Monday Mornings with Madison

Employee Loyalty: A Balancing Act Between Workplace Demands and Employee Needs – Part 1

Across every industry, companies today are competing to hire and retain employees with the strongest skills.  While the unemployment rate may still be high, most companies will attest that there is a shortage of top talent.  According to Forbes, some of the most sought-after skills today include:  critical thinking, complex problem solving, judgment/decision making, active listening, computer, math, operations and systems analysis, monitoring/ assessment, programming, sales and marketing.  Anyone with a combination of these skills — the top skills desired for the most in-demand jobs in 2013 — is considered highly valuable.  To attract and retain the most talented workers, many employers have offered workplace accommodations that cater to employees’ needs including working remotely, flexible schedules, relaxed work attire, etc.  These accommodations are meant to meet needs and thus increase employee loyalty.  After all, without employee loyalty, employers have to fill the same positions over and over as the most skilled employees are hired, work for a short time, and then leave.

By the same token, companies find themselves in the unique position of also needing to remain relevant and competitive, which sometimes flies in the face of employee needs.  For example, two major companies — Yahoo and Best Buy — recently found themselves trying to balance internal demands against employee needs.  At Yahoo, new CEO Marissa Mayer announced that she was abolishing the company’s work-from-home policy in an effort to create a new culture of innovation and collaboration.  To do that, she said employees needed to physically report to work.  While Mayer said her decision was not meant as a referendum on working remotely, Yahoo did paint a picture of a company where employees were aimless and morale was low.   No sooner did Yahoo make its announcement and another ailing company followed suit.  Best Buy announced that it also would no longer permit employees to work remotely, reversing one of the most permissive flexible workplace policies in the business world.  However, both companies are already viewed as struggling to remain relevant and competitive.

Do such moves help reinvigorate ailing companies or will these steps simply push top talent to leave those companies even faster?  How are such actions perceived by employees?  And what should businesses take into consideration as they try to strike a balance between a company’s needs and the needs of its employees?

A Change In Values

In order to understand what factors influence employees to stay or leave companies, it helps to understand the differing values of generations of workers today.  Employee loyalty has been on the decline in the American workforce for the last 30 years.  It was common for people from the Baby Boomer generation (those born from 1946 to 1965) to remain loyal to an organization for many years or even an entire career. Dubbed “a company man”, a loyal worker could be expected to stay in the same company until retirement.  That is seldom the case anymore.  As more people from Generation X (about 44-50 million Americans born from 1966 to 1983) and Generation Y also known as Milennials (about 80 million Americans born after 1984 to about 2002) have entered the workforce, employee loyalty has declined.  Why is that?

The first step in understanding the decline in employee loyalty is to understand the characteristics of Gen Xers and Gen Ys.  Gen Xers are largely in their 30’s and early 40’s. Overall, they are more ethnically diverse and better educated than the Baby Boomers, with over 60% of Gen Xers having attended college.  These individuals often hold professional positions such as junior partner, senior associates, mid-level support staff, and middle-management.  Gen Xers were raised in the era of two-income families, rising divorce rates and a faltering economy. Gen Xers also experienced women joining the workforce in large numbers, creating the concept of “latch-key” kids. This resulted in Gen Xers being more independent, resourceful and self-sufficient. They value freedom and responsibility and have a casual disdain for authority and structured work hours. They dislike being micro-managed and embrace a hands-off management philosophy.

Gen Xers are technologically savvy, as they are first generation to grow up with computers.  They are the first generation to feel completely comfortable using PDAs, cellphones, e-mail, laptops, Blackberrys and other technologies.  They also lived through tough economic times in the 1980s and saw their workaholic parents lose hard-earned positions. This explains in part why Gen Xers are less committed to one employer and more willing to change jobs to get ahead than previous generations. Their collective experience has discouraged loyalty.  Instead, they adapt well to change and are tolerant of alternative lifestyles. They are also ambitious and eager to learn new skills but want to accomplish things on their own terms.  Unlike previous generations, Gen Xers work to live rather than live to work. They appreciate fun in the workplace and espouse a work hard/play hard mentality. Given this mentality, it is no surprise that Gen Xers are increasingly less loyal to a specific company.

What about the characteristics of the Gen Ys or Milennials?  Milennials are credited with having a lot of confidence and tolerance as well as some sense of entitlement, self-importance and a rejection of social conventions.  Milennial behaviors, values and attitudes are thought to differ from previous generations as a response to the technological and economic implications of the Internet

Millenials also have a penchant for delaying some rites of passage into adulthood, longer than most generations before them. Indeed, Gen Ys live with their parents for longer periods than previous generations.  They are also much closer to their parents than their parents’ generation, the Baby Boomers.

Milennials are similar to Gen Xers only more so.  For example, two surveys by the University of Michigan and UCLA showed the proportion of students who said being wealthy was very important to them increased from 45% for Baby Boomers to 70% for Gen Xers and 75% for Millennials. The percentage who said it was important to keep up to date with political affairs fell from 50% for Boomers to 39% for Gen Xers and 35% for Millennials.  By the same token, while 40% of Baby Boomers claimed that they would be “better off without their parents”, a recent study showed that 90% of Generation Ys claimed to be “extremely close” to their parents.

If the trend of declining employee loyalty carries through from Gen Xers to Gen Ys to the same degree as other indicators, then companies can expect that employee loyalty will decrease even further.  So is there anything that companies can do turn the tide on declining employee loyalty?  And how is that balanced against business demands?  Stay tuned ‘til next week to learn the top five factors that affect employee loyalty.

Quote of the Week

“Employees are a company’s greatest asset – they’re your competitive advantage. You want to attract and retain the best; provide them with encouragement, stimulus, and make them feel that they are an integral part of the company’s mission.”
Anne M. Mulcahy


© 2013, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.

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