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Employee Loyalty, Organizational Performance & Performance Evaluation – A Critical Survey

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This study was conducted to examine the importance of Employee Loyalty in Organizational Performance and hence the feasibility of its subsequent inclusion into Performance Evaluations. The 411 respondents in this study were randomly selected participants of an internet based survey (restricted to the group of working people aged 20-60). The significant majority share the opinion of having their loyalty acknowledged and rewarded. A survey was conducted by using a questionnaire through online survey form for gathering information about Employee Loyalty, relating it to Organizational Performance and taking the respondent’s opinion of its inclusion into Performance Evaluations.
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IOSR Journal of Business and Management (IOSR-JBM)
e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 19, Issue 8. Ver. III. (August 2017), PP 62-74
www.iosrjournals.org
DOI: 10.9790/487X-1908036274 www.iosrjournals.org 62 | Page
Employee Loyalty, Organizational Performance & Performance
Evaluation A Critical Survey
*Sachin Murali1, Aayush Poddar2, Prof. A. Seema3
B.Tech., VIT University, Vellore, Tamil Nadu - 632 014, India
3Assistant Professor, Department of Technology and Management, VIT University, Vellore, Tamil Nadu - 632
014, India
Corresponding Author: Sachin Murali
Abstract: This study was conducted to examine the importance of Employee Loyalty in Organizational
Performance and hence the feasibility of its subsequent inclusion into Performance Evaluations. The 411
respondents in this study were randomly selected participants of an internet based survey (restricted to the
group of working people aged 20-60). The significant majority share the opinion of having their loyalty
acknowledged and rewarded. A survey was conducted by using a questionnaire through online survey form for
gathering information about Employee Loyalty, relating it to Organizational Performance and taking the
respondent’s opinion of its inclusion into Performance Evaluations.
Keywords: Employee Loyalty, Organization Performance, Performance Evaluation
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Date of Submission: 23-05-2017 Date of acceptance: 17-08-2017
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I. Introduction
Employee Loyalty
Employees are considered the core of an organization and the success or failure of the organization is
attributed to the performance of the employees. It is of prime importance that the employees are loyal to the
organization and don’t actively search for other alternative opportunities. Loyalty, as a general term can be
defined as a person's devotion or sentiment of attachment to a particular object, which may be another person or
a group of persons, an ideal, a duty, or a cause (Encyclopedia Britannica, 1998). “It expresses itself in both
thought and action and strives for the identification of the interests of the loyal person with those of the object"
(Safra, 2007). In recent times, employees are provided with many employment opportunities which attracts them
to shift jobs often. However, from the organization’s point of view, there is a loss incurred as the organization
has spent resources on the employees to make them more competent so that the organizational performance is
enhanced thus leading to a better gross output.
The economic performance of organizations is becoming ever more dependent on the participation,
commitment, and more generally, loyalty of their employees (Rodríguez, Boltansky, Chiapello, & Vázquez,
1999). Loyalty has become one of the vital concerns for organizations, especially in the context of the economic
tensions related to the ‘psychological contract’ between employers and employees (Naus, van Iterson, & Roe,
2007; Sverke & Goslinga, 2003). Loyalty can be defined as “a strong tie that binds an employee to his/her
company even when it may not be economically sound for him/her to stay there” (Logan, 1984). Employee
Loyalty is “is a deliberate commitment to further the best interests of one’s employer, even when doing so may
demand sacrificing some aspect of one’s self-interest beyond what would be required by one’s legal and other
moral duties” (Elegido, 2013). Definition of loyalty can correspond to the following expressions: “relation of
trust, resistance to the adoption of opportunistic behaviour faced with an outside job offer” (Dutot, 2004);
“significant length of service in the company, less inclination to search for outside job offers and a strong sense
of belonging” (Peretti & Igalens, 2015); or “a feeling of belonging” combined with staying in the organization
over the long term (Colle, 2006). An employee’s loyalty to the occupation, his/her emotional investment, and
the regularity of his/her commitment to the organization, are key factors that determine the longevity and the
performance of organizations (Bakker & Schaufeli, 2008).
Organizational Performance
Organizations are defined as instruments of purpose (March & Sutton, 1997). An Organization consists
of various components working in coordination towards achieving a common goal. Organizational
performance can be defined as the actual output or results of an organization as measured against its intended
outputs (Alfred, Thirolf, Harris, & Webb, 2012). Organizational performance involves the recurring activities to
establish organizational goals, monitor progress toward the goals, and make adjustments to achieve those goals
Employee Loyalty, Organizational Performance & Performance Evaluation A Critical Survey
DOI: 10.9790/487X-1908036274 www.iosrjournals.org 63 | Page
more effectively and efficiently (McNamara). According to (Richard, Devinney, Yip, & Johnson, 2009)
organizational performance encompasses three specific areas of firm outcomes:
(a) Financial performance (profits, return on assets, return on investment, etc.)
(b) Product market performance (sales, market share, etc.) and
(c) Shareholder return (total shareholder return, economic value added, etc.)
Performance Evaluation
Performance evaluation is a method by which the job performance of an employee is documented and
evaluated (Muchinsky & Marchese, 2004). Performance evaluation is a very methodical and periodic procedure
which measures individual employee’s job performance and efficiency in relation to pre-established criteria and
objectives (Abu-Doleh & Weir, 2007, Manasa & Reddy, 2009). Performance evaluation is very essential in
order to align the employee’s activities in the path of achieving the set goals. Performance evaluation can be
carried out using one the following methods Management by objectives, Psychological appraisals, Assessment
centres, 360-degree feedback. In the present research work we have linked the above mentioned concepts. How
the loyalty of an employee affects the organizational performance and is it necessary to include employee
loyalty as a key factor in evaluating the performance of employees.
II. Review Of Literature
Kyle LaMalfa (2007) pointed out in his study that as an employer, you need to understand why your
employees are emotionally connected to your business - and it's usually much more than salaries, training, or
benefits. Research has shown that emotionally connected employees are the best employees as they are engaged
and productive, and they feel authorised and appreciated.
Frederick Reichheld (2006) in his study reported that loyalty, for those who plan to stay with an
employer at least two years, can be affected by several factors, like benefits and pay, working atmosphere, job
contentment and customers. Employee loyalty is critical for organizations as continuous turnover can be very
expensive. In his study he specified that one of the most effective ways to improve employee loyalty is to make
employees feel like they are a significant part of the organization. His study found that only 55 percent of the
employee’s surveyed feel like their organization treats them well. He suggested that an employee feedback
system can help raise employee loyalty by providing two-way communications between employees and
management. If employees feel like the organization is listening to them, recognizing them for their
contributions, they will more likely be loyal to the company. Ho fstede, (1980) Rewards, financial or otherwise,
should be valued and must be perceived as based on performance. Perhaps there is no hitch in acknowledging
this principle. But most organizations have far to go in implementing them. This study makes allusions to
several management practices such as time-based compensation, inadequate performance appraisal etc. that
hinder reward- performance contingency and equity in the Indian context.
Studies on loyalty based upon the analytical context proposed by Hirschman (1970), and have
interpreted it either as an attitude that inspires expression (voice) and discourages departure (exit) from the
organization, or as an alternative form of behaviour to both voice and exit (Guillon & Cezanne, 2014). In a
study that enquiries the financial consequences of employee turnover, Hinkin and Tracey (2000) proposed the
five cost groups: separation costs, recruitment costs, selection costs, hiring costs, and loss of productivity costs.
They developed a piece of computer software based on these five categories to simplify the labour turnover cost
calculations. Their study revealed unpredictably high costs related to labour turnover and emphasized the duty
of managers and human resources (HR) authorities in retaining staff with practices beyond financial benefits
(Ineson, Benke, & Laszlo, 2013). The studies conducted by Graham (1996) and Hizer (1998) showed that
organization's efforts in reviewing the relationship between employee satisfaction, customer satisfaction,
efficiency, and financial performance revealed the following points to them: Grief-stricken employees have low
efficiency and high absence records, Content employees are efficient, innovative, and loyal, A rise in job
contentment would cheer up the employees, and lead to an increase in efficiency. Employee satisfaction leads to
customer loyalty (Graham, 1996) (Davidhizar & Shearer, 1998).
Jawahar (2006) found that performance evaluation played a role in the relationship between employee
satisfaction and employee loyalty in this study. Performance evaluation is an important element of loyalty
because it is positively related to organizational commitment and negatively related to turnover intentions. Job
satisfaction and organizational commitment fall into a broader definition of loyalty.
Satisfactory appraisal system is also necessary to have steady performance by employees. The
appraisal fairness provides perceived fairness to the employees, elicits employee satisfaction and organizational,
performance (Hassan, Nawaz, Abbas, & Sajid, 2013).
Employee Loyalty, Organizational Performance & Performance Evaluation A Critical Survey
DOI: 10.9790/487X-1908036274 www.iosrjournals.org 64 | Page
III. Objectives Of The Study
1. To study whether the respondents feel their exits a relationship between employee loyalty and
organizational performance.
2. To identify whether the respondents feel that their loyalty should be included in their performance
evaluation as a key factor.
3. To measure whether the respondents prefer a Raise in Salary based on Annual Overall Performance
Rating/Evaluation or a Loyalty Bonus Scheme based on years of service.
4. To discover whether the respondents would chose to support an individual; Person A (A Performing and
disloyal individual) or Person B (A non-performing and loyal individual).
5. To recommend certain pre-emptive measures to companies and arm them against high attrition rate and
dismal employee turnover problem by weighing in the respondents preferences to being rewarded for their
loyalty, whether the loyalty reward needs to be monetary in nature and on their comfortability with their
organization testing their loyalty by various means.
RESEARCH QUESTIONS AND STATEMENT OF THE PROBLEM
How can companies recruit loyal employees, test and hold on to the current ones, invest in the right
ones and minimise losses on the ones who are about to leave?
Do employees consider themselves to be loyal? Do they feel that their loyalty affects their
organizational performance? Do they feel that loyalty should be a key factor in performance evaluations? Do
they want remuneration for their loyalty? Is there a relationship between an employee’s loyalty and an
employee’s age? Is there a relationship between an employee’s loyalty and an employee’s gender? Is a high
salary capable of retaining dissatisfied employees? Would employees prefer a Raise in Salary based on Annual
Overall Performance or an Annual Loyalty Bonus based on Years of Service? Are employees comfortable with
their current organization testing their loyalty? Do employees feel that loyalty should entitle an increased pay
scale in comparison to achieving the monthly target?
PURPOSE OF THE STUDY
This self-observation stemmed from the fact that a large fraction of the working class feels that their
loyalty goes unrewarded or unnoticed. To add to this, they feel disconnected from the popular and widespread
employee appraisal methods out there like MBO, 360-degree appraisal and cost accounting method. This is
solely because it dealt with numbers and their performance as per the books while not taking into account the
relationship that they share with the company.
An organization and its employee work towards each other's mutual benefit. This relationship is but an
exchange of professional services between two professional entities. Organizations spends and invests
resources (like time, energy and money) on employees as a means of acclimating them, develop their skills and
abilities and improving the efficiency and effectiveness of their work and output, which in turn benefits the
organization. However, a large fraction of the employee base tend to shift their jobs and leave their current
organization thus making all the invested resources go to waste and also make the organization incur added
costs in recruiting and training abecedarians. This growing trend and culture is turning out to be a large boon to
employees and a large bane to the employers because investing in an employee who leaves thereafter acts as a
double loss. Hence, to turn the situation back in their favour, organizations are in critical need of a loyalty
testing method along with other novel devices to retain employees.
The survey primarily focussed on deducing a link (if any) between surveyed people considering
themselves loyal, them thinking that it goes on to affect their organizational performance and them voting for or
against the subsequent inclusion of their loyalty in their performance evaluation along with a remuneration for
the same.
IV. Methodology
RESEARCH DESIGN
To carry out this study, we used an internet based survey using Google Form, in which a questionnaire
was made in order to record the responses of the people who were responding to the study. It consisted of a
personal profile questionnaire, a loyalty questionnaire, a work history questionnaire, a current job questionnaire
and an opinion questionnaire. For the same, loyalty was defined as employees who are:
1) Devoted to the success of their organization,
2) Believe that being an employee of this organization is in their best interest.
3) Plan on remaining with the organization in the long run
4) They do not actively seek for alternative employment opportunities.
Employee Loyalty, Organizational Performance & Performance Evaluation A Critical Survey
DOI: 10.9790/487X-1908036274 www.iosrjournals.org 65 | Page
DATA COLLECTION
The personal profile questionnaire included name, age and gender. The requirement of entering one’s
name was kept optional so that people could maintain their anonymity given the sensitive nature of the topic.
However, essential parameters such as age and gender that were required for further analysis were kept
compulsory.
RESEARCH INSTRUMENT & STATISTICAL TOOLS USED
The loyalty questionnaire included questions like do the respondents of the survey “feel they are loyal
to their organization”, do the respondents of the survey “feel that their loyalty affects organizational
performance”, do the respondents of the survey “think that their loyalty should be a Key Factor in their
performance evaluation which would go on to affect their salary” were kept as a linear scale ranging from 1 to 5
in order to allow cross-column analysis and ANOVA.
The work history questionnaire included short-answer questions to record how long the respondents
have been working for, how many companies they have worked in, what is the longest duration they have spent
in any company, what is the longest duration they have spent in their current company. This section was
designed to deduce a relationship between age and average number of years spent at a company along with
tendency to shift jobs.
The current job questionnaire included questions like are the respondents of the survey “satisfied with
their current organization”, are the respondents of the survey “satisfied with the salary at their current
organization” and whether the respondents of the survey “are planning on leaving the current organization” were
kept as a linear scale ranging from 1 to 5 in order to allow cross-column analysis and ANOVA.
The opinion questionnaire included questions asking the respondents of the survey “their preferred
mode of add-on to their salary”, whether the respondents of the survey were “comfortable with their current
organization testing their loyalty” and whether the respondents of the survey felt that an increase in pay scale
was deserved by “a loyal employee or an employee who had achieved his target”.
A total of 411 responses were recorded over a time period of 6 months which comprised a total of
sixteen questions that were used for data collection. The recorded responses were then taken and proper pie
charts, bar graphs and line graphs were made in order to analyse the results of the survey and derive conclusions
from the same.
LIMITATIONS OF THE STUDY
However, the plan to conduct a survey and record the results needs to be done while keeping in mind
that this particular survey was answered by a large fraction of the people who answered the survey hailed from
the Southern region of the Indian sub-continent. This survey was carried out over a time span of 6 months. It
was solely aimed to be answered by the working class demography and not any other strata of society. A lot of
the responses were from people who belonged to the education industry. Apart from that, the survey was
restricted to people between the age group of 20-60 but the 61-70 age group responses had to be left out due to
lack of substantial responses in order to draw inferences. In all probability, the survey would not have responses
from the crème de la crème upper class nor the endeavouring lower class, each of which might have brought
their own take to the table. The online Google Form based survey would have restricted the survey’s outreach to
people privy to the use of smart phones and adept at manoeuvring their way about the internet and other online
sources. Most importantly and of paramount importance, is the fact that the psychologically introspective
questions would account for transient changes in opinion within the surveyed subjects as they would
subconsciously want to show themselves in better light as is known and can be expected from the human nature.
ORIGINALITY OF THE STUDY
The study was completely original and was inspired from self-observation which initiated the study.
This problem hasn’t been dealt with before in any of the studies which have provided the scope for conducting a
detailed survey based analysis on how loyalty is a key factor in organizational performance, what employees
feel about loyalty and how organizations could test the loyalty of its employees.
DATA ANALYSIS AND INTERPRETATION
The results of the survey have been represented in the form of pie-charts, bar-graphs and line graphs.
