Study links staff loyalty to profit increases

WM Circle Logo

By: Wise Marketer Staff |

Posted on September 21, 2002

Employees in the US are significantly less committed to their employers than those in other countries, and the problem is affecting company profits, according to a study from International Survey Research (ISR).

The survey shows that less than 70% of employees want to stay with their current employer or would recommend their current company as a good place to work. As a result, the US is ranked 6th among the top 10 global economies.

The study, US: Leader or Follower?, analyses the views of 360,000 employees from the world's 10 biggest economies (the US, Brazil, Spain, Germany, Canada, Italy, France, China, Japan and the UK).

Survey results
The country with the highest level of commitment is Brazil, where 79% of employees say they are committed to their current employer. Next in line are Spain with 76%, Germany with 74%, Canada with 73%, and Italy with 70%.

The US tied for sixth place with France, with 67% of employees viewing their employer favourably. The bottom three were the UK with 59%, followed by China with 57% and Japan with only 50%.

Loyalty-profit correlation
The research also suggests that organisations with committed employees are more likely to improve their profitability than those that don't nurture staff loyalty.

Over the three years of the study, both operating margin and net profit margin increased (by 3.74% and 2.06% respectively) in businesses where employees were highly loyal, whilst those with less committed employees saw operating margin fall by 3.01% and net profit margin fall by 1.38%.

Key loyalty factors
Contrary to popular belief, according to ISR, employees' relationships with their immediate supervisors do not compensate for poor leadership at the top. The study says that quality of leadership is vital to employee loyalty, along with the employees' view of development opportunities they are offered, and whether or not they are empowered to do their work effectively.

"Committed employees are more likely to stay with an organisation, go the extra mile for their company, and put maximum effort into their work," explained William Werhane, who co-directed the research. "To be committed, employees want leaders who are willing to set a clear direction and persevere with its implementation, even in the face of external pressures that arise every quarter to shift focus."

The study asserts that those corporate leaders who succeed in nurturing employee commitment will see a positive impact on their organisation's profitability.

More Info: