By Dan Sussman

THE TERM “JOB SECURITY” has becomean anachronism—as dead as the five-cent nickel. Just ask the thousands of au-to workers whose jobs were recentlyslashed by GM; the unemployed workerswho, a decade ago, retrained for the high-tech jobs that are now being shippedoverseas; or the Enron employees whowatched their livelihoods and their re-tirement plans evaporate overnight.

So, with the workplace survivorshumming The Who’s Won’t Get FooledAgain, and business gurus advisingworkers to be “flexible” in managingtheir own careers, is it possible—letalone, reasonable—for companies to expect employee loyalty?

Based on the experience of one majormanufacturer of healthcare products,the answer is “yes.” By listening to em-ployees’ concerns, ensuring that theyhave the resources to do their jobs, andreducing reliance on contract employ-ees, Indianapolis-based Roche Diagnos-tics measurably improved employeeloyalty and reduced employee turnover.

Employee exodusRoche Diagnostics manufactures diag-nostic products aimed at diabetes care,blood screening, virology, and othermedical procedures. The company,which is part of the worldwide RocheGroup of healthcare companies, em-ploys 3,500 people at seven locationsthroughout the United States and Cana-da. In the late 1990s, Roche officials no-ticed a disturbing trend that wascommon to many major employers:Venture capitalists were writing checksfor every entrepreneur with a broadbandconnection and a dream. A handful ofthose startups snatched up some ofRoche’s most valuable employees.

“A lot of our most talented peopletook positions in companies that of-fered them equity shares,” says RocheHuman Resources Manager ElizabethGrusczyk. “Our turnover rose to 15 per-cent, and that was a little higher than wewere comfortable with. So human re-sources was challenged to reduceturnover and stem the flow of knowl-edge walking out the door.”

Grusczyk, who was put in charge ofthe initiative, says the company was initially tempted to “throw money at the situation” in the form of increasedsalaries for coveted employees. However,the company rejected that solution, rea-soning that it would be only a quick fixand would do little to stem defections in the long run. Instead, Roche sought toestablish a program to identify the fac-tors that drove employee loyalty and en-gagement, and then to take steps tostrengthen those ties.

Company surveyThrough research, Grusczyk discoveredthat Walker Information, a researchcompany also based in Indianapolis,and the Hudson Institute, a WashingtonD.C. think tank, had studied and report-ed on company loyalty. Consequently,Roche contracted with Walker to devisea plan of action, and in 2000, it created apilot plan to measure the company’sstanding in 10 key loyalty-related quali-ties. Assessments were carried out via asurvey that, in the pilot, was given toemployees in the areas of the companythat had the highest employee turnover.

“The survey covered employees’ day-to-day satisfaction, employee impres-sions of the company’s concern for them, fairness in treating employees,whether they felt they had enough resources to do their jobs, and similarfactors,” Grusczyk says.

While Walker provided Roche with atemplate on which to base its survey,the healthcare company customized it to suit its specific needs. For example,Walker typically asks if employees feel that their organizations trust them,but Roche asked the question in reverseas well: “We wanted to know if the em-ployees trust us, so we asked them,”says Grusczyk.

The first companywide survey atRoche’s Indianapolis campus revealedthat it was faring better than many other companies in employee loyaltymeasures.

“In Walker’s methodology, a score of4.0 indicates a high level of consistency inemployee behavior, actions, and engage-ment. The national average score is 3.35,and we came in at 3.6,” says Grusczyk.“Nevertheless, our management hadchallenged us to be best in class, so therewas room for improvement.”

Among Roche’s first actions was tocommunicate the results of the surveyto workers within six weeks of its com-pletion and let employees know thatleaders in each of their business areaswould be creating action plans.

“By sharing this information early,people had a sense of the steps involvedand when they could expect to hear information specific to their own areas.I think this demonstrates the org-

anization’s sincere commitment to tak-ing action based on the feedback,”Grusczyk says.

Action plansSince the first implementation of theprogram, Roche has conducted two ad-ditional employee surveys, each ofwhich has brought the company closerto its 4.0 goal. Among the steps Rochehas taken in response to employee feed-back was the recent conversion of ap-

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Roche Diagnostics improves its loyalty-related qualities to quell employee turnover.

Loyalty Expectations

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FOR YEARS, companies have beenmeasuring and, when necessary, enhancing employee satisfaction. But just because your employees aresatisfied doesn’t mean they won’t soon be walking out the door, says Chris Woodard, a consultant with Walker Information. What companiesneed to do is develop loyal employees,he adds.

Walker Information’s 2005 study ofloyalty in the workplace indicates that 34 percent of employees are trulyloyal—an increase of 4 percentagepoints over the 2003 results and a 10percent increase since 2001.

Walker defines loyal workers asthose who are both committed to theorganization and plan to stay with theircompanies for at least two years.

“Loyal employees have positive attitudes about their companies. Theyreally want to be part of the enterprise,and they exhibit behaviors that indicatethey plan to stay with the company,”

says Woodard, who focuses on em-ployee and customer loyalty projects.“They do things like recommending their companies as good places towork, going above and beyond theirprescribed duties, and typically resistingoffers from other potential employers.”