For better understanding, these visual representations have been transcoded along with the addition of cross
field analysis of data so as to delve into the statistics of the responses with much depth and bring forth
significant albeit latent conclusions.
Employee Loyalty, Organizational Performance & Performance Evaluation A Critical Survey
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There was a higher response from the male gender than the female gender. In all further conclusions
and research implications, we have compared values on the basis of the percentage so as to normalise this
particular response. This descriptive statistics showcases that there is a mixture of responses and that it does not
tend towards a biased observation. As this study is linked with the idea or thought of one’s own self being loyal,
it becomes difficult to pose questions to employees and hope for a valid and true response, but interestingly
enough, we obtained quite credible data.
The above bar-graph represents the age wise distribution of the total responses obtained from the
survey for each gender.
After evaluating the data bank, we came to a wise conclusion to not include the 61-70 age band
responses because of their starkly dismal numbers as compared to the other age-bands, thus an attempt to make
sure that poorly skewed implications aren’t derived hereafter which we happened to come across in our
question-wise and cross-question analyses.
Employee Loyalty, Organizational Performance & Performance Evaluation A Critical Survey
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It might be commonplace, but it is important to mention findings irrespective of whether or not people
feel that it exists by default. Thus, in continuance, the trend lines clearly indicate that with increasing age, both
males and females consider themselves to be more loyal to their organisation.
However, a much important observation was that across all age bands, a higher percentage of the
female respondents considered themselves more loyal to their organisation than the male respondents.
This would be an incalculable boon to organisations that suffer losses due to high attrition
rates. They might want to consider giving weightage to candidates who are better settled (or rather grounded) in
life, be it in the case of having a family or other stochastic factors and are hence more likely to associate
themselves with the ideas of loyalty and direct the same towards their organization.
From the above trend lines it can be implied that over time the percentage of males who considered
themselves loyal remains constant while that of females increases. The percentage of females who feel that their
loyalty affects organizational performance is higher than that of males.
Employee Loyalty, Organizational Performance & Performance Evaluation A Critical Survey
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With increasing age-bands, both genders wanted some form of reward (monetary or otherwise) for their
loyalty, hence they considered it to be an organisational asset which entitled them to their fair share of the prize.
What is interesting to note here is that although the response increased with age for both the genders,
the female population had a much higher response as compared to the male population, which on the other hand
had a steeper trend line suggesting a drastic change in opinion with age.
Assuming a normal distribution of responses between the age bands, we can safely conclude that on an
average, a male respondent has worked more years than the female respondent for any given age-band thus
suggesting either one of two things:
a) a male respondent starts working at an earlier age compared to their female equivalent
b) a female respondent start working a bit later compared to their male equivalent
Employee Loyalty, Organizational Performance & Performance Evaluation A Critical Survey
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The trend lines indicate that an average male respondent has changed his organization more than the
average female respondent, which means that (for reasons beyond the scope of evaluation of this particular
survey and paper (such as ambition and monetary requirement, and social factors)) males are more likely to
leave their organization than females. More importantly, a cross-analysis between the number of years that a
respondent has been working for and the number of organizations that they have worked with so far reveals that
with increasing age, people (both males and females) are more loyal to their organisation and less likely to leave
the same. This is because the average 21-30 aged respondent has spent 4.33 years working in 1.8 companies.
Extrapolating the same means that in the 51-60 aged respondent data bank, since they have worked for an
average of 25.65 years, hence assuming all transient factors to remain constant and unbiased, they should have
worked in {(25.65/4.33)*(1.8)} companies, that is 10.66 companies. However, these respondents have only
worked in 3.06 companies, a mammoth 71.29% less than the extrapolated estimate. What this essentially goes
on to show is that for reasons out of the scope of this paper, people aged 20-40 have a higher job-shifting trend
as compared to those aged 40-60. Changing times, mind sets, societal factors and many other stochastic
variables could be attributed for the same.
Employee Loyalty, Organizational Performance & Performance Evaluation A Critical Survey
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With increasing age, people (both males and female respondents) feel satisfied with their current
organization. Female’s respondents with respect to males ones feel more satisfied at their current organization.
With increasing age, people (both male and female respondents) feel more satisfied with their current
salary at their current organization. Female respondents with respect to the male ones feel more satisfied with
their current salary at their current organization.
With increasing age, people (both males and females) are less likely to leave their current organization.
Female respondents with respect to the male ones are more likely to stick to their current organization.
Employee Loyalty, Organizational Performance & Performance Evaluation A Critical Survey
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There is a greater preference to Raise in salary based on the annual overall performance as a mode of
add on to salary because people would rather prefer to be remunerated for their performance on an immediate-
return basis. What this translates into is the fact that the Indian corporate environment is not ready to shift to the
American one. An annual loyalty bonus as a means of remuneration translates into much greater returns for a
company both in terms of monetary profit and employee tenure. The same has been backed by many studies
which is the paramount reason for it being the commonplace system in foreign lands as opposed to India.
Nonetheless, companies will not see a reciprocative response in the event that they do decide to change their
system.
With increasing age, people (both males and females) are more comfortable with their current
organization testing their loyalty with various plots, schemes, tactics and strategies. Female respondents with
respect to the male ones are more comfortable with their current organization testing their loyalty.
