How Leaders Can Manage Org Stability to Inspire Loyalty

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Author: Crystal Kadakia | Source: HCI | Published: July 21, 2016
organizational stability

Millennials have a bad rap for being an entitled, job-hopping generation. Is it possible that companies are behaving as though they are entitled to loyalty they no longer deserve – from any generation?

Inspired by an article written by Dr. Maria Gottschalk on the connection between engagement and organizational stability, I explored the idea of loyalty and organizational stability with my network. Upon sharing Dr. Gottschalk’s article, I received over 400 shares and several comments. The highlight? All generations have found something they can agree on: employee loyalty has decreased because of unstable, profit-focused companies.

Employee engagement is generally a vague, fuzzy subject without clear metrics, creating a challenge when attempting to gain investment for related initiatives. Dr. Gottschalk argues that we should be measuring organizational stability as one of the measures for employee engagement. I’d like to take the thought one step further and look at the connection between loyalty and org stability. It’s well known that turnover is costly. Intuitively, it’s easier to connect increased loyalty to decreased turnover in comparison to increased engagement.

The old adage that employees leave managers, not companies is based on an old assumption: that companies are stable forces and managers are the ones that vary. However, in today’s VUCA world, managers have the tough job of enabling employee engagement and productivity in a very unstable corporate environment. Fear of corporate instability and the possible impact on one’s job is among the most common reasons for employees jumping ship. Leaving a bad manager is likely taking second place today.

I’d like to share three new perspectives on organizational stability and loyalty.

#1: ROI for the Employee

One of the key ways organizations are focused on ‘solving the revolving door’, especially regarding Millennials, is by assuming they can’t retain employees and instead, leveraging them while they are there. As a part of my Millennial insight consulting firm’s research, one of the talent development executives I spoke to mentioned that they are revising their career pathing model to allow for assignments that are 1 or 2 years in length instead of their standard 3 to 5 years in length. Ironically, I’ve found this may reduce engagement and actually increase turnover because it reinforces the perception that the company doesn’t have room for the employee longer term.

I’d like to introduce a new idea: building ROI for the employee. For the hours the employee is putting in, what are THEY getting out of it, in addition to what the company is getting out of it. Just the paycheck isn’t enough of an answer – not if the paycheck is only coming for the next 6 months or can’t be counted on. Just like a company doesn’t solely measure success by revenue, what other measures of success matter for employees?

#2 Choose Whether Loyalty Matters to Your Business Strategy – Then Stick By It

The Great Recession has affected the ability to trust for many employees. Consider the following comments that were shared in response to my brief update:

“I must say Crystal that these days retaining "Human Resource" is the last priority in most of the cases. Even the organizations working for human rights, at times, give last priority to the employee rights. However, I think these are business rules and emotions has got nothing to do with business. So perhaps both sides do not need loyalty.” -- Samina Naz

“Loyalty is a precious commodity these days. Trust is the basis for creating loyalty. Millennials have great difficulty with trust and therefore loyalty.” -- Suzanne Allyn

“You're so right about that. As a Millennial, I would like to commit to a company long term. However, the job climate doesn't seem to make it an option to do so.” -- Michael Martin

As a company, by boldly communicating which side of the loyalty fence you are on, you can attract, engage, and retain the right talent. If you are truly an “At Will” employer, then make it clear that either party can leave at either time AND don’t whine when someone leaves. Realize that is a part of the culture that is being created and part of the business strategy. If you’re part of an unstable company, make it clear that this is more like a startup environment. Share the perspective that “we could make it big or we could bust. You can’t necessarily count on us, but in the meantime, you will have the opportunity to get a lot of growth.” Being honest about your organization’s stability will actually build more trust with employees.

If you’re a part of a company that is very stable or has plans to be around for the next 150 years, communicate that and try not to surprise employees with divestitures, layoffs, or cutbacks. If loyalty is an important value, build constant trust – even when things are changing rapidly. Involve employees in change as early as possible and show them respect when going through cut-backs. Go the extra mile and invest in outplacement coaching. Don’t fire people with no notice, give them 1 hour to pack their things, and have security walk them out. Reinforce a steady, caring image that says, “You care, I care.”

#3 Managers are the Vehicle for Trust and Org Stability

Give managers the tools they need to build trust. We are in the prime age where managers are being told and taught to act like coaches. In addition, we need managers to understand how to communicate change. We need them to give them scripts when change is coming and leave it up to them to figure out the best message on their own. We need it to be okay for managers to be leaders – not just responsible for managing budgets, schedules, and resources, but to help cascade culture.

Every day, managers should be focused on trusting and respecting their direct reports. Leaders should be focusing on trusting and respecting managers. In our consulting work, we’ve found ten levers for employee engagement for modern talent. However, for any of these ten levers to truly take hold, trust and respect must be an underlying attitude. Things like flexible work initiatives, meaningful work plans, and on-going feedback for performance management can’t work without a foundation of trust and respect. Trust and respect starts from the top – if one leader behaves in disrespectful or untrustworthy manner, like dominoes, the culture will begin to reflect that attitude.

Org Stability is the Key to Loyalty

In summary, employee loyalty has decreased because of unstable, profit-focused companies that fail to produce an ROI for employees’ contributions. It’s time we stop blaming the Millennial generation for job-hopping. They are merely a symptom of a much larger problem of a new world of organizational stability and trust. The more leaders react instead of act, the more the employee base will do the same. 


Crystal Kadakia is a two-time TEDx speaker and the founder of Invati Consulting, a leading firm that helps organizations modernize culture to attract, engage, and retain today's digitally enabled workforce.