Employee retention

How to Inspire Loyalty in a Gig Economy

George Dickson
December 16, 2015
0min

Is loyalty dying?

As the business landscape continues to evolve and the gig economy gains steam, it's a question that has become more and more common. Average tenure among employees has shrunk over time, and with the astronomical cost of turnover, employee retention is a major challenge for many organizations.

Some workplace experts like Lynda Gratton claim that the age of employee loyalty is already dead; however, in an excellent New York Times piece, "The Shifting Definition of Worker Loyalty," Phyllis Korkki explains that it may not be so simple.

Employee loyalty isn't simply a forgotten relic of business past, but its definition is actively adapting to fit a changing business landscape. To some, this shift comes as a major challenge. Korkki explains:

For some baby boomers, this shift has been hard to accept. Many started their careers assuming that they would be rewarded based on long tenure. Now they are seeing that structure crumbling around them...
-Phyllis Korkki

Although once unilaterally valued, tenure is losing its stature in the modern workplace.

The devaluation of tenure and security

In the past, many employee-employer relationships operated on a mutual understanding, a loyalty pact. The employer would provide long-term job security, healthcare, pensions, and other benefits to the best of their abilities. In return, an employee would provide their best work and their undying loyalty, day in and day out, for their foreseeable working life.

The nature of this arrangement began to change in recent decades. The pact between employees and employers became less ironclad.

Wharton management professor Adam Cobb is quoted in Knowledge @ Wharton's "Declining Employee Loyalty: A Casualty of the New Workplace" explaining that:

Firms have always laid off workers, but in the 1980s, you started to see healthy firms laying off workers, mainly for shareholder value...You would also see cuts in employee benefits—401(k)s instead of defined benefit pensions, and health care costs being pushed on to employees. The trend was toward having the risks be borne by workers instead of firms.
-Adam Cobb

This shift in liability was a strong impetus for a new kind of employer-employee relationship—one in which each is looking out for their own best interests. That's not necessarily a bad thing though, because, in an ideal situation, these two goals aren't mutually exclusive.

Generational differences

The emergence of this new approach and philosophy regarding work has shown itself as a well-documented generational divide.

Although there are always exceptions, many workers who grew up and matured in a more historical business environment of job security and tenure tend to follow that paradigm, whereas a younger generation of workers adheres to a more individualistic approach.

Neither approach is necessarily better than the other, but understanding those underlying differences is a valuable advantage for any manager.

Loyalty and engagement

There's a clear connection between loyalty and engagement, though the two aren't synonymous. You can have an employee with a long tenure who isn't fully engaged, yet is 'loyal' in the sense that they're not looking for other employment. You can also have an employee who truly believes in the mission of your organization, who is extraordinarily dedicated to their work but has only been around for a year.

Which would you expect to have a more positive impact, and perhaps more importantly, which would you prefer to have on your team?

Lauren Keller Johnson's article "Rethinking Company Loyalty" in Harvard's Working Knowledge covers this topic from an extraordinarily thoughtful perspective: maybe we need to re-evaluate the meaning of 'loyalty' in the context of modern business.

Instead of thinking of loyalty in terms of how long someone is willing to stick around with your company, it might make more sense to consider how dedicated an employee is to the organization while they're there. An employee who came into your organization, did extraordinary work, and helped advance its goals, but was ultimately lured by a different calling wasn't disloyal.

As Keller Johnson explained:

"Employers can promote company loyalty by helping people grow out of their jobs—ideally, into new ones within the company."

 

Contingent labor

A striking statistic of the "gig economy" is the percentage of the workforce that falls under "contingent" labor.

In his Dollars and Sense article "The Rise of the Gig Economy" Gerald Friedman details the increasing percentage of contingent workers. He explained that contingent workers including "independent contractors, temporary workers, on-call workers, and workers provided by contract firms, made up over 11% of the labor force in 2005."

Today, that number has soared to over 40% and Kevin Akeroyd writes in his Forbes article that it should be a C-suite priority. Akeroyd explains:

The reality is this workforce increasingly consists of highly skilled workers who couldn’t be more critical in companies’ war for talent, with billions of dollars of associated spending.

 

Contingent work comes in many different forms and isn't limited to low-paying, entry-level, or temp work. Software engineers, financial analysts and physicians can all fit this category. Higher education institutions have seen a significant spike in contingent employment as well in the form of non-tenured, or adjunct professors.

Technology and an entrepreneurial spirit

Technology is another major driving force behind the changing business landscape. Modern tools like Upwork, Etsy, and TaskRabbit allow individuals to embrace their entrepreneurial spirit, build their own brand, and market their services online. Companies like Uber, Lyft, GrubHub, and DoorDash allow people to work whenever and pretty much wherever they want. And these types of companies continue to grow year after year. 