The respondents were asked to choose between a performing and disloyal individual (Person A) or a
non-performing and loyal individual (Person B) for receiving a reward of increase in salary. Person A was said
to achieve 120% of his target and was slated to be dissatisfied with his company and constantly scoping for a
better company opportunity. Person B was said to achieve 80% of his target and was slated to be loyal to his
organization, not actively looking for better opportunities and directing every effort towards his company’s
betterment.
Employee Loyalty, Organizational Performance & Performance Evaluation A Critical Survey
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A higher percentage of the respondents (both males and females) prefer Person B over Person A. A
higher percentage of female respondents prefer Person B as compared to the male respondents. A higher
percentage of male respondents prefer Person A as compared to the female respondents.
What this translates into is that although both the genders prefer the loyal individual as more deserving,
male respondents are more likely to look at an actual raise based reward to be a consequence of a numbers and
computations. The male respondents might associate themselves with Person A, as a person who deserves the
raise because of the target he procured while still managing to look for better opportunities owing to his
ambition.
MANAGERIAL IMPLICATIONS
89% of the respondents consider themselves to be loyal to their organisation. A person with a higher
age is more likely to be loyal to their organisation. Female respondents associate loyalty with their organisation
to a greater extent than the male respondents. 76% of the respondents feel that their loyalty affects their
organisational performance. Female respondents associate to these more than male respondents.
65% of the respondents feel that their loyalty should be a key factor in their organizational
performance. The average male respondent has worked for more years than the average female respondent.
Older aged respondents have spent more years in lesser companies as compared to the weighted extrapolated
value of younger aged respondents. Female respondents are more satisfied at their current organisation as
compared to the male respondents.
65% of the respondents are positively comfortable with their organisation testing their loyalty, while
82% of the respondents feel they won’t be negatively affected with their organization testing their loyalty. 74%
of the respondents prefer a Raise in Salary based on Annual Overall Performance over an Annual Loyalty Bonus
based on Years of Service. 68% of the respondents would choose to reward a loyal and non-performing
individual with a raise in salary over rewarding a disloyal and performing individual with a raise in salary.
The current study has shed light on the how loyalty acts a key factor in performance evaluation of an
employee and also sees loyalty from an employee’s perspective. Employees in general with increasing age
consider themselves loyal to their organization. Compared to the employees in the lower age band those in the
higher age band are more satisfied working for their current company. The lower term of office for the
employees in the lower age band is mainly because they are ambitious and tend to leave for a better salary. This
has direct implications on the overall organizational performance and hence it is imperative that organizations
include in their performance evaluation loyalty as a key factor. This would help the organization retain the most
loyal staff which would directly go on to affect the organization’s overall performance.
V. Suggestions
Organizations should consider age of an employee in the higher senses while making hiring decisions.
People who are single or are not settled with their family in a particular city would be more likely to change
their current job when they get better job prospects elsewhere. This could be rarely seen in the employees who
are married and are settled in a city as the cost of relocation would surpass the extra salary they would be
earning in their new organization.
Organisations also need to note that while female respondents were found to be more loyal to their
organisations, male respondents were found to be have more work experience in terms of years spent working.
While the female respondents were more satisfied with their current salary and less likely to leave their current
employer, the male respondents were found to be more dissatisfied with their current salary and open to other,
more rewarding opportunities.
From the employee’s perspective loyalty is seen as a factor which may not necessarily bring them
monetary benefits but would mask the drawbacks in them. An employee might not be target achieving but is
loyal to his organization and works hard to bring achieve his targets. So this loyalty shown by the employee
towards his/her organization should allow the employee to cover-up his drawbacks.
Organisations would do well to formally recognise an employee’s loyalty, and most importantly, make
them (the employees) aware of the fact their organisation acknowledges their loyalty and appreciates the same.
Whether or not a company can afford to set up a reward or incentive scheme based on an employee’s loyalty is
something that solely depends upon the company’s unique dynamics. This would foster a positive environment
conducive towards increasing organisational performance. Loyalty as a factor is higher in people belonging to
40 to 60 age band compared to those in the 20 to 30 age band. This is due to changing lifestyle and
circumstances. The basic needs of people have changed over time. Money has been a major requirement for
satisfying the basic needs of our current generation which would directly reflect on the number of years they
work for a particular company. The current generation people tend to change their job more often whenever they
are offered better pay. This is not the case with the the people in 40 to 60 age band as they tend to remain
satisfied with their current job and are less likely to leave when offered a better pay.
Employee Loyalty, Organizational Performance & Performance Evaluation A Critical Survey
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More important than the 65% of the respondents who are comfortable with having their loyalty tested,
is the fact that 82% of the respondents won’t take it in a negative way. That means organisations stand a
potential chance of offending 18% only. Most of the companies out there could and should capitalise on this and
actively record their employee’s opinion on this during the moment of joining, thus allowing t hem to carry out
fake head-hunter calls, interview calls, phone calls, emails, profile searches on job-seeking and job-review
websites and other widely propagated devices that are very much common in the U.S. to keep a tab on their
employees.
In the Indian scenario people expect a raise in salary based on their overall performance. They expect
the extra work they do to be rewarded by a raise in their salary or through some incentives. But in an American
scenario the employees are paid for their loyalty that is for the year of service for the organization and not for
achieving their targets or achieving more than their target. But when it comes to companies with high attrition
rate a loyalty based system is a better option because it helps the employer to prepare well in advance for any
resignations from their employees. This would help the organization prepare for the requirement of any new
recruits. Slowly the many companies in India have also started rewarding their employees based on the loyalty
based scheme.
