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HR fails to link loyalty with profit

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Despite the fact that staff loyalty is proven to improve business performance – via reduced costs from attrition; improved productivity from knowledge of a company and its products; and corresponding reduction of management time spent on HR issues – only 74% of UK HR managers believe that
employee loyalty leads to business profit, according to an international survey of HR managers conducted by Manpower.
This is 6 percentage points lower than the international average.

Only just over half [53%] of UK HR managers believe their retention strategies create loyalty, which is 16% points below the international average. 24% feel that their companies do not strive to retain the best talent.

The demographic differences revealed by the survey include:
– The highest loyalty levels were reported in Mexico, the Netherlands and the United States, while the lowest levels came from Japan and Italy.
– Loyalty levels sag noticeably among employees who have 3 – 5 years tenure with their present employer, highlighting this as a group vulnerable to turnover.
– Women report higher levels of loyalty toward their employers (76%) than their male counterparts (68%).
– Strong company leadership is viewed as a much more important loyalty driver in the United States than in any other country.
– Low loyalty levels are more likely to lead to employee exit in small companies than in companies with more than 150 employees.
– The public sector revealed the lowest employee turnover rates, and rated “strong teamwork” as the most important loyalty driver. The service sector rated “open and honest communication” as the most important loyalty driver, and the manufacturing sector ranked “job interest and variety” as most important.

The U.S. and U.K. employee survey results were segmented into four distinct employee profiles, based upon their loyalty characteristics:

Mutual Loyalists (53% of employees surveyed) are loyal to their employer and believe this loyalty is deserved. These employees are likely to see their psychological contract as a two-way street, where their own efforts and performance are rewarded with investment from the company. To some degree, this is the ideal scenario: true, mutual loyalty. This group is comprised of a higher proportion of U.S. employees, women and senior managers.

Blind Loyalists (19% of employees surveyed) express loyalty toward their company despite not feeling that the company deserves it. To some extent, this segment is expressing blind or misplaced loyalty towards the company. The challenge for companies with large numbers in this employee segment is how to generate more positive perceptions of deserved loyalty through improved HR practices. This segment is comprised of a higher proportion of women and U.K. employees.

Mercenaries (6% of employees surveyed) feel that the company deserves their loyalty, but they sense no loyalty toward it. Only about half intend to be with the same company in three years. Mercenaries are represented by a
higher proportion of non-managerial employees and employees with lower scores on awareness and understanding of the company’s values.

Saboteurs (21% of employees surveyed) feel that the company does not deserve their loyalty, nor do they feel any loyalty toward it. Only one in four of this group would speak highly of their company as an employer, and a similar
proportion would actively criticize the business as an employer. Only about half feel any sense of motivation in their jobs, and more than half feel their company does not reward loyalty. Saboteurs are comprised of a higher
proportion of men, U.K. employees, and those with 3 – 5 years of tenure with their current employer.

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