Employee loyalty and trust as the key to success

What makes some businesses successful and others fail? One can argue that it is all about the core of business - laws of supply and demand, your competitiveness, quality etc. But I, as many others, would say, that beside the awesome business idea, the people can make or break the deal. Even if the business idea is not that great, it is the people who can turn it into diamonds.

So, you have the great business idea, check! You have a great team, check! How can you ensure that your people can show all of their potential, fulfill their tasks in the best possible way and maybe even more? Yes, here comes the emotional stuff again!

Research shows that employee trust is one of the key factors to increase employee performance (1). What makes us trust the company or leader them? There are obviously things like trustworthiness, keeping the promises, honestness, of course. But on the emotional level we are more likely to trust and be more loyal to compassionate and kind leaders. (2, 3 and 4). Even our brains, on a neurological level, respond more positively to emphatic leader (5).

This all makes very much sense and maybe even sounds obvious. But how can you know what your employees are feeling? The thing is, you can't. If you don't ask them.

Luckily, at least in Finland, almost every company has some kind of employee satisfaction survey at least once a year. The bad news is that emotional experience is something much more than satisfaction. And if you want to improve it, you need to know it first. We need to focus more on this softer, or more human, side of the measurement scales. We stare at dollar sighs, numbers and satisfactions scores endlessly. When in fact, research shows that warm feelings and good relationships affect employee loyalty more than the paycheck (6).

But, returning to where this all started from - there are studies that shows that compassionate management leads to improvements in customer service, which, improves client outcomes and satisfaction (7). And good customer experience is the baseline for the flourishing of any business.

Sources and further reads:

1. T. Bartram et al., (2007) "The Relationship between Leadership and Follower In-Role Performance and Satisfaction with Leader: The Mediating Effects of Empowerment and Trust in the Leader," Leadership &Organization Development Journal 28, no 1: 4-19.

2. T. Qiu et al. , (2002) "The Effect of Interactional Fairness on Performance of Cross-Functional Product Development Teams: A Multilevel Model", The Journal of Product Innovation Management 26, no 2: 173-187.

3. K. T. Dirks et al., (2009) "Trust in Leadership: Meta-Analytic Findings and Implications for Research and Practice," Journal of Applied Psychology 87, no 4: 611-628.

4. E. Seppälä (2017) "Why Compassion is a Better Managerial Tactic than Toughness," Harvard Business Review Emotional Intelligence Series: Empathy: 13-28.

5. R. Boyatzis et al., (2012) "Examination of the Neural Substrates Activated in Memories of Experiences with Resonant and Dissonant Leaders," The Leadership Quarterly 23, no 2: 259-272.

6. "Britain's Workers Value Companionship and Recognition Over Big Salary, a recent report revealed," AAT press release, July 15, 2014.

7. S. G. Barsdale and D. E. Gibson (2007) "Why Does Affect Matter in Organizations?" Academy of Management Perspectives 21, no 1: 36-59.