With 68% people siding with the loyal and underperforming individual, companies need to understand
how gravely people consider loyalty to be a valuable asset that can even go on to be weighed against the
monthly target itself. Owing largely to herd mentality, if people see other people receiving some fort of benefit
or lack of a negative because of some quality that they possess, and then they are more likely to inculcate the
same within themselves in a bid to avail the same. Such an organic and healthy way of inculcating loyalty
among the employees works out far better than Loyalty Bonus schemes which are regarded as a paid way of
servitude.
VI. Conclusion
A lot of stochastic and transient factors make up the very idea of loyalty. Its measurement,
quantification and comparison are also difficult as it is an abstract noun. Yet, organisations would do well to
realise that a significantly large portion of the working crowd consider themselves to be loyal to the
organisation, which subsequently affects their organisational performance and should consequently go on to be a
key factor in their performance evaluation. This calls for a rapid and immediate overhaul of any performance
evaluation system employed by any organisation which does not include this, when the very mass are rooting
for it. A lot of papers, case studies and research exists out there that tries to link loyalty with organisational
performance, but what they miss out on is the people’s opinion on it. As long as the people think it affects the
organisational performance, it will invariably go on to, and that is more than enough substantial ground for it to
be included in performance evaluations as a critical factor.
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AUTHOR INFORMATION PROFILE
Sachin M is pursuing his Bachelor of Technology in Biotechnology from VIT University, Vellore. He is
presently in his 4th Year as an Undergraduate Student in the School of Bio-Sciences and Technology, VIT
University, Vellore, Tamil Nadu, India. His area of interests include Gene and cell therapy, Molecular Biology
and Human Resource and Financial Management. He has two publications one in the field of immunology and
other in the field of anti-freeze proteins. He is planning to pursue an MBA in Finance and become a Bio-
entrepreneur with the motive of manufacturing generic medicines and provide low-cost treatment to the under-
privileged people.
Aayush Poddar is pursuing his Bachelor of Technology in Biotechnology from VIT University, Vellore. He is
presently in his 4th Year as an Undergraduate Student in the School of Bio-Sciences and Technology, VIT
University, Vellore, Tamil Nadu, India. His area of interests includes Tissue Engineering, Stem Cell
Technology, Gene and Cell Therapy, Principles of Management and Organisational Behaviour. A burgeoning
spirit for research and innovation spurs him on in his endeavour to redefine the history of the future of
humanity.
Prof. A. Seema has completed her M.B.A (International Business) from VIT University, Vellore. Presently
serving as Assistant Professor in the Department of Technology & Management, VIT University, Vellore, Tamil
Nadu, India. Her area of interests includes, Organisational Behavior, Principles of Management, Human
Resource Management, Career Management, and Training and Development. She is having 6 years of
experience in teaching and research from the reputed university. She is pursuing her Doctoral Degree in the
Area of Career Management. She has, to her credit, over twelve research publications in wide spectrum of
journals.
IOSR Journal of Business and Management (IOSR-JBM) is UGC approved Journal with Sl.
No. 4481, Journal no. 46879.
Sachin Murali. “Employee Loyalty, Organizational Performance & Performance Evaluation
A Critical Survey.” IOSR Journal of Business and Management (IOSR-JBM), vol. 19, no. 8,
2017, pp. 6274.
... On the other hand, Kissler (1994) stated that loyalty was defined by performance in the old employment system when it is defined by output and quality in a new employment system [14]. Murali et al. (2017) describe loyalty as an abstract noun concept that referred to several transients [15] in organizational commitment, an employee agrees with a company's goal and wants to stay on as a member [16]. In addition (Jin et al. (2016) stated that the organizational commitments combined three attitudes are: identifying the organizational objectives, the feeling of involvement in organizational duties, and feelings of loyalty to the organization [17]. ...
... On the other hand, Kissler (1994) stated that loyalty was defined by performance in the old employment system when it is defined by output and quality in a new employment system [14]. Murali et al. (2017) describe loyalty as an abstract noun concept that referred to several transients [15] in organizational commitment, an employee agrees with a company's goal and wants to stay on as a member [16]. In addition (Jin et al. (2016) stated that the organizational commitments combined three attitudes are: identifying the organizational objectives, the feeling of involvement in organizational duties, and feelings of loyalty to the organization [17]. ...
Research Proposal
The industrial sector in Iraqi Kurdistan is one of the most important economic sectors due to it having the ability to adequate economic services especially raw materials that help it develop and expand. Among the Iraqi Governorates, Sulaymaniyah is ranking the first in terms of the size of invested capital for setting up manufacturing plants. It has long been recognized that organizations with commitment workers will accomplish more of their goals and objectives. This paper investigates the impact of the effectiveness of performance appraisal on organizational commitment which commitment goes a step further than loyalty. This paper approved that most industrial enterprises lack effective performance appraisal practices. This is reflected in the reduction and organizational commitment, especially the willingness to leave work if they are given a better opportunity. Finally, the research reached several recommendations for strengthening organizational commitment and decreasing its cons.
... In [9], the study aimed to determine the impact of employee loyalty on organizational performance and, the possibility of including it in performance evaluations. The 411 individuals who participated in the study were chosen. ...
