LOYALTY AND A SENSE OF DUTY

Money doesn't guarantee loyalty, though in some cases it can serve as a sizeable down payment. Granting titles and positions is a game that has played itself out in most industries. People know their value and the value they create, and the smart ones move on when they feel they are not being fairly compensated. And when they move on, they take their knowledge—not only their technical expertise, but your business strategies, tactics, strengths, weaknesses, and customer lists—with them as well. A promising future is not what awaits executives who cannot build loyalty among their staff. If fact, once people feel they are earning the money they deserve, they begin to search for something more significant to satisfy an inner craving for fulfillment. Paradoxically, loyalty does not have to cost you much, or even anything (beyond a competitive pay and benefits package), but disloyalty can cost you a lot, or even everything.

Smart executives know how to transform workers from clock-punching employees into smart partners by encouraging and enabling them to forge the types of relationships that foster loyalty. Wise leaders do this by understanding and aligning organizational values with personal values, by recognizing the achievements of their people, and by transforming the employment relationship into a true partnership focused on the success of the enterprise. Everyone wants to feel valued for their intelligence, contributions, follow-through, and successes. People want to feel part of something greater than themselves. As you read in Chapter 5, a compelling strategic framework announces the inspiring intentions of an organization's leaders and acts as a beacon to attract smart partners who resonate with the organization's vision, values, ethical standards, and strategic directions. As you read in Chapter 6, the ability to identify and hire the people with the right partnering competencies ensures that an enterprise has the basic relationship skills required for building a Powerhouse Partner. Now is the time to build loyalty, a sense of duty and commitment to the organization. Hiring smart partners is one thing; keeping them and growing their partnering skills is an entirely different endeavor.

Equip Employees with the Right Tools and Training

We recently reviewed a documentary detailing how the U.S. military is using information to fight the war on terrorism. In Iraq and Afghanistan, the military's traditional chain of command has been enhanced with a network of information-gathering and information-disseminating tools. On the front line of twenty-first-century warfare, the antenna has replaced the cavalry sword as the symbol of advancing troops. Predator drones scan and photograph battlefields, every move is perfectly executed using the Global Positioning System, and many soldiers receive up-to-the-minute intel on PDAs.

Every business can learn two things from the military's new approach to battle. First, it's encouraging to see an institution as old and seemingly tradition bound as the American military fully embracing change. Second, and more significant, the military has clearly done more than invest in cool gadgets. For all these new toys to work, the armed forces—all of them—had to invest in the people who use them. How soldiers, sailors, airmen, and marines collect, manage, and apply this information is as important as what information they are managing.

Giving people the right technical tools and training is only part of the equation. Employees must also know how to build the relationships that drive trust among other employees, their customers, and their partners. The armed forces establish the relationship of trust because of the critical nature of operations on the battlefield. Soldiers must be able to trust each other as if their lives depended on it, because they do. Businesses are not that different. Sales in the field must depend on Manufacturing to deliver what was promised; Customer Service must work with the customer to deliver ongoing satisfaction. Everyone depends on each other for information and follow-through if the end result is to be winning and keeping customers.

Building and maintaining loyalty among officers (think management) and enlisted members (think employees) is an area in which the military has most businesses beat. We tend to think of the armed forces in terms of a chain of command, of a rigid hierarchy; but what we don't think about is how thoroughly the military takes care of its people. The army, air force, navy, and marine corps all shower their people with training and support because the leaders know that when you take care of people, they take care of you.

Knowing how to build loyalty is emerging as a rediscovered art. During the past several decades, short-term incentives drove business decisions, decimating employee loyalty. The hard lesson that many companies have learned, however, is that losing even one key employee to the competition can wreak havoc on a business's strategies, proprietary information, and customer lists. Moreover, employees who have defected often return to poach additional talent, and the organization suffers further harm. Remember when Novell acquired WordPerfect Corporation for $1.25 billion, then tried to ram its uptight culture down the throats of the laid-back WordPerfect management team? Remember how the WordPerfect team abandoned ship in droves, how WordPerfect product development stagnated, and how sales collapsed? Do you remember how many of that WordPerfect team were scooped up by that other big software company? Eventually throwing in the towel, Novell unloaded WordPerfect for $250 million, a book loss of a cool $1 billion. And you still think loyalty is just something for the folks in Human Resources to worry about?

