How loyal are your employees? Does it even matter to you? It should. Employee loyalty plays a key role in the long term success of a business, however, when the going gets tough, many managers and senior leaders focus on the hard, quantifiable numbers. Numbers like the cost of employing people. This means they forget about the softer, qualitative numbers such as the economic value of loyal employees and employer-employee relationships.
The link between employee loyalty and profitability
Of course, it is one thing to believe that employee loyalty will result in better performance and a more profitable business. But, if we are going to take a more long term view of our businesses, we need to understand the real impact that employee loyalty can have.
Benjamin Schneider, professor emeritus at the University of Maryland, has shown that the loyalty-related attitudes of employees are a key indicator of a business’ performance, and that there is a much greater payoff for improving employee loyalty than people and businesses think.
In fact, researchers at the University of Pennsylvania found that productivity could be increased by 3.9%, if businesses spent 10% of their revenue on capital improvements. However, if they invested the same amount in developing employee capital, then it more than doubled the improvement in productivity to 8.5%.
Employee benefits play a key role
A Chartered Institute of Payroll Professionals (CIPP) report from 2012 highlighted a growing trend of employers adding flexible benefits on top of an employee’s basic salary. Of those surveyed, 85% ranked receiving flexible benefits as either very important or important.
The same report found that the best workplace benefits encourage employees to stay with their current employer. And it remains the case, as more recent surveys have also found that nearly three quarters of employees would be loyal to their employer if they had a good employee benefits scheme.
Can you buy employee loyalty with benefits?
If you want to encourage your employees to be loyal to your business then you need to offer the best employee benefits. But which benefits are the best? We all 
have differing wants and needs, so the only way to get the best benefits scheme for your business is to talk to your employees: find out what they want, what they would like, and, ultimately, what would make their lives easier or more comfortable.
Employees are still concerned about the cost of living. And although the economy is starting to pick up, many have not yet felt the impact of the improving financial situation. In fact, only this week, BBC Political Editor Nick Robinson was surveying employees, and found that a significant proportion of them struggle to stay on top of everyday living costs, and live from one pay packet to the next.
Employers should look towards benefits that help their employees save money. These might include:
Subsidised leisure and gym memberships
High street discounts
Childcare vouchers
Travel discounts
Cash back deals
Cinema and leisure activity discounts
In addition to these, businesses can also offer a range of salary sacrifice schemes that allow employees to purchase mobile phones, laptops and more at close to trade prices. These salary sacrifice schemes can also be extended to include car leasing, to allow your employees to budget better, and control their monthly outgoings.
Employee also really value Employee Assistance Schemes, that provide financial assistance/education, and legal advice for them and their family.
If your business can’t afford to give its employees a pay rise yet, then providing employee benefits, that help ease the cost of living, can remove some of the financial burden on your employees, and make them feel better off: it’s an alternative pay rise. And, if your employees feel that you’re helping them, then it will encourage their loyalty. Shouldn’t you review your scheme today?
Of course, here’s the reality: employees will only be loyal to the business if they believe that the business is loyal to them. Ultimately, if you want truly loyal and committed employees, then you need to demonstrate to them that your business deserves their loyalty.
Kuljit Kaur
Kuljit is responsible for business development at The Voucher Shop, a division of p&mm ltd. Your one stop shop for corporate vouchers and gift cards for employee benefits, recognition or rewards.
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