Conference Paper
Organizational loyalty has an active role that contributes considerably to improving the performance of human resources in institutions, whereby administrative leaders must be instructed to take care of it and know its levels among employees. This study aims to know the level of organizational loyalty of administrative staff at the University of Benghazi, Libya, its relationship to job performance, and the extent of variation in the level of organizational loyalty according to personal variables. The questionnaire was used to collect data from 76 participants, including employees, directors, and heads of administrative departments at the university. The Alpha Cronbach test was used to extract the stability and consistency coefficient of the data, and descriptive statistics is used to identify the answers of the participants. Inferential statistics are used to answer the questions of the study using SPSS. The results showed that the level of organizational loyalty among employees is high despite the low job performance, as most administrators are not satisfied with their performance. It was found that there is a correlation between organizational loyalty and job performance, but this relationship is weak, which reflects the reality of performance at the university. There were no significant differences in the level of organizational loyalty in most of the personal variables except for the age group variable. The results also showed a lack of skills and inequity in salaries and bonuses.
... H5. Training satisfaction has a positive relationship with employee loyalty. j INDUSTRIAL AND COMMERCIAL TRAINING j 2.8 Employee loyalty and turnover intention EL is critical for organizations because ongoing turnover can be very costly (Murali et al., 2017). However, workforce training provides companies with different advantages, including, for example, decreased manufacturing losses, higher efficiency, reduced turnover and improved safety (Turkyilmaz et al., 2011). ...
Article
Full-text available
Purpose The purpose of this study is to focus on Turnover intention (TI) which is gaining significance in the Jordanian government sector as well as in many other international institutions. Organizations tend to seek valuable benefits from the human resource capital they have to achieve their competitive advantages. However, TI becomes a global issue as well as in Jordanian public context. The research framework of this study is based on the satisfaction and social psychological literature. Design/methodology/approach By applying the convenience sampling method, data were collected through an online questionnaire; 354 respondents from the governmental sector participated in this study. Data were analyzed using the statistical software Smart PLS. Findings Results revealed that mind wandering (MW) has a negative impact on training satisfaction (TS) while trainer efficacy (TE) has a positive impact on TS. Meanwhile, work–life conflict (WLC) was not significantly related to TS. TS has a negative impact on TI and a positive impact on employee loyalty (EL). However, EL has a negative impact on TI, and, at the same time, it mediates the relationship between TS and TI. Moreover, the study demonstrates sequential mediation for TI. Originality/value The research adds to the body of knowledge by testing a new framework. Moreover, it introduces sequential mediation for TI.
... Many studies on loyalty have been examined within the scope of customer loyalty or brand loyalty. In these studies, it was observed that the common points of loyalty positively affect the performance and is an attractive aspect of the organization (Kiruthiga and Magesh, 2015; Murali, Poddar and Seema, 2017). ...
Article
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The COVID-19 outbreak affected many areas, as well as education systems worldwide. In our country, the transition of all universities to the distance education system due to COVID-19 has created the opportunity to analyse the administrators/academician loyalty in this system in many ways. This study investigated the effects of three sub-dimensions of crisis management, pre-crisis, crisis and post-crisis activities, on each other and employees' perceptions of organizational loyalty. For this purpose, the data was obtained through questionnaires from 810 participants consisting of administrators and academicians working in public and foundation universities. As a result of the research, it was determined that the three sub-dimensions of crisis management have significant effects on each other and organizational loyalty.
... However, how to assess the competitiveness and innovation of an organization? It is therefore deemed appropriate to develop a measuring method; to apply the proposed tool in order to assess its effectiveness; to analyze the index of success in the organizations surveyed; to compare the findings from companies; and to determine the main areas for improving performance (Khalifa, 2015;Murali, Poddar, & Seema, 2017). ...
Article
This study contributes to the literature on career decisions on strategic leadership activity and knowledge sharing by introducing a resource-based approach to the forecasting of organizational performance. The study design was accompanied by a quantitative approach using a questionnaire to gather data from the Department of Municipal Affairs employees in the UAE. A total of around 500 questionnaires were provided and 405 related answers were collected. Structural Equation Modeling-Partial Least Squire was used as a statistical tool to verify the effects of the hypotheses. The findings of this study: (1) strategic leadership practice has a significant impact on knowledge sharing;(2) knowledge sharing mediates significantly between strategic leadership practice and organizational performance; and(3) knowledge sharing has a significant impact on organizational performance. This study illustrates the importance of organizational efficiency in municipal affairs as a public service industry, and offers a new understanding to improve its effectiveness. The findings of this study could enable municipal organizations to improve their organizational performance.
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The level of success of the company can be measured through the work productivity of individuals who work in the company. To be able to predict the level of employee work productivity, employee competence has an important role in it. Employee loyalty has a role in mediating the effect of competence on the level of employee work productivity. PT A.W. Faber-Castell Indonesia faces the challenge of employee work productivity not achieving work targets. This study aims to examine the role of employee loyalty in mediating the effect of employee competence on work productivity at PT A.W. Faber-Castell Indonesia. The sample of this study is 250 employees from a population of 745 employees. The data collection technique was done by disproportionate stratified random sampling. Analysis technique using SEM PLS. The results of the analysis show that work loyalty is proven to mediate between employee competence and employee work productivity at PT A.W. Faber-Castell Indonesia. The results show that employee competence can have a significant and positive influence on employee work productivity, so in this case employee loyalty mediates the effect of employee competence on productivity. The implication of this research is that in an effort to increase employee productivity, PT A.W. Faber-Castell Indonesia can improve employee competence through training, which is accompanied by increased loyalty through involving employees in decision-making and establishing effective communication.