Think about the people to whom you've been loyal. What was it about them that fostered your loyalty? Not surprisingly, different people are loyal for different reasons, and reasons for loyalty reside in part in our psychological makeup as human beings. We offer here two case studies in building loyalty: first Malcolm, then Sarah.

Building a culture that values loyalty is a key leadership responsibility. And since people are motivated to be loyal for different reasons, understanding loyalty motivators and incorporating them into your culture is critical. Building loyalty in your organization requires a holistic approach. It's up to leadership, not Human Resources. But if you embrace loyalty, loyalty will embrace you.

BUILDING LOYALTY THROUGH PROFESSIONAL DEVELOPMENT—MALCOLM'S STORY

Malcolm, a product engineer at a Minnesota silicon chip manufacturer, was good at his job, but he often felt he was being treated unjustly. He felt that he was being held back and not given any opportunity to demonstrate his leadership abilities. One day Malcolm told Allen, the division director, that he dreamed of leading a team of people to develop a new process that Malcolm believed would improve safety and reduce production time. The company's product, nearly microscopic silicon chips, are fragile, and the manufacturing process requires close-up work that even with safety glasses presents a hazard to the eyes, both from flying debris and general eye strain.

Malcolm's idea was to build magnifying canopies over the assembly site. These canopies would give assemblers a better view of their work and better protect them from flying debris. Allen was skeptical: Malcolm's idea would require a complete rethinking of how they approached the work. Nevertheless, Allen unleashed Malcolm's creativity and supported his every effort. At first, Malcolm was beset with a series of technical setbacks—even though his idea seemed like an elegant solution, getting the right combination of optics and protection was difficult. At one point the project looked doomed. However, Allen never wavered in his support. Eventually, Malcolm and his team had a breakthrough, earning Malcolm a promotion. He is now a regional manager for the division and an extremely loyal employee who is willing to pay back Allen's support tenfold.

"When Allen recognized my desire to improve the situation and supported and stuck with me, I felt like an important contributor to our business's success," says Malcolm. "All the money in the world couldn't change how I feel toward Allen and my company."

What did Allen do to build Malcolm's loyalty? First, he took a personal interest in Malcolm and his future. He listened to Malcolm and didn't dismiss Malcolm's complaint as mere whining. Allen realized that here was an employee who wanted to do more and he acted on that. Then, once the project was underway, Allen never wavered in his support. Though there were ups and downs in the project, Allen publicly took ownership along with Malcolm. He was willing to pin his success on his employee's success.

Businesses don't need to build loyalty just for the sake of building loyalty. Capturing the hearts and minds of your most important asset makes bottom-line sense. Loyal employees are more productive than employees who just don't care. Loyal employees are quick to offer ideas and suggestions for improvements. They act as a catalyst for positive energy within the culture. Loyal employees are more likely to defend and support management decisions than be critical and negative about them. Loyal employees will adapt to change quicker and provide less resistance.

Behaviors of loyal employees are contagious, and they tend to spread enthusiasm to customers, resulting in higher levels of customer care. If you don't like your employer, you probably don't care how you treat its customers. After all, you're just putting in time to collect a paycheck. However, if you do care about your organization, your colleagues, and your job, you'll care about customers and give them a high quality of service. You not only retain customers, you also grow your customer base because of your good reputation, thus growing profits. Employee loyalty translates into customer loyalty, producing a positive growth in the bottom line.

Leaders can begin to shape a partnering culture and build employee loyalty by taking the following actions:

• Sharing an organizational vision that connects with employees' souls. Business is about more than making money. Provide people with a greater purpose than just money and you will be surprised at how hard they will work for you.

• Creating an environment of open and candid communication. Closed marketplaces eventually collapse. Forums for the exchange of ideas and opinions operate the same way. Embrace freedom of expression and drive out every remnant of fear. Nothing kills creativity, innovation, and honesty quicker than fear. Fear is a mind killer. Fear is the mother of groupthink.

• Recognizing that trust is a must. Only one lapse of judgment can destroy a lifetime of building trust, and without trust there can be no loyalty. Guard trust as you would guard proprietary information… it's actually more valuable.

• Generating opportunities for collaboration. When people have the opportunity to participate in creating the work they execute, they feel as if they are a part of something bigger. Make collaboration an essential part of your business culture.

