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             29 March, 2024
 

    
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Employee Loyalty - Sabotaging the Value Chain

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2008-01-23 04:08:17     
Article by Michael Mccarty

Employee loyalty has a distinct bottom-line value affecting your margins, profits, and shareholder value. The impact of loyalty is traceable through the Value Chain manifesting itself in the delivery of your Value Proposition. Although employee loyalty is a fluid factor in today's business climate, loyalty remains a critical success factor in many components of the Value Chain.

The Value Chain was a concept popularized by Michael Porter in his 1985 book "Competitive Advantage: Creating and Sustaining Superior Performance" (The Free Press). Simply stated, the Value Chain model represents the myriad of sequential and concurrent activities occurring within an organization to render competitive goods or services exchanged in the marketplace for a value.

A business's Value Chain provides the logistical support for creating and delivering upon the company's Value Proposition to their customers. A Value Proposition is the promise for goods or services a business makes to it's customers in exchange for a fee. For example, the Southwest Airlines Value Proposition found on the Southwest Airlines web site reads:

"If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline."

The Southwest Airlines analogy also provides us with a clear example of an extremely successful business model containing a streamlined Value Chain, a clear Value Proposition, and fierce employee loyalty.

The impact of employee loyalty serves to either enhance or erode the value of any of the Value Chain components. Imagine your customer's disappointment in learning you have assigned a new sales representative for the third time in as many years because of turnover. Inbound customer contact centers battle the demands of meeting service levels in the face of traditionally low levels of employee loyalty. The downside danger of this activity is a loss of customers, sales, market share, and ultimately profits because of faults in the human aspects of your Value Chain.

In contrast to lower levels of employee loyalty, higher levels of loyalty represent growth in a businesses intellectual capital, sustained quality and service levels. Management expert Peter Drucker popularized Fritz Machlup's term "knowledge worker". The term knowledge worker typically refers to a person who works with their brains than brawn to produce. These "gold collar" workers collectively represent the intellectual capital, legend, and lore that define the corporeal mind, heart, and soul of an organization. Their collective value grows with employee loyalty and retention.

How can you improve loyalty to your organization and minimize the risks to your Value Chain?

1.Hire for alignment. Evaluate internal and external candidates with alignment in mind. For external candidates, this starts with making sure the candidate's values are generally aligned with the company's values. Follow the value alignment closely with the right alignment of the person to the job. This provides enrichment, success opportunities, and employee satisfaction.

2.Focus on employee career growth. Knowledge Workers generally want to expand their skills and abilities and appreciate internal education, tuition reimbursement, attending trade seminars, and reading trade journals. This activity positions employees for positions of increased responsibility within an organization that has a solid succession management program and underlying philosophy.

3.Compensate competitively. Compensation takes on many forms and - like beauty - is in the eye of the beholder. Financial compensation must be competitive to attract and retain talent. The same can be said for employee benefits programs and both require constant attention to your industry practices and offerings.

4.Build relationships. This is the easiest, least expensive, and most overlooked tool in maintaining a loyal staff. Employees are more likely to stay in jobs where they have built a strong relationship with their direct supervisor. I have personally witnessed this affect in my own supervisory assignments and can attest to first hand knowledge of the power of this tool. Earn and maintain the respect of those you lead, value these relationships, and start holding on to the true value in your Value Chain.

Michael McCarty C.C.C.E, MBA

Mr. McCarty has a proven record of accomplishment in strategic leadership roles for fortune 500 companies. He is an award winning performer in the areas of large-scale operations leadership, strategic planning, senior project management, and significant contributions to the bottom line. Michael has successfully leveraged his leadership skills to provide keen insight, vision, direction, and executive support to financial services firms, information technology firms, and the automotive, credit, and insurance industries. He has been particularly effective in start-up and turnaround situations.

Insisting on integrity, self-reliance, resourcefulness, and ingenuity, Mr. McCarty is an action and solution oriented leader capable of making strong financial contributions to the bottom line. Operational leadership in the areas of process improvements, cost analysis, and innovative revenue generation characterize soundly this veteran executive's distinguished career. For more on Mr. McCarty, please refer to http://www.leadershippinnacle.com

Specialized in: Employee Loyalty - Sabotaging - Value Chain
URL: http://www.leadershippinnacle.com
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