Thesis
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There are many factors that can affect academic success efforts of academics. In the study, it is aimed to determine the relationships between the ethical leadership behaviour of the managers, the loyalty of the academicians to their institutions and managers, and the behaviours of envy and jealousy to their colleagues. Within the framework of this purpose, a model was created and scale questions related to research variables were developed in the research conducted on 609 academicians. When the relationships in the research are examined; It has been seen that the ethical leadership behaviours of the administrators have a positive total effect on the academic success efforts of the academicians. It has been observed that the ethical leadership behaviours of the administrators have a positive effect on the loyalty of the academicians to both their institutions and their managers. It has been observed that the loyalty of academicians to their institutions has a positive effect on academic success efforts. It has been concluded that the jealousy behaviours of the academicians have a negative effect on their academic achievement efforts, while the envy behaviours have a positive effect. It has been observed that envy behaviour has a moderator effect on the effect of academics' loyalty to their institutions on their academic achievement efforts. In the research, it was concluded that the ethical leadership behaviours of the administrators have a mediating effect on the academic success efforts of the academicians, and the loyalty of the academicians to their institutions.
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The aim of this research is to strive for academic success; The aim of this study is to examine the ethical leadership behavior of the manager within the framework of the variables of loyalty to the manager and academic jealousy. Academic and administrative activities carried out by academicians at universities can shape academic success efforts in terms of their performance. It is thought that the ethical leadership behavior of the managers, loyalty to the manager and the institution, and jealousy of their colleagues, which are recommended to be taken into account in their organizations while academicians carry out their activities, may have important effects. The research was carried out on 609 academicians operating in the Eastern Black Sea Region. The convenience sampling method was preferred in the study. According to the findings, while the ethical leadership behavior of the manager, loyalty to the manager, and loyalty to the institution variables contributed to the academic success effort, academic jealousy behavior had a reducing effect. The ethical leadership behavior of the administrator has made significant contributions to both the administrator's loyalty and the institutional loyalty of the academician. It has been observed that loyalty to the manager and loyalty to the institution reduce jealousy behavior. In the study, it was also concluded that the administrator loyalty and corporate loyalty of the academicians have important mediating effects according to the model.
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In this current era of a competitive world, it's has become necessary to every organization to maintain its sustainable performance and retain its employees. Researchers have reported that there are different factors that relate to organizational performance. Therefore, this study tries to find out relation of under study variables with organization performance. For comprehensive understanding mediation mechanism has been applied. This research has investigated the mediating role of organizational commitment in the relationship between Compensation, Employee Engagement, Employee Loyalty and Organization Performance. Data were collected from 278 respondents from bank through questionnaire. Structural equation modeling was conducted by using Smarts PLS 3. The findings of the study have discovered that direct and significant positive relationship exists between Compensation, Employee Engagement, Employee Loyalty and organization performance. So, organization must give importance to these factors in order to increase their performance and sustain in business world.
Thesis
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Most studies of organizational performance define performance as a dependent variable and seek to identify variables that produce variations in performance. Researchers who study organizational performance in this way typically devote little attention to the complications of using such a formulation to characterize the causal structure of performance phenomena. These complications include the ways in which performance advantage is competitively unstable, the causal complexity surrounding performance, and the limitations of using data based on retrospective recall of informants. Since these complications are well-known and routinely taught, a pattern of acknowledging the difficulties but continuing the practice cannot be attributed exclusively to poor training, lack of intelligence, or low standards. Most researchers understand the difficulties of inferring causal order from the correlations generated by organizational histories, particularly when those correlations may be implicit in the measurement procedures used. We suggest that the persistence of this pattern is due, in part, to the context of organizational research. Organizational researchers live in two worlds. The first demands and rewards speculations about how to improve performance. The second demands and rewards adherence to rigorous standards of scholarship. In its efforts to satisfy these often conflicting demands, the organizational research community sometimes responds by saying that inferences about the causes of performance cannot be made from the data available, and simultaneously goes ahead to make such inferences. We conclude by considering a few virtues and hazards of such a solution to dilemmas involving compelling contradictory imperatives and the generality of the issues involved.
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Although job insecurity has received growing recognition in connection with the transformation of working life, little is known about how unionization affects its consequences. This study addresses how unionized workers cope with job insecurity and examines the extent to which they respond with reactions of exit, voice and loyalty. Of special interest is whether such reactions tend to affect primarily the employer or the union. Survey data from four European countries (Belgium, Italy, the Netherlands and Sweden) suggest that job insecurity is primarily related to exit and loyalty reactions, but not to voice. The results replicate previous findings of adverse effects of job insecurity on organizational loyalty and employees' propensity to turnover from the job. Although the findings were less consistent across countries with respect to union-related outcomes, the study suggests that job insecurity may lead to reduced union loyalty and withdrawal from union membership.
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Training is often a key to improved performance. Performance appraisal is a systematic process that assesses the performance of an employee and measures his contribution to the organizational objectives. The deficiencies brought at in the appraisal can be corrected through training. The paper attempts to understand perceptions of employees at Andhra Pradesh State Financial Corporation (APSFC) with regard to performance appraisal and how training plays a key role in correcting the deficiencies in performance.