Employees Loyalty and

the Organization
Employee Loyalty – Importance?

• vital resource for the organization

• represent a significant investment in term of locating,
recruiting, training
• alone salaries, welfare plans, bonuses and rewards
What is Loyalty?
• a person’s devotion or sentiment of attachment to a particular
object, which may be another person or group of persons, an
ideal, a duty, or a cause

• expresses itself in both thought and action and strives for the
identification of the interests of the loyal person with those of
the object
Employee Loyalty
• Employee loyalty can be defined as a psychological attachment or
commitment to the organization and develops as a result of increased
satisfaction. Satisfaction results from a process of internal evaluation, and if
an employee’s expectation level is met or exceeded, then satisfaction grows.

• Employee loyalty then develops into a generalized emotional attitude

towards the organization.

• In other words, the more satisfied an employee is regarding his working

environment, the more likely that he develops a sense of commitment
towards the organization in general.
Organizational Loyalty
• Employees’ loyalty towards organization is often referred as
organizational loyalty of the employees.

• the most important factor that determines the effectiveness and

efficiency of the organization.

• one of the key elements that measures the compatibility between

employees on one hand and the organization on the other hand,
since if this compatibility increases, the organization achieves a
lot of its goals and aspirations.
Changes in Organizational Loyalty
• In the last three to four decades, there have been major changes in the
industrial world.

• In the past, once hired, an employee believed that it was a life time job
and the management expected their unstinted loyalty towards the
organization. Similarly, the employees used to be devoted to their
organization.

• Loyalty and trust have become more difficult to obtain and give in the
work place. Employees’ loyalty seems like a quality that is now
becoming increasingly harder to find.
• In the present day global environment, organizations are often
confronted with the fact that today’s definition of employees’
loyalty is inherently complex.
Dimensions of Employee Loyalty

Employee
Loyalty

Internal External

Behavioura
Emotional
l
Componen
Componen
t
t
• Presently there is a trend towards globalization and liberalization. In such an
environment, employees are becoming the competitive advantage an
organization.

• An organization may manage with employees with average caliber, but

competent employees can take an average organization to greater heights.
Likewise, average employees can cause the downfall of a flourishing
organization.

• In the present day market situation which is full of competition, having

capable employees and developing employees’ loyalty becomes increasingly
important and a continuing challenge for the organization.
• In the present environment, it becomes a necessity for the organization to
have a strategy for retaining their key experts and crucial skilled employees.

• As there is a tendency amongst the organizations to lure away the top

performers of the competing organization, management strategies must
therefore give due consideration and sufficient resource allocation to keep
employees motivated and satisfied.

• The idea is that the satisfied employee is less likely to pursue greener
pastures. Thus, implementing desirable human resource management
policies have a positive effect on employee loyalty.
Employee Loyalty in the Present
• Employees’ loyalty towards organization refers to their adoption
of the values, attitudes and beliefs of the organization and their
willingness to exert additional effort to achieve the goals and
objectives of the organization.

• It is multidimensional in nature and involves the employees’

commitment, attitude and behaviour for the organization.

• Employees’ loyalty makes them to show their concern for the

organization and its continued success and wellbeing.
Organizational Commitment
• Organizational commitment of the loyal employees is the degree to which the employees
identify with the organization and its goals, and wish to continue with the organization.

• There are three types of commitments identified. These are

• (i) normative commitment,
• (ii) affective commitment, and
• (iii) continuing commitment.

• Normative commitment is defined as organizational commitments. Affective

commitments are define by emotional attachments, identification, and involvement to
achieve the goal of organization. Continuing commitment is the willingness to remain in
an organization because of different investments
• Employees’ loyalty makes the employees committed to their work.
They hold a strong sense of duty towards their work, and place
intrinsic value on work. These employees are motivated towards work
and have a strong job involvement. Work becomes part of their life.

• Employee attitudes towards the organization then give rise to the

behavioral component of loyalty. An employee who has developed
affection to the organization is more likely to demonstrate loyal
behaviours and work towards the overall goals of the organization,
such as improved productivity, greater efficiency, and a high-quality
service orientation to customers.
Drivers of Organizational Loyalty
• As management treatment of employees has an effect on employees’ sense of
commitment and loyalty, there is a correlation between human resource
management policies and employees’ loyalty. 

• There are many drivers for the employees’ commitment and loyalty to the
organization. As per one survey the five top drivers of employees’ commitment and
loyalty are
• (i) management recognizes the importance of personal and family life,
• (ii) the organization provides opportunities for personal growth,
• (iii) the organization is satisfying customer or societal needs,
• (iv) management communicates information about employee benefits, and
• (v) co-employees’ skills keep pace with the skill demands of the job.
The main drivers of employees’ loyalty
are:
• (i) participation in goal setting,
• (ii) performance feedback,
• (iii) supportive communications with immediate supervisors and upper
management,
• (iv) justice in performance appraisals,
• (v) objective measurements of performance,
• (vi) sufficiency of pay, benefits and rewards,
• (vii) quality of supervision,
• (viii) favourable developmental opportunities, and
• (ix) clearly stated guidelines defining appropriate work behaviour and job
demands.