Loyal workers likely to be paid more: study

Loyal workers likely to be paid more: study

Workers who are loyal to their employers tend to be paid more, according to a new study.

Michigan State University researchers surveyed 10,800 employees in former socialist countries that introduced capitalist economies in the 1990s.

While previous research has found that worker loyalty bolsters companies' bottom lines by lowering labour turnover costs and enhanced customer service, this study shows that employees benefit as well - by making more money, said Susan Linz, lead author and professor of economics.

"We know that firms realise financial gain from loyal workers, but we wanted to know if they share those benefits with the workers," Linz said.

"And among the more than 650 workplaces included in our study the answer is yes, they are sharing the wealth," she said.

The researchers surveyed employees from 2005 to 2011 in six culturally and economically diverse countries: Armenia, Azerbaijan, Kazahkstan, Kyrgyzstan, Russia and Serbia.

The employees came from a wide range of sectors including manufacturing, retail and financial services, health care, education, public sector, construction and transportation.

Loyalty was measured in three ways: by workplace seniority; whether the employee would turn down an offer of slightly more money to change jobs; and whether the employee was committed to and engaged with the company ie, did they buy into the company's mission even when it was outside their job responsibilities.

Linz said she was surprised to find such a strong link between worker loyalty and higher earnings.

In three countries, the contribution of loyalty to earnings was equivalent to the contribution to earnings of an additional year of experience.

Workers were more likely to be loyal if they expected to earn a bonus or learn new skills. In addition, loyalty was higher among employees who expected that doing their job well would result in job security and the feeling that they were accomplishing something worthwhile.

Praise from senior managers, however, was not always positively linked to worker loyalty.

Linz conducted the study with Linda Good, professor of advertising, public relations and retailing, and Michael Busch, a doctoral student in economics.

The findings were published in journal Evidence-based HRM. 

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