• Offering hope. Hope is one of the greatest human motivators and builders of loyalty. Every great movement, whether social, religious, or political, has offered participants hope. Be optimistic, and above all communicate. People can't believe in you if you don't articulate the vision.

• Inspiring a duty to teamwork. Encourage, cajole, do whatever you must to ensure that people work well together. Make sure that your compensation and reward structure reflects your desire for teamwork by finding a way to compensate the individual contributors and teamwork fairly.

BUILDING LOYALTY THROUGH PERSONAL DEVELOPMENT—SARAH'S STORY

Sarah was a midlevel manager in a bank. She loved her job. It provided her with a high level of professional satisfaction and personal development. However, she often felt torn between her vocation and the passion for her avocation, the ecological health of the barrier islands that lie off the coast of North Carolina. The past decade had seen an increase in vacation homes built on the islands and a decrease in the natural vegetation and wildlife that grows and thrives there. Over the past several years several tropical storms had hit the islands and eroded the beaches, causing even more extensive damage to the habitat.

Her boss, Ella, knew of Sarah's love for the barrier islands and that every year Sarah spent her summer vacation doing community service work on the islands, such as picking up trash, marking protected turtle and bird nesting areas, and replanting beach vegetation. Sarah even started a fund to help rebuild one of the beaches after a tropical storm grazed the state. Ella also knew that they were trying to build community banking relationships within the state and that people in that area had a choice of regionally located banks.

Ella introduced Sarah to Tom, the bank's vice president of community services. Sarah shared with Tom her passion about the barrier islands. Tom had an idea. What if the bank established a fund to support the rehabilitation of the barrier islands in the eastern parts of the three states that shared these island habitats? He also suggested that Sarah be given some time to coordinate volunteers from the bank to work on beach restoration projects during their free time. Sarah was overjoyed… literally speechless. She had never imagined that her employer would take such an interest, much less encourage her to pursue her passion.

Over the years, the bank has sponsored several restoration projects and has won the hearts of many people within the three-state area. Sarah has noticed an increase in the growth of sea oats, birds, and other wildlife that populate the habitat, while the bank has witnessed an increase in the number of customers.

What did Ella and Tom do to build Sarah's loyalty? Ella recognized a passion in Sarah that, while not totally focused on business, fit into the larger corporate picture. Tom quickly connected Sarah's passion with the mission of the bank's community service division. He understood that he had a resource both for fostering growth for the bank and for doing good in the community. He worked with Sarah to help her follow her passion while he also was able to achieve his goal of community service. Sarah was able to connect her passion with her vocation and is firmly committed to making sure her employer gets the very best she has to offer. From what we hear, that's been quite a bit. This situation has had a true win-win outcome for everyone involved.

Building a Sense of Duty Among Employees

Your employees are partners in the business. If you invest energy in your relationships with employees and work to promote their loyalty, they in turn will provide added value. If you do not invest in employees, ignore them, or abuse them, the opposite will occur. They will take advantage of you and leave you at the first opportunity, taking business knowledge with them and perhaps even try to diminish the company's reputation.

Being a business where people want to work is an important asset and growth strategy for many businesses. GMAC-RFC has an internal human resource campaign that includes posters of their employees. Under the picture are these words: "Human … Capital … In That Order." The message is that their business offers two products. The first is the human intelligence, knowledge, and relationships needed to make a deal. The second is the capital to fund a deal. But the stress is on people. They stress their ability to partner with customers, suppliers, and investors to create a win-win outcome, and they accomplish this not so much through financial capital, but through human beings. Anyone who has done business with GMAC-RFC knows that they value building trust and making sure deals are mutually beneficial. Working through issues until mutual satisfaction is achieved is a hallmark of their business and an important business strategy for their future.

Steele Alphin, chief people officer for Bank of America, talking about his partnership with Exult, a human resources partner, put it this way:

We quickly realized an important truth about today's business environment: teamwork isn't always enough. The future of business is partnering. Team members share a common goal, but people working in partnership also share a common sense of duty. Partners take full responsibility for each other's success. As a result, the level of commitment is deeper, and the potential for reward is far greater.

When you have team members who take care of each other, look out for each other, protect each other, and make sure each member succeeds, you have a partnering culture that inspires success. In reality, few of those types of cultures exist in the business world today.