Features

Playing for keeps

Loyal employees are an asset to any business – and building that loyalty needn’t cost the earth

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As the economy begins to recover and employees become more confident about looking for new career opportunities, encouraging staff to stay is high on the agenda for many employers – but what is the cost of an effective employee loyalty programme?

THE BOTTOM LINE

Whatever the cost of implementing the programme, it’s likely to compare favourably with the financial impact of staff churn. Recent research from Oxford Economics found that the average cost of replacing an employee is over £30,000, including productivity losses of over £25,000 before new recruits get up to speed. “Lack of employee loyalty negatively impacts the bottom line, so the more loyal your employee base, the lower your costs as a business will tend to be,” says John Sylvester, executive director at P&MM Motivation. “A well-constructed employee loyalty or employee engagement programme can deliver an improvement of about 10% when it comes to employee churn.”

“Loyal employees are critical to the success of every business,” says Bill Alexander, CEO of Red Letter Days. “More specifically, employee loyalty reduces costly turnover rates by eliminating the time needed to train new hires, and importantly, loyal staff are usually also satisfied, productive employees. In short, there is a clear link between the success of your loyalty programme and whether or not your employees willrespect you and feel a sense of commitment to your organisation. By working to develop a deep sense of loyalty in your employees, you’re creating the bedrockfor an effective and successful employee-employer relationship.”

MEASURE FOR MEASURE

A range of measures can be put in place to build employee loyalty, says Sylvester. “The first thing to look at is the hard benefits side – things that are expected such as pensions and performance-related bonuses. Then, employers can look to provide a set of voluntary benefits such as employee discount schemes, childcare vouchers and Bike2Work schemes. On top of those measures, simple things like a structured recognition programme are a valuable addition to the workplace  culture. The programme doesn’t necessarily have to carry rewards, as long as it provides a mechanism whereby the organisation can say ‘thank you’ to its staff in a well-structured and appropriate way.

But it can move into something more performance-related, such
as a rewards programme for meeting sales or customer satisfaction targets. Whatever the core performance measures are for the role, additional performancerelated rewards can be made available for going above
and beyond.”

It’s important to recognise employees as individuals, and a well-structured engagement programme can achieve that, says Alexander: “Because employees have diverse interests, we have found that offering a range of incentives works best for a successful loyalty programme. Some members of staff may be very interested in driving super cars, while some love a shopping day; our Experience and Lifestyle Voucher ranges speak to both of those interests. It’s really all about diversity and understanding your audience.

We always encourage our clients to take an inclusive approach to developing their campaigns and to have a selection of incentives at different price points so they can cover all bases in terms of gender, age and so on.”

MARKING MILESTONES

With a sophisticated range of reward and engagement options to choose from, the time-honoured tradition of the long-service award still has its place as part of a wellstructured employee loyalty programme.

“A long-service award is primarily a mark of appreciation and recognition, a way for employers to say ‘thank you’ for loyalty that’s already been demonstrated,” says Sylvester. “Its effect in generating loyalty is more about peer recognition and the fact that others might aspire to being recognised for long-service too.” “Acknowledging and celebrating the loyalty and commitment of your employees is very important,” says Alexander. “We’ve worked with a number of clients to implement innovative and bespoke long service rewards programmes.

What we have heard time and again, is how important these campaigns are, and how they continue to boost the morale of staff. Whether you’re handing out an Experience Voucher for five years’service or delivering an incentive travel reward for 15 years of hard work and commitment, these gifts are always valued and appreciated.”

ECONOMICAL ENGAGEMENT

The cost of implementing those measures needn’t be expensive, says Alexander. “Creating loyalty and reward programmes takes ingenuity, commitment and creativity – and it does not have to cost an arm and a
leg. You can create simple, instant campaigns where you utilise high street vouchers to congratulate staff on a ‘job well done’, or you can provide days out for the entire team to encourage cohesiveness and unity. All you need to do is outline the goals of the programme and work towards creating something that is memorable and exciting. We work with clients of all sizes to create the right type of programme for their diverse workforce.

Encouraging loyalty is an important piece of any staff reward programme.” “The key to engendering loyalty is to make employees’ working lives interesting and fulfilling by layering a range of measures such as performance-related rewards on top of a job that is interesting and allows them to progress with their careers,” says Sylvester. “As a rule of thumb, employers should be spending between 1% and 2% of the salary bill on staff engagement – at 2%, that’s a budget of £500 per year for an employee with a £25,000 salary. That’s not a huge amount and it’s there to fund the programme infrastructure as well as the rewards that flow from good performance.”

 

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