These services allow for the flexibility and autonomy that modern workers routinely emphasize as crucial to their engagement in study after study. They're able to decide when they want to work, and how they want to go about it.

With all this momentum, it's difficult to ignore the "gig economy," but it's also important to remember that it's still only one part of a greater whole.

Using this understanding

Employee loyalty truly contributes to the success of an organization. Improving loyalty and retention really comes down to one question: are you creating an environment that inspires employee loyalty?

If another company or micro-entrepreneurship opportunity can offer an employee a better experience, that's where they'll gravitate. Not because they're disloyal, but because it's in their best interest.

Luckily, you can provide great experiences in your own organization. The most important thing is to build an organizational culture that is meaningful, flexible, and engaging.

Provide work that is meaningful

Finding purpose in the work you do isn't limited to philanthropic or altruistic careers. It doesn't matter if you run a car wash or an international corporation—finding meaning is possible. 

Fostering a culture where personal and professional growth is prioritized is a great place to start.  

Provide flexibility and autonomy

Whether you're offering the flexibility to take a needed break mid-day or pick kids up from school, or you're giving employees the autonomy to take initiative in determining how to approach a project, you're providing a crucial element that modern employees have come to expect more and more.

Provide development opportunities

Some employers fear that providing development opportunities for their employees will only cause them to leave for a position at a different company. However, employees need room to grow—nurturing that growth is something that you can do to inspire their loyalty. 

Are there clear opportunities for employees to move up in your organization? Are managers mentoring and developing team members so they're ready for those opportunities? 

Provide recognition for great work

Recognition is a strong factor in employee engagement which is closely tied with loyalty. An employee's loyalty is often closely tied to their team, sometimes more than to the organization itself. This is one of the reasons peer-to-peer recognition strategies are so impactful.

The massive growth of the "gig" economy is proof that there is a revolution happening in the way employees want to work. This makes the challenge for companies to attract and retain top talent greater than ever before. They will have to evolve with a more modern working environment or they may get left behind.

Luckily there are ways to transform the employee experience to boost employee engagement, reduce retention, and inspire a loyal team.

Check out our Guide to Modern Employee Recognition to learn more about recognition's role in nurturing employee loyalty:

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It’s rare that you can change someone’s mind in an exit interview, but you can make improvements before employees leave!

Is loyalty dying?

As the business landscape continues to evolve and the gig economy gains steam, it's a question that has become more and more common. Average tenure among employees has shrunk over time, and with the astronomical cost of turnover, employee retention is a major challenge for many organizations.

Some workplace experts like Lynda Gratton claim that the age of employee loyalty is already dead; however, in an excellent New York Times piece, "The Shifting Definition of Worker Loyalty," Phyllis Korkki explains that it may not be so simple.

Employee loyalty isn't simply a forgotten relic of business past, but its definition is actively adapting to fit a changing business landscape. To some, this shift comes as a major challenge. Korkki explains:

For some baby boomers, this shift has been hard to accept. Many started their careers assuming that they would be rewarded based on long tenure. Now they are seeing that structure crumbling around them...
-Phyllis Korkki

Although once unilaterally valued, tenure is losing its stature in the modern workplace.

The devaluation of tenure and security

In the past, many employee-employer relationships operated on a mutual understanding, a loyalty pact. The employer would provide long-term job security, healthcare, pensions, and other benefits to the best of their abilities. In return, an employee would provide their best work and their undying loyalty, day in and day out, for their foreseeable working life.

The nature of this arrangement began to change in recent decades. The pact between employees and employers became less ironclad.

Wharton management professor Adam Cobb is quoted in Knowledge @ Wharton's "Declining Employee Loyalty: A Casualty of the New Workplace" explaining that:

Firms have always laid off workers, but in the 1980s, you started to see healthy firms laying off workers, mainly for shareholder value...You would also see cuts in employee benefits—401(k)s instead of defined benefit pensions, and health care costs being pushed on to employees. The trend was toward having the risks be borne by workers instead of firms.
-Adam Cobb

This shift in liability was a strong impetus for a new kind of employer-employee relationship—one in which each is looking out for their own best interests. That's not necessarily a bad thing though, because, in an ideal situation, these two goals aren't mutually exclusive.

Generational differences

The emergence of this new approach and philosophy regarding work has shown itself as a well-documented generational divide.

Although there are always exceptions, many workers who grew up and matured in a more historical business environment of job security and tenure tend to follow that paradigm, whereas a younger generation of workers adheres to a more individualistic approach.

