If we believed everything that we read in the papers, we’d have accepted that there wasn’t such a thing as employee loyalty anymore and that psychological contract between an employer and its workforce was broken for good. Today’s workforce, especially those classed as Millennials or Gen Z are accused of hopping from one job to the next with carefree abandon. As the press would have it, just the promise of the latest smartphone or ‘free Tim Tams on a Wednesday’ is enough to get people to jump ship. If employees are being less loyal, is there a genuine reason for this shift? And is this just a one-sided story? Is it that employees are actually now less loyal or perhaps it’s the other way around; that employees are merely responding to a lack of loyalty on the side of the employer?
In recent decades, job security and retirement security have declined dramatically. In many cultures, there was the notion of ‘the job for life’ with the promise of a strong, live-able pension that would see people retire in comfort. Those golden years have disappeared. Around the world, large enterprises have felt the strain of supporting those generous pension pots, and a generous ‘final salary’ pension is now extinct. The continued advance of new technologies means that many jobs have been automated or are at threat of being replaced by machines. Whether it’s Artificial Intelligence or the self-checkouts at your local Cole’s or PAK n’SAVE, slowly once-stable jobs are being ‘rationalised’ to achieve maximum efficiency. In some of the lowest paid industries, employees are at the mercy of zero hours contracts and have no guarantee of a stable salary at the end of each month. This trend has no doubt created anxiety for employees across a whole host of industries and given this lack of perceived ‘loyalty’ from employers, who couldn’t blame employees for taking their livelihoods into their own hands and shifting jobs to get the best possible deal?
The COVID-19 pandemic has also had a huge impact on employee loyalty. In fact, it’s made swathes of people re-appraise their entire philosophy when it comes to prioritising and balancing work, home and family. If employee loyalty was already in a precarious position pre-pandemic, then COVID-19 was the straw that broke the camel’s back. First was the strain of having to turn one’s life upside down, adapt to home working and all the stress of home-schooling children (for whom that applied). However, people quickly adapted and grew to appreciate this new style of living. They said goodbye to the horrible commute and hello to eating a good breakfast in the morning. They relished having quality time with the children. Plus, time to prepare home-cooked meals and using commute time instead for Yoga, Pilates or even a bit of spinning.
Businesses are confronting an uncomfortable truth: employees’ needs, and preferences have changed forever. The new normal means ‘no going back’ for millions of people around the world. With the global rollout and success of many vaccination programmes, organisations have called their workforces back to the office. But instead, millions are choosing to quit. In April 2021 and looking only at the USA, over four million people resigned from their jobs. Clearly, the desire for flexible working on employees’ terms is more valuable than the loyalty they have to their employers. Given this scenario, the most flexible employers are able to attract the very best of talent. That goes for open minded enterprises like LinkedIn and Twitter who have told their people that they can work from home indefinitely.
This trend that made itself so visible during 2020 has gathered so much momentum that academics are now talking about a complete shift in the power dynamic in the favour of workers. In simple terms, if you want to keep your best people you need to be prepared to be super-flexible.
You would have thought that a global catastrophe like the coronavirus would have made people even more loyal, given the level of uncertainly and the need to hold on to stable work. However, there’s more to this than meets the eye. There are other forces at work here
“Work takes up a huge part of who we are. During the pandemic, identities changed. People spent more time with their families, some might’ve thought more about entrepreneurial ventures, side hustles or other pastimes away from their day job,” he says. “It’s quite possible that many people no longer define themselves as much through their jobs as they used to.” That, Klotz elaborates, “means that they are less emotionally attached to their employer”.Anthony Klotz, Professor of Management at Texas A&M University
We’d be silly if we didn’t acknowledge what today’s employees are actually looking for in return for some of that hard-earned loyalty. A recent PwC survey found that employees increasingly want to be compensated for their work not just with money, but with flexibility.
“We’ve also found that younger workers are more likely than older employees to accept smaller pay increases for non-monetary benefits, including extensive mental health benefits, unlimited sick time, flexible work hours and remote work options,” says Bhushan Sethi, who jointly leads PwC's global people and organisation practice. In the wake of the pandemic, he adds, “these incentives can be the difference between a candidate accepting the job or not”.
Today’s savvy recruits want more than just a paycheck or even a pay rise.
They care about forming stable careers. That means your organisation needs to take employee training and development very seriously. They want opportunities for career progression, coaching and employee engagement. You’ll need to deploy high quality employee training programs to give people the career development that they seek. When your teams see you investing in employee growth (for example, giving them access to an online learning platform), they are likely to invest back in your organisation, seeking internal advancement and committing to a longer tenure.
On a positive note, despite the perception that employees might be less loyal than ever, there is good news at the end of the tunnel. As reported in Harvard Business Review, in general, workers are job-hopping less often today than they were 30-plus years ago. A recent NBER working paper by Raven Molloy, Christopher Smith, and Abigail K. Wozniak shows that the share of workers with less than one year of tenure fell from 18-20% in the 1980s and 1990s to about 16% in recent years. At the same time, the share of workers with more than 20 years of tenure has increased from 8-9% in the 1980s and 1990s to about 10% in recent years.
Ending on a note of caution — in certain industries such as software and high-technology, there is a shortage of the most skilled types of people. In other works, there’s more job openings than there are people to fill them. Therefore, in these lucrative sectors you can expect to face stiff competition for the very best talent. Money does talk and, in this situation,, be prepared to offer competitive pay and compelling benefits to attract the people you need to reach your highest and most important business goals.