Satisfied employees may be happywith their positions for the most part, but they simply don’t behave with thesame depth of commitment as the loyalemployees, and as a result, they’re lesslikely to stick around for the long haul.

Training and developmentOne of the biggest factors in employeeloyalty levels is the amount of trainingand development companies provide.“Employees want opportunities to grow, and they want career paths andopportunities to go down those paths,”says Woodard.

Also high on the list is the employ-ees’ need to be treated fairly. “Theywant to see policies executed fairly

throughout the company. When that’slacking, animosity builds up. If there is adiscrepancy between the way groupsare treated in the company, manage-ment should at least explain why those discrepancies exist.”

Walker Information’s employee loyal-ty report also found that employees athigher levels in an organization are moreloyal than subordinates. For example, 86percent of executives and senior man-agers are considered truly loyal, whilejust 28 percent of individual contributorsfall into that category. Also, only 55 per-cent of respondents stated that theircompanies have strong, capable leaders.

Employers shouldn’t start slappingeach other on the back because of theincreases in employee loyalty over thepast five years. Walker Informationnotes that its results indicate that morethan half of the workforce is not loyal toemployers. Woodard acknowledgesthat, in light of the job insecurity manyemployees feel today, the overall lack

of employee loyalty isn’t surprising.

“Sure, overall loyal-ty has gone up, butwe’re still dealingwith employees whoare worried that theirjobs are going to beoutsourced andthey’ll be laid off. So you wind up withemployees who say,‘I won’t be loyal to my employer be-cause they’re not loyal to me,’” hesays. “You also haveemployees who low-er their expectationsand are happy just to have jobs at all.But in the long run,you can’t run a com-pany that way.”

Loyalty in the workplaceBy Dan Sussman

100 80 60 40 20 0 0 10 20 30 40 50 60 70 80

Loyal (truly loyal and accessible)

Not Loyal (trapped and high risk)

Recommended as a good place to work

Limit search

Working at company in two years

Doing things “above and beyond” the call of duty

Resist offers

8% 26% 35%

10% 32% 43%

17% 31% 48%

18% 44% 62%

7% 16% 23%

95% 61% 34%

81% 44% 37%

84% 34% 51%

95% 38% 57%

47% 31% 17%

% Extremely Likely

% Very Likely

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Source: 2005 Walker Information

Loyalty affects behavior

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proximately 60 outsourced jobs—most of them in production and in the com-pany’s call center—to full-time Roche positions.

“This was an effort to address our toppriority, which was to improve work or jobresources,” she says. “It’s the one areaeveryone struggles with, since no onefeels he has enough employees or time tocomplete his work. If you leave people ascontingency employees, you tend to get alittle more turnover. By making them full-timers, you get more consistency.”

Roche also instituted a workforceplanning program to help it better antici-pate turnovers, retirements, promotions,and other personnel moves, and imple-mented work and life flexibility pro-grams throughout the organization.These programs include provisions foralternate work schedules, compressedworkweeks, and altered summer hours.For employees who can work from homeon occasion, the company provides re-mote access and broadband capability.

“We’re also very proud of our on-boarding program,” says Grusczyk.“We’re a large, complex, global organiza-tion, and in the past, our orientation fornew employees wasn’t sufficiently com-prehensive. People were missing theconnection between their work and thegreater good for the organization.”

With the new program, new hires aregiven a more thorough introduction tothe company when they walk in thedoor, and the program also involves theindividuals’ supervisors and managers.

“Our surveys show that employee loy-alty has increased 15 percent in the newemployee category, so that tells me thatthe efforts we put into the onboardingprogram are having the desired effect,”she says.

The most prominent benefit the com-pany has realized since implementingthe employee loyalty program is a 50 per-cent reduction in annual turnover. In ad-dition to being a positive indicator ofemployee loyalty, reduced turnover hasfinancial benefits, including a reductionin the cost of hiring and training replace-ments for the departed workers.

And, says Walker Information analystChris Woodard, the longer customer-

facing employees are on the job, the hap-pier those companies’ customers arelikely to be.

“If you’re a customer forced to dealwith new salespeople and account man-agers all the time, it becomes frustrat-ing,” says Woodard, who leads Walker’semployee loyalty practice. “In this situa-tion, the customer winds up having tobring the employee up-to-speed versushaving a stable employee in there whoknows the customer and can take care ofhis needs quickly.”

Grusczyk advises companies seekingto improve employee loyalty to heed thefollowing suggestions:● Companies need to pay attention tothe strengths they already have as wellas shore up weaknesses. “If you just tryto fix the things that are broken, you nev-er deal with your strengths. We realizedthat if we could amp up the strongthings, think about how much impactthis program could have,” she says.● It’s not enough to have a “gut level”sense of problems that could be causingemployee loyalty to flag. Human Re-sources departments need to conduct re-search and then bring hard data tocorporate leaders that can convince themto take steps to improve the situation.

Similarly, it’s not enough to simplyidentify the problem areas. “Leaders wantinformation they can act on. Otherwise,the exercise is just time consuming anddoesn’t get results,” she says. TD

Dan Sussman is an Arizona-based freelance

writer who specializes in technology and busi-

ness improvement topics; dsussman@cox.net.

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