A question of loyalty

is the ‘correct’ level of staff turnover, and how long should you stay in one
job? When an employee is frustrated in their role, what should a company do to
retain their productivity, asks Stephen Overell

All humans love habit and nothing seems more natural than celebrating long
service. By tradition, decades of toil during which an employee became, if not
integral to the operation, then at least part of the furniture, was marked by
the gift of a fob watch or crystal decanter.

Nowadays, because we perceive the modern labour market to be running at such
a madcap pace, long service appears increasingly impressive. It seems
splendidly quaint that London Underground has a 40-year long service award and
extremely odd that McDonald’s has one for 25 years.

The idea that people diligently stick with the same employer well into the
autumn of their careers provokes the same warm feelings as the famous story of
lottery winner Linda Hill. In December 1996, she scooped £2m, but decided to
continue with her £80-a-week job as a chambermaid at a Butlin’s holiday camp on
the grounds that she loved her work. "Life just wouldn’t be the same
without it," she told the tabloids.

Retention headache

If only this loyalty was more widespread. Retention represents one of HR’s most
intractable headaches. Some 35 per cent of employers believe labour turnover is
too high1. In sectors such as retail and leisure, annual turnover is more than
50 per cent; in many call centres it is closer to 100. Each time an employee
leaves, it costs just under £4,000 to replace them2. For managers and
professionals, the figure is £6,000, and is rising fast. The nation must be
full of homeless decanters.

But hang on. Is long service really so desirable and turnover such a curse?
Long service is not the same as loyalty, and commitment is not the same as
endurance: many organisations are muddled about such distinctions, if a study
by Bain and Company, the management consul-tants, is to be believed3.

According to Fred Reichheld, an emeritus fellow at Bain, researchers
expected to find that workers with more than 10 years service felt a greater
sense of loyalty to their employer.

In fact, the opposite was true. On many measures, people who had stayed with
the same employer for longest tended to be the most dissatisfied. When asked if
they felt their firm operated through open and honest communication, half of
the workforce agreed. Yet for workers who had stayed with their employer for
more than 10 years, the figure was 39 per cent. Some 38 per cent of all
employees believe their company "puts people above profits". But
among those who had been there longest, just 28 per cent agreed.

They are also least likely to trust business leaders, tending to think they
are being lied to, and most likely to believe their company does not deserve
their loyalty. In the best companies, 80 per cent of the workforce reckon their
employer deserves their loyalty. Typically, the figure is less than half.

"People who have been at the same company for more than a decade are
grumpier and less happy," says Reichheld. "If they are allowed to
languish they can be a highly destructive presence. People need

Striking the balance

He argues loyalty needs to be understood as a two-way street, a mutually
beneficial relationship that is open to abuse on all sides. A worker who
pursues their short-term interests is disloyal; a manager who rewards
favourites, equally so.

This study was carried out in the US, where the typical professional has
worked for nine different companies by the age of 324. It seems likely that it
would be a similar story here. Certainly, on the narrow point of how loyal
British workers feel to their employers, there is little ground for a rosy

Career consultancy Penna Sanders & Sidney found that two-thirds of the
working population would change jobs tomorrow if they could, but are held back
by anxieties over money, their age, or just that they think it is too drastic a

It would be intriguing to know how many managers would say they want loyalty
in their workforce, but in their heart of hearts believe it merely reflects a
lack of ambition.

A fresh challenge?

Maybe loyalty is too difficult a concept for modern organisations. Yet the
Bain research does suggest some arresting points. There is little commercial
reason for celebrating long service per se; in many ways over-familiar
presences are a bad thing. And it also implies grave responsibilities for
employers – not just to manage performance, but to listen when people get stuck
and provide clear opportunities for progression.

Some staff will always be seeking further challenges in whatever role they
are in. An organisation has the choice of seeing them leave, letting them
congeal in work that bores them, or actively trying to retain their
productivity through encouraging cross-functional moves, secondments, project
work, rotation and job swapping.

Stuck in a rut

Reichheld argues that ultimately the responsibility for getting stuck in
certain roles must lie with the individual. Yet, he says, people often need
help from organisations in recognising the early signs of going stale. "It
may sound idealistic, but the truth is that people who get stuck in jobs are
underselling themselves," he says. Retention, in short, must never mean
simply getting people to stay.

However, it is perhaps also time to celebrate another old-fashioned point:
any organisation with no new blood, no turmoil, no new faces, no fresh gossip,
is one that is condemned to decline.

So what is the right length of time to stay in a job? Labour turnover is one
of those fields where the most reliable data does not seem to support the
widely held perception that job tenure is getting shorter (though other surveys

According to Labour Force Survey, the average worker currently stays in
their job for five years and six months. It was exactly the same figure in
1995, yet in 1985 they stayed for five years and two months6.

While certain sectors suffer from massive and harmful turnover, it is worth
remembering that they are the exception, rather than the rule. Some 75.3 per
cent of the working population have been in their jobs for at least six years.

Just under a quarter have been with the same employer for more than seven

Six years is surely about the right balance between stability and flux. Long
live the status quo.

Research Viewpoint plus

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1 Pulling Together: 2001 Absence and Labour Turnover Survey, CBI

2 Labour Turnover Survey, CIPD, October 2001

3 Loyalty Rules, by Fred Reichheld, Harvard Business School
Press, 2001

4 Innovation in HRM by Alec Reed, CIPD, 2001

5 Taking the Plunge, Penna Sanders & Sydney, www.e-penna.com

6 Labour Force Survey, ONS, 2002, www.statistics.gov.uk

7 CIPD, survey (as above)

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