Originally published in American Business Magazine.
“I’m looking forward to seeing the results of our work when I return from my two week vacation in Hawaii.”
The coughing and sputtering sounds that broke the silence came from one of the vice presidents who had just choked on his coffee. He had apparently not been briefed on the content of the talk that Fred, the CEO, was giving.
The team was pushing hard to hit an aggressive product launch deadline. The CEO decided they needed a shot of inspiration, a few words of encouragement. He called a meeting in which he exhorted the team to work long hours, work weekends and give up time with their families in order to hit the deadline. Had it not been for his rather dramatic final sentence, his little speech would have been utterly unmemorable. As it was, however, it became the stuff of legend. By the time he returned from Hawaii, two people had quit. Within six months, half the company was gone. After a year, only the CEO’s footsteps echoed hollowly in the empty corridors and offices of what had once been a thriving company.
This, it may be argued, was not the way to build loyalty.
To be fair, it was not this isolated incident that led to the exodus. The Hawaiian vacation was merely the final straw, which, under other circumstances, might have been taken as a joke. While it’s certainly possible, albeit difficult, to lose employee loyalty in a heartbeat, building employee loyalty is a process. Depending on how well you’ve managed that process, your Hawaiian vacation might be the source of some good-natured grumbling or it might be the death knell for your company. Context is everything. As for your customers, well, if you haven’t managed to gain employee loyalty, you can forget about customer loyalty.
So what is this process? In today’s environment of tight budgets and limited raises, what can be done to keep your employees coming back? It’s not as hard as you may think.
To begin with, though, let’s debunk that popular myth that employees had better be loyal because there’s nowhere else for them to go in this economy. If your business is in a profitable niche, then you can bet that other businesses will join you there. Nothing attracts competition like the scent of money. During the last recession, I had a senior manager boast to me that he’d just scoffed at an employee who asked for a raise. “I laughed at him and told him he should be grateful that he has a job!”
A short time later, that employee had a new job with a significantly higher rate of pay. If he’d received a raise, he wouldn’t even have been looking. That manager’s department, meanwhile, was set back six months by the loss of that employee.
Sure, it’s a lousy economy, and sure, it’s hard to find a job. However, those companies that are hiring like nothing better than to lure employees away from their competitors. Indeed, foolish though it may be (see the article, Who Betrays One Master ), a great many companies will only hire those who are already employed somewhere else. Never assume that your employees have nowhere to go.
The first step to building employee loyalty is to give them something to be loyal to. If that’s their paycheck, then all you’ve done is hire a bunch of mercenaries. That’s fine, until someone offers them more money. If you don’t want mercenaries, though, start by getting people excited. What is your company doing? Why does anyone care? Why should they care? Why should your customers care? It doesn’t matter whether you’re a high-tech startup, an accounting firm or a landscaper. If you can’t clearly and succinctly state the value that you are bringing and get people excited about providing that value, you’re in trouble. Recognize that your message doesn’t have to appeal to everyone. Rather, it only needs to appeal to the people you want to hire and, eventually, to those whom you’d like to turn into your clients.
Crafting an exciting message isn’t always easy, but the benefits are worth it. Most of us want to take pride in our work. The more vividly we can see ourselves providing value, the more motivated and loyal we are. Similarly, when clients receive value from a company that isn’t afraid to stand up and say, “This is who we are!” they also become more loyal. People like to support causes they believe in, so make sure your company is the company people want to spend money to support. This is something our friend Fred did well. His product was one his employees were initially extremely excited by and his customers couldn’t wait to get their hands on it. Unfortunately, that’s as far as Fred went.
Now that you’ve established the frame, if you will, the next step is to start filling in the details. Having an exciting message is only the beginning. You have to help your employees see how they fit into your corporate story. Remember, when it comes to stories, no one wants to be the bit part. Maybe everyone doesn’t want to be the hero, but virtually everyone does want to feel competent, important, valuable and useful. Exactly how you make this happen will vary somewhat from person to person, but here are some elements to focus on.
