Loyalty in management terms means a worker’s devotion to the company, the strength of the psychological connection between them and the firm, which reduces the chances of them leaving. The more loyal the personnel, the better the future of the company will be.
However a lot depends on the company itself: its values, the way it treats staff, the psychological atmosphere and the overall culture of the corporation. Experts believe that loyalty in a company essentially derives from the kind of corporate culture it has. In her report “Trust and Loyalty as Indicators of Corporate Social Responsibility” Professor Alla Kupreychenko of the HSE Department of Organisational Psychology presented empirical evidence to show that an open kind of corporate culture where the interests, initiatives and needs of staff are nurtured, increases emotional attachment to the company. While on the contrary, a closed culture with its characteristically hierarchical principle reduces the levels of confidence and loyalty among staff.
The research sample was based on 154 specialist Russian and foreign companies in different fields – hi-tech, investment, PR, publishing, etc. Research was conducted between 2010 and 2013.
Alla Kupreychenko says that loyalty and trust increases if the company shows more social responsibility and supports the professional development and well-being of staff. Corporate social work has many aspects, from freedom for staff to express their views in the company, encouragement of new working methods and stimulating professional and career development, to corporate volunteering with people in need outside the company.
These examples of social responsibility are characteristic of a company with an open corporate culture. The more signs there are of this kind of culture in a company, the higher the level of trust and loyalty will be among staff. These kinds of companies have more opportunities to grow.
Organisational trust is a complex concept, says Kupreychenko. She has based her ideas of what it is on Robert Shaw’s essential work
Shaw R.B. Trust in the Balance: Building Successful Organizations on Results, Integrity, and Concern. Jossey-Bass, San Francisco, 1997).
Shaw puts the essentials of organisational trust as;
Essentially these indicators are all criteria for evaluating levels of corporate social responsibility, says Kupreychenko.
Companies with an atmosphere of openness have the advantage of staff loyalty as dofirms with an ‘accidental’ corporate culture. The ‘accidental system’ has constant innovation, it puts a high value on individual creative decisions and non-conformity.
Kupreychenko found in her research that staff in an organisation with an accidental and open type of corporate culture work in a more energetic, creative and independent way. They take part in decision making, contribute to communication strategy and organise events. “All these things make for a higher level of trust and loyalty”, she said.
Of course, high levels of trust can also be connected to the personal qualities of managers, notes Alla Kupreychenko. This is where liking the boss comes in.
Worker’s loyalty depends to some extenton which method the company uses to motivate (encourage) them – how they do it and how effective it is.
Other significant factors of organisational trust are on a macro level – wage levels in a company, conditions on the job market, the company profile and its market share, and staff turnover. As Kupreychenko puts it, “A high turnover of staff is a negative factor in trust and loyalty to the company”.
Kupreychenko’s research shows that in organisations with a closed corporate culture, constructed on subordination and strict norms, trust and loyalty indicators are lower. Distaste for working in that kind of atmosphere shows in the high indicators of preferred open systems of organisation where any agreement is taken as the basis for cooperation, and roles are assigned through mutual consent.
Moods of dissatisfaction are characteristic of staff whose expectations of the corporate culture do not coincide with reality. They would like to discuss their own professional development, to construct their work on the basis of agreement rather than compulsion, and to be a team player rather than a pawn, languishing under constant control. As a result of the disjuncture between reality and their desires, staff loyalty towards the company falls, and this is manifested in de-motivation, leaving the company, etc.
It might look like a one-off instant in the life of the firm, but that isn’t actually the case. The consequences of disillusionment among the staff can be serious. For example the competitiveness of the company can suffer, and its future could take an unexpected turn. “Although indicators of trust [where expectations don’t coincide with reality of the corporate culture] are still average, and the company can be quite successful at that point, this is a sign that it could encounter several problems when it tries to introduce a programme of organisational change and development”, says Kupreychenko.
A company’s future depends in many ways on its professional and psychological atmosphere. Managers need to understand that the culture they create in the organisation is the main reason for the successes or failures of the company, particularly in how they work with the staff, as the famous specialist on management psychology, professor in the HSE Department of Organisational Psychology Tahir Bazarov, put it in his paper “Organisational Culture and Loyalty/Corporate Cultural Management”. (in Russian) 2013. So we can say that there is an interconnecting ring or closed psychological cycle within the organisation. The corporate culture and measures of social responsibility a company chooses influence the loyalty of staff and, in turn, increasing employees’ attachment to the company reinforces its corporate culture and ultimately strengthens its position in the market.