October 22, 2019   |   Compliance

How to build employee loyalty in a tough economy

Building employee loyalty in a tough economy isn’t easy.

Australian businesses have had a tough couple of years. Falling sales have driven record numbers of companies into administration in 2018/2019. While this, according to business analytics firm illion, still only places the failure rate at 0.8%, the types of failures paint a very different picture. Rather than more typical startup failures, much of this increase is the result of extensive and established retailers going under. The reasons for this are varied, from the entrance of Amazon into the Australian market, to a general drop in disposable income for Australian consumers.

In this type of environment, pay raises, bonuses, and employee perks are difficult to maintain. Worse, the drop in disposable income that’s squeezing retailers is even harder on employees. They face the same rising rents and utility costs as other consumers, but they’re also professionally hampered by the impact this has on retail spending. Predictably, this can affect employee morale. To maintain productivity and limit employee turnover, hard-pressed businesses need to find other ways to boost confidence and build loyalty in their customers.

Quality of Leadership

Great leaders consistently engage their teams to achieve outstanding performance. They create environments where employees take responsibility for their own — and their team’s — engagement and build workplaces that are engines of productivity and profitability.

Managers should be proactive in creating a healthy relationship centred around open communication with their employee. They can do this by empowering their employees through ownership and accountability while providing them with the tools and resources to best support their journey. A study by Gallup revealed managers invested in taking the time to build trust and authentic relationships with their employees contribute 48% higher profits to companies.

Acknowledge the Problem

Acknowledging that your business can’t afford to increase salaries due to market conditions can be a humiliating experience for a business owner. Nor is that revelation always immediately beneficial for morale. It’s essential, however, to communicate with employees about the situation of the business. Ultimately, this communication is critical to building the trust that employers need before other attempts to improve morale can succeed.

Without this trust, other attempts to improve morale can backfire spectacularly. Company events, team-building exercises, retreats, and other functions all come with a cost, and, from the perspective of a distrustful employee, all such activities are funded by the raise they were denied. Because of this, employees mustn’t be left to believe that they aren’t valued enough to express that appreciation through their wages.

Focus on Team Building

Employees leave their jobs for a wide range of reasons, and a lack of adequate pay comes in far behind more social aspects of work. Inadequate communication, bullying, lack of recognition or career advancement, and poor management are all more likely to damage morale and drive employees to quit. In the case of retail workers, of course, budget issues are a more pressing concern. It does tell us, though, that addressing company culture issues can go a long way toward boosting morale and improving employee retention. Building a strong company culture doesn’t need to come with a big price tag, though traditional team building activities with their reasonable budget are undoubtedly helpful. Building a great team is mostly about how a company interacts with its employees and how those employees are encouraged to communicate with each other in general.

A competitive work environment is a good thing for businesses in the sense that it can encourage workers to invest more effort into their work, boosting employee productivity and quality of work. However, it’s essential to keep this competitiveness friendly. For example, a bonus structure where a single top-performer collects a payout might sound like a great incentive, and it could save an employer a lot of money that would otherwise be spent on additional bonuses. However, it can also take on a desperate, mean-spirited, gladiatorial air in an environment where employees are actively suffering from financial insecurity. Instead of just rewarding an employee, it would adequately breed resentment against the winning coworker and the employer.

Ultimately, building a culture that’s resilient enough to deal with hard times comfortably is all about cultivating trust. By creating an atmosphere where employees are encouraged to look out for each other, and where they have the sense that their employer is looking out for them, businesses can maintain morale and retain employees even as competitors suffer from high turnover.

Build your Talent Brand

Employees want to be proud of their jobs and where they work. Businesses that have impressive talent brands attract and retain talent more efficiently. Unfortunately, talent brands, like corporate brands and product brands, take time and effort to build and maintain. There are no shortcuts. However, if you’ve created a reliable talent brand, you can quickly get more mileage from it by bringing it front and centre on your website and PR materials.

By doing these things, you’ll be able to increase your employees’ loyalty. And above all, this means a happier, more productive, and more successful workforce.

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This article was originally posted on HR Expert, one of Australia’s leading HR resource and compliance websites. To view the original article, click here.

Mat PaineAbout Mathew Paine

Mathew Paine is an HR practitioner with over 19 years of senior HR experience across Australia, New Zealand and the U.K. He is currently the Managing Director of HR Expert and Non-Executive Director at Definitiv.

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