How to reward and increase employee loyalty?

Compensation and benefits

When a company decides to hire new employees, educates them, invests in a probation period and all the requisite technologies, understandably, it expect staff to stay as long as possible. But there is always churn. The Paylab Loyalty Report shows that, in general, loyal employees working for one employer for more than 5 years are in the minority on the labour market at only 27.5%. The largest group is those who are employed for less than 2 years. Attitudes of Millennials and Generation Z are even more complicated, because they have a tendency to consider their career challenges more often and look for opportunities elsewhere. What specific action steps can employers take in order to retain employees on board longer? How many employees do receive loyalty bonus?


1, Financial Rewards for Employee Loyalty

It is still not common among employers to reward loyal employees financially for years they have devoted to the corporation (Employee Loyalty Bonus). This benefit varies by country and it has potential for development. How many colleagues in your company have worked there for more than 5 years. This is also an indicator of company culture and the conditions the corporation creates to stabilize the workforce.


2, Career Progress and Personal Development

Loyalty to an employer largely depends on career growth inside the company. There is a significantly higher share of people working for one employer for more than 5 years among those currently working in management positions. This is largely related to the fact that these people had to gradually work their way up the ladder during their careers. Work in management positions often provides employees with a broader perspective, an opportunity for realisation over the long-term and an attractive mix of financial and non-financial benefits. When a company has limited opportunities for career progression there is space to offer a personal development plan for soft and hard skills. Simply said, there is no room for long-term stagnation.



3, Participation in Company Life and Development

High retention companies tend to give employees a chance to take an active part in creation company values and environment. People are encouraged to discuss the further direction of the company through internal initiatives, workshops and surveys. Brainstorming sessions generate interesting ideas about internal processes, corporate life and company brand. These companies give a signal to the employees that their opinions count, because it all about a shared future and every employee is welcome to be part of it.


4, Focus on the ‘Talents‘

Every employee has their own importance score – the measure of influence and value that they bring to the company. Usually, most of the business progress is driven by a group of key employees – identified as talents. They are special not only for their knowledge and professional skills, but also for their leadership potential. Companies try to identify such individuals within the company and treat them with special care and attention to reinforce their loyalty. It is called a talent management program. The higher the expectations and attention, the greater results and loyalty.


5, Enhanced Status and Demanding Workload

It often happens that really difficult projects and clients are assigned to longer – serving employees. It is natural, because the employer knows their true capability and can estimate, how strong their reliability is. It is often riskier to give big responsibilities to the new-hire employees. For the long-serving employees there are better conditions for professional development through the increasing difficulty of the allocated tasks. Moreover, they perceive it not only as a challenge, but also as encouragement and appreciation from the employer’s side.


6, Employee Loyalty Programmes

We understand loyalty programmes for retail customers and clients, but now there are increasing discussions on rewarding one’s own employees for long-term „employee membership“. It is all about a system that shows employees, regularly, that loyalty counts. It is reflected in the following:

  • above-standard healthcare
  • extra days of vacation
  • higher contribution sums to retirement savings
  • vouchers for shopping and leisure time
  • more flexible working hours

The employee must feel that the employer cares.

Paylab Loyalty Report shows on one side that 31,6 per cent of the employees think that it is not worthwhile to be loyal to the employer, because new-hired employees have comparable benefits and conditions. On the other side, around half of respondents (47%) think that being loyal to their employer is worth it and that employees have tangible proof of this in the form of financial or non-financial benefits. It is also a question of how the benefits and loyalty programmes are communicated internally.



7, A Human Approach to the Employee Life

It is even harder to leave a „second family“– colleagues who are also the good friends. Friendly relations on the workplace have a big impact on the turnover. Employers are trying to stand by their employees not only during good times. Some of them offer bonuses for marriage and childbirth. But event more challenging is to support employees in the difficult life situation. For example people might divorce, have financial or health problems, or need to overcome the loss of the close family member. If employers stand by employees in such situations, there is a strong chance that ties to the company will be reinforced in the future. It is all about a humanity that shows that companies treat people as human beings not merely human resources.



Communication and Market Research Specialist with focus on Compensation & Benefits