Do employers benefit from employee loyalty?

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Two recent pieces of research look at whether or not worker loyalty pays, and whether organisations are better off investing in their best apprentices or compensating weaker performers. This is the second in a series summarising findings from a journal that covers evidence-based HR management.

Time is money

A paper by Susan Linz, Linda Good and Michael Busch of Michigan State University in the US – “Does worker loyalty pay? Evidence from transition economies” - investigates whether or not workers, in terms of their earnings, experience positive benefits as a result of remaining with the same employer. The empirical analysis is based on data collected from 10,880 employees in 655 firms across six transition economies, with the six economies comprising: Armenia; Kazakhstan; Kyrgyzstan; Russia; Serbia; and Azerbaijan. The findings conclusively support the hypothesis that workers’ earnings are positively correlated with loyalty - in other words, those remaining with the same employer for longer periods see their earnings rise at a faster rate. In addition, the paper reveals that there is a strong positive correlation between loyalty and performance - that there are mutual benefits to both the firm and the employee as a result of worker loyalty - and hence it needs to be supported and encouraged wherever possible. The authors also highlight that the payment of bonuses, worker autonomy and opportunities for job enrichment are key drivers of increased worker loyalty. Factors such as job security, friendly co-workers and praise from supervisors, which a