalty is, among other things, an important motivation to duty. It brings into play virtues such as courage, gratitude, and justice, and involves the exercise of good judgement. Loyalty is, fundamentally, an emotional attachment. The loyal person is one who sticks through hard times, not one who cuts and runs as soon as it becomes clear times will remain hard and there may be no overall end payoff. Loyalty lies at the heart of all morality and also forms the basis of much immorality. It can make possible our trust in each other, and can be an integral part of what makes life worthwhile. However, exceesive loyalty, or loyalty to a wrong source, can lead to trouble.

Basis of Loyalty

Corporations and their managers seek loyalty from customers and employees for many good reasons. We have already discussed aspects of customer loyalty; what about employee loyalty? Companies normally expect a loyal employee to subordinate their own interests, at least sometimes and to some extent, to the corporation and/or manager. On the cynical side, if employees are loyal, they might do more for the corporation than good judgement alone would lead them to do.

The positive perspective is that loyalty to a company is based on pride in the products and quality of work produced. Such loyalty is predicated on the company's standards. It is because the company meets those standards that it receives the employee's loyalty.

A result of that loyalty and accompanying pride is the employees have a strong motivation to do their duty well. They even have a motivation to go beyond what duty requires if it properly furthers the ends of the company. Ethical management can seek loyalty furthering the interests of shareholders and customers because it opposes misdeeds and cover-ups. Personal loyalty will not be to an individual, but to the company position devoted to the corporations's proper ends which includes delivering excellent products and services.

Promoting Duty

How can companies encourage development of appropriate employee loyalty? The company can begin by ensuring every employee understands thoroughly their role in its activities and missions. Each employee must understand the overall mission of the company so they can understand the significance of their work and how it affects the excellence of the products and/or services. All tasks need to be understood in terms of personal contributions to the whole if an employee is to flourish and be willing to engage as part of the solution rather than withdraw or resist change. in that way, no one is viewed as merely a means to an end.

Because loyalty does involve subordinating one's own interests to those of the company, employees on occasion must be given credit for this and protected from exploitation. Companies expecting employees to delight customers must nurture those employees. It is inappropriate and unrealistic to expect employees will produce excellent products and/or deliver superior service because they have a job. What people seem to want most from their work is challenge, accomplishment, recognition, financial security and fun.

Companies can engender employee loyalty and trust in three essential ways:
1. Through congruent, on-going demonstration of commitment to employees as valued business partners. Loyalty develops when management commincates (speaking AND listening) with all employees forthrightly and frequently aabout the big picture.

People need to feel a sense of shared values, personal involvement, sense of purpose and appreciation for their contributions. They need to believe the company knows where it is going, then understand their role in that journey.

Behaviours and actions of senior expecutives speak much louder than words. Genuine shared decision making and plan implementation bujild confidence and credibility among employees. Front-line employees must be empowered to exercise good judgement within predetermined guidelines, and make independent decisions in solving customer problems and building loyalty and trust.

2. Through meaningful financial-, work- and family-related benefits supporting a collaborative work environment, such as profit-sharing, incentive plans rewarding indiviual effort, pay plans with similar formats, flexible benefit options and a quality work environment. Encourage employee involvement with ideas, then share monetary gains or savings achieved on a monthly or quarterly basis. Consider doing lifestyle surveys to determine what's really important to employees.

3. Through work by providing professional and personal challenge and development. Employees need a sense of being treated fairly and respectfully and a belief their careers are being supported. It's a pleasure to work where the customers smile, where they're excited about the good service and appreciate the employees.

Pleased and pleasant customers motivate employees to superior performance and high productivity. People want to be where the action is, where good things are happening, where there are resources and opportunities for the future. They want to participate in a thriving enviornment.

Professional challenge and develpment includes job enrichment, job rotation opportunities, lateral movement or an option to grow beyond a current level of competence.

Earning Loyalty

Loyalty is tied directly to the health and quality of the corporate culture. Organizations managing and treating people well, placing emphasis on future development and providing opportunities for growth, generate allegiance and respect. Building a loyal customer base must be integral to a company's business strategy. Customers are loyal to a company that continues to identify their needs, expectations and problems and then responds with the right products and services.

The same is true for employees. Involvement and commitment are hallmarks of loyal cusomers. Happy loyal employees, with excellent service attitudes will interact effectively with customers to build loyal relationshps, trust and synergy. The company must understand the inextricable link between customer retention and other aspects of the business. A company striving to earn customer loyalty and maximize profits cannot afford to base its decisions on intuition.

The company must be dedicated to continous improvement and accurate quantification of the relationships between loyalty and profits, such as critical incidents affecting loyalty; identification of customer needs; measurement, analysis and prioritization of specific corrective actions; implementation of corrective measures; and remeasurment to ensure actions were effective and meaningful.

Customer-driven empirical data quantifying the bottom-line impact of poor quality and customer problems and then identifying corporate priorities based on market and reveneue impact provides a solid basis for making strategic decisions. Firms sustaining economic success consistently seem to have corporate cultures equally valueing and balancing customer and employee needs.


A corporation that neglects its internal customers will surely falter and fail to thrive because employees ARE the corporation in the eyes of the customer.


Donnie Smith said...

Excellent Blog!

Ezekiel said...

Thanks for the sound advice. The third one is my favorite. I agree with it 100%. Based on a long experience in manufacturing plants, I have observed that people tolerate a low salary than a company that does not take care of their carreer.
You might be interested in the the Young Entrepreneur Society from the It is a good resource for entrepreneurs.

cator said...

A pos, along this train of thought your readers will be interested in a post at CrystalD that has the results of a new survey conducted among CEOs suggests that employer attempts to boost employee retention shouldn't simply consist of giving out raises. In fact, the survey suggests that offering employees more money to earn their loyalty may be less effective than the improvement of three simple business practices. For more details and information employee best practices check out at CrystalD

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