Staff Loyalty - Why Should it be Rewarded and if so, How?

The cost of retaining an employee can range vastly. Techniques for increasing staff loyalty can vary from the low cost, like handing out long service awards after 20 or 30 years with a firm, to the more expensive such as offering them an attractive employee benefits package throughout their career.

However, the cost of recruiting a new member of staff is often greater than even the more expensive staff loyalty methods. The recent Resourcing and Talent Planning survey, published by the Chartered Institute of Personnel and Development (CIPD), revealed the current price of recruitment in the UK.

The research found that the median total cost of taking on a new worker currently stands at £2,930. Although the lowest reported recruitment spend was just £50 per employee, the highest was £40,000. When senior management or director levels were considered, the median cost increased to £8,333 - while the maximum jumped to £100,000.

With this in mind, it is easy to see how staff loyalty is advancing up the business agenda. The CIPD explained:"An effective employee retention strategy is important for avoiding the costs associated with a high turnover rate.

"Moreover, strategic retention objectives that support resourcing and business goals will also strengthen the internal employer brand and therefore contribute to the organisation's ability to attract new talent."

But how do companies go about increasing their employee loyalty and retention rates? Hay Group's Changing Face of Reward study, which was conducted at the end of 2009, found that retention is becoming a key goal of businesses, with many enterprises using their employee recognition and reward schemes to bolster loyalty by supporting motivation and engagement.

The CIPD Resourcing and Talent Planning report also examined how companies attempted to boost employee loyalty during 2009. Improving the people management skills of their line managers was the most common way of trying to raise retention rates, used by 42 per cent of firms, while 35 percent increased the learning and development opportunities open to staff.

Other techniques saw businesses attempt to directly reward their staff's loyalty. Some 22 per cent improved pay, 19 per cent strengthened their employee benefits packages and 14 per cent realigned their reward schemes to better recognise their workers' achievements.

However, when asked to name the best example of employee loyalty rewards, most managers tend to choose long service awards. Designed to encourage workers to stay with their company for decades rather than years, these offer staff a reward after up to 40 years of service.

Many organisations consider it essential to reward their staff's long-term loyalty. The Wiltshire Fire & Rescue Service did just this earlier in the month, presenting two long service awards at an annual event.

Chief fire officer Andy Goves summed up the ceremony's importance, commenting:"This is one of the most prestigious and important events in our annual calendar, as it allows us to publicly recognise and thank those members of the fire and rescue service who have served their communities for at least 20 years."

While long service awards are a tried and tested method of rewarding employee loyalty, some experts believe they are offered too far in the future to have a real impact on staff's motivation and engagement right now. The CIPD research showed that 55 per cent of companies experienced some difficulties in retaining employees last year, which suggests firms should consider ways to boost loyalty now.

Compiling the opinions of a number of loyalty and motivation experts, an article on employee benefits.co.uk claimed that rewards should be offered to workers throughout their careers.

"Long service awards should be given to employees every year that they stay with the company to help increase retention," it recommended. The article also suggested that these awards can take a number of forms, such as retail vouchers, small gifts or personalised thank you letters.

Be it through the traditional carriage clock or by vouchers redeemable across the high street, rewarding employee loyalty should be a goal for all businesses - and now appears to be the time to do it.

The solutions we recommend you consider for staff loyalty are featured below, however, if you would like to speak to a Love2reward representative about any of our products or services, then please talk to us today.

Other areas of interest similar to staff loyalty may include, Staff Motivation, Employee Retention, Staff Incentives, Employee Engagement, or Customer Loyalty.