How many hats do employees wear? Some people thrive when given the opportunity to wear multiple hats on the job. Other people like to wear just one hat, but they wear it very, very well. Whether you need employees to do a variety of different things or one thing well, recognize that those alternatives often appeal to different people. When you get a match, you also get increased loyalty. When you give people the opportunity to experiment and potentially expand what they’re doing, you get even more loyalty— provided they don’t think they’ll be fired for failing. But not all experiments are successful. The best way to get employees to do more is to let them develop an area of strength and then try new things. If they succeed, great! If not, they can retreat to their area of strength and try again. Over time, you’ll end up with steadily more competent employees.
The more competent your employees feel, the more loyal they will be. By extension, the more competent and loyal your employees, the more satisfied, and hence more loyal, your customers. Fred got this one wrong on two counts: First, he rarely let anyone experiment to see if they could expand their duties. When he did, he focused on weakness instead of strength and had no tolerance for failure. The net result was that everyone swiftly became afraid to try anything new or volunteer to help out beyond the limits of their job lest it not go well.
Employees also want to feel as though they matter to the company. Can your employees see how their work contributes to the company? When I worked for IBM in the 1980s, I was a very small cog in a very large machine. Even my most successful project was a rounding error on Big Blue’s balance sheet. Fred’s company was considerably smaller and each person could see how their work fit in and mattered. Fred’s biggest mistake was that he didn’t take the time to recognize the work his employees were doing and remind them how much it mattered. Even so, the employees quit in inverse order to the importance of their contribution. Make sure everyone can see their contribution to the company and periodically thank them for it. The more visible and important their work, the more loyal your employees will be.
Part of feeling competent and important is being able to make your own decisions. While any given employee may only be able to make decisions in limited areas, nonetheless, it’s important to provide employees with the opportunity to make as many decisions as possible. Fred needed to be part of every decision, even the most trivial. Not only did this slow down progress, it also left the experts in the company mightily offended. If you’re going to go to the trouble and expense of hiring highly skilled people, make sure you let them make decisions on the best ways to exercise those skills. Create a framework, provide guidelines and structure, but give them some freedom. For example, you might give your customer support people the authority to provide refunds to any customer up to $100 (or $1,000 or $10,000 depending on the nature of your company and product/service). They’ll feel good because they’re getting to exercise their own judgment and help the customers. Then, the customers will be happy because their problem was resolved quickly. Once again, you’ve increased loyalty.
Finally, how will your employees know they’re doing the right thing? Let’s face it, no one wants to have to ask how well they’re doing and you really don’t want people bugging you all the time. That means they need to be able to see the fruits of their labors as part of the job. Developing feedback systems that keep you mostly out of the way is not an easy task, but it is a very worthwhile one. The easier it is for employees to get feedback on their progress, the more they’ll enjoy their work and the greater their loyalty. In addition, taking the time to talk to your employees one-on-one and let them know you see their efforts and appreciate them is very powerful. Back when IBM was a tiny, struggling company, a big part of Tom Watson’s secret to building loyalty was taking the time to meet everyone. Tom Watson, Jr., presiding over a significantly larger IBM, maintained the tradition.
If you take the time to get to know your employees, you also reap an additional benefit: When you know your employees as individuals, you can reward them as individuals. Rewarding someone at random because “I’ve seen your work and I just wanted to say thank you,” is a great way of increasing loyalty. Making that reward something the individual employee really values is even better. Fred could never bring himself to reward people. Instead, he always complained that their work wasn’t good enough and would find excuses not to give rewards he’d promised.
Loyalty is not something that just happens. It’s something that you build over time and put in the bank for the times when you need it. If it’s not there, a single wrong word can cost you your employees or your largest customer. If it’s there, well, you can accomplish almost anything. The choice is yours.