Neither approach is necessarily better than the other, but understanding those underlying differences is a valuable advantage for any manager.

Loyalty and engagement

There's a clear connection between loyalty and engagement, though the two aren't synonymous. You can have an employee with a long tenure who isn't fully engaged, yet is 'loyal' in the sense that they're not looking for other employment. You can also have an employee who truly believes in the mission of your organization, who is extraordinarily dedicated to their work but has only been around for a year.

Which would you expect to have a more positive impact, and perhaps more importantly, which would you prefer to have on your team?

Lauren Keller Johnson's article "Rethinking Company Loyalty" in Harvard's Working Knowledge covers this topic from an extraordinarily thoughtful perspective: maybe we need to re-evaluate the meaning of 'loyalty' in the context of modern business.

Instead of thinking of loyalty in terms of how long someone is willing to stick around with your company, it might make more sense to consider how dedicated an employee is to the organization while they're there. An employee who came into your organization, did extraordinary work, and helped advance its goals, but was ultimately lured by a different calling wasn't disloyal.

As Keller Johnson explained:

"Employers can promote company loyalty by helping people grow out of their jobs—ideally, into new ones within the company."

 

Contingent labor

A striking statistic of the "gig economy" is the percentage of the workforce that falls under "contingent" labor.

In his Dollars and Sense article "The Rise of the Gig Economy" Gerald Friedman details the increasing percentage of contingent workers. He explained that contingent workers including "independent contractors, temporary workers, on-call workers, and workers provided by contract firms, made up over 11% of the labor force in 2005."

Today, that number has soared to over 40% and Kevin Akeroyd writes in his Forbes article that it should be a C-suite priority. Akeroyd explains:

The reality is this workforce increasingly consists of highly skilled workers who couldn’t be more critical in companies’ war for talent, with billions of dollars of associated spending.

 

Contingent work comes in many different forms and isn't limited to low-paying, entry-level, or temp work. Software engineers, financial analysts and physicians can all fit this category. Higher education institutions have seen a significant spike in contingent employment as well in the form of non-tenured, or adjunct professors.

Technology and an entrepreneurial spirit

Technology is another major driving force behind the changing business landscape. Modern tools like Upwork, Etsy, and TaskRabbit allow individuals to embrace their entrepreneurial spirit, build their own brand, and market their services online. Companies like Uber, Lyft, GrubHub, and DoorDash allow people to work whenever and pretty much wherever they want. And these types of companies continue to grow year after year. 

These services allow for the flexibility and autonomy that modern workers routinely emphasize as crucial to their engagement in study after study. They're able to decide when they want to work, and how they want to go about it.

With all this momentum, it's difficult to ignore the "gig economy," but it's also important to remember that it's still only one part of a greater whole.

Using this understanding

Employee loyalty truly contributes to the success of an organization. Improving loyalty and retention really comes down to one question: are you creating an environment that inspires employee loyalty?

If another company or micro-entrepreneurship opportunity can offer an employee a better experience, that's where they'll gravitate. Not because they're disloyal, but because it's in their best interest.

Luckily, you can provide great experiences in your own organization. The most important thing is to build an organizational culture that is meaningful, flexible, and engaging.

Provide work that is meaningful

Finding purpose in the work you do isn't limited to philanthropic or altruistic careers. It doesn't matter if you run a car wash or an international corporation—finding meaning is possible. 

Fostering a culture where personal and professional growth is prioritized is a great place to start.  

Provide flexibility and autonomy

Whether you're offering the flexibility to take a needed break mid-day or pick kids up from school, or you're giving employees the autonomy to take initiative in determining how to approach a project, you're providing a crucial element that modern employees have come to expect more and more.

Provide development opportunities

Some employers fear that providing development opportunities for their employees will only cause them to leave for a position at a different company. However, employees need room to grow—nurturing that growth is something that you can do to inspire their loyalty. 

Are there clear opportunities for employees to move up in your organization? Are managers mentoring and developing team members so they're ready for those opportunities? 

Provide recognition for great work

Recognition is a strong factor in employee engagement which is closely tied with loyalty. An employee's loyalty is often closely tied to their team, sometimes more than to the organization itself. This is one of the reasons peer-to-peer recognition strategies are so impactful.

The massive growth of the "gig" economy is proof that there is a revolution happening in the way employees want to work. This makes the challenge for companies to attract and retain top talent greater than ever before. They will have to evolve with a more modern working environment or they may get left behind.

Luckily there are ways to transform the employee experience to boost employee engagement, reduce retention, and inspire a loyal team.

Check out our Guide to Modern Employee Recognition to learn more about recognition's role in nurturing employee loyalty:

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