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The importance of loyal employees

07.31.2013
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Many surveys have shown how poor employee engagement currently is around the world.  Few of those studies actually go into detail as to why this is a big problem for companies however.

One that has is a recent study by Michigan State University.  They studied nearly 11,000 employees from former communist countries that introduced capitalism in the early 90′s.  The study showed that not only do loyal employees benefit their employer, but employees also benefit.

They found that employees were more likely to be loyal if they had the chance of learning new skills, whilst securing job security was also a high priority for them, alongside performing worthwhile taks.

“We know that firms realize financial gain from loyal workers, but we wanted to know if they share those benefits with the workers,” the researchers say. “And among the more than 650 workplaces included in our study the answer is yes, they are sharing the wealth.”

The employees came from six countries across Europe: Armenia, Azerbaijan, Kazahkstan, Kyrgyzstan, Russia, and Serbia, and were studied over a six year period from 2005 to 2011.

Loyalty to their employer was measured in a range of ways, including workplace seniority, employee engagement and the probability that the employee would reject a better paid offer to move elsewhere.

The research found a strong link between employee loyalty and higher earnings.  In three countries this relationship was particularly marked, with high loyalty earning the employee the same salary premium as an extra year of experience.

So how relevant are these findings to employers here in the west?  Suffice to say that in a global economy, many multinational companies are now setting up offices in eastern European countries, so this research should prove useful in understanding the kind of things that motivate employees in the region.

“If Western managers come in and start offering them praise, telling them they’re doing a great job and so on, it might not have that big of an effect,” the researcher says. “Managers might have more success by offering the workers a chance to learn new skills, which can contribute to their sense of better job security or desire for more job autonomy, all of which were positively linked to loyalty in our study.”

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