--- title: Create loyalty in your organisation - Linus Murphy description: Loyalty is not bought with a retention bonus. Transparent career paths, specific peer recognition and shared upside help people act like owners, not renters. url: https://linusmurphy.com/guide/getting-good-people-around-you/create-loyalty-in-your-organisation/ language: en-GB type: article author: Linus Murphy author_url: https://linusmurphy.com/about/ --- [The 30-part series · Part 29 of 30](https://linusmurphy.com/guide/#series) # Create loyalty in your organisation: a path, a thank-you and a share By [Linus Murphy](https://linusmurphy.com/about/) • 9 min read Focus area 29: Create loyalty in your organisation. [Chapter 7: Getting good people around you](https://linusmurphy.com/guide/getting-good-people-around-you/). Part of the Executive Coaching Methodology: [Build the side that can win](https://linusmurphy.com/guide/#build-the-side) ![An old iron anchor with coiled rope on a stone harbour quay at evening](https://linusmurphy.com/images/series/create-loyalty-in-your-organisation.webp) The argument in brief Loyalty that helps a company cannot be bought with retention bonuses. It is built from three things people can see for themselves — a path they can name, recognition that is specific and frequent, and a fair share of the upside they help create — and leaders who make all three visible get people who act like owners, not renters. Three visible levers move people along the line from renting a job to owning the work, and all three stand on the same floor of kept promises. Most chief executives I meet say they want loyalty. When I ask what they are doing to earn it, the answer is often a retention bonus, a values poster or a more generous benefits package. Each of those has a place. None of them is loyalty. They are rent. And people who are paid rent behave like tenants: they look after the place well enough, and they move when a better offer comes along. I ran businesses for more than 25 years, and the people who stayed through the hard seasons were rarely the best paid. They were the ones who could see where they were going, who felt the work they did was noticed by the people around them, and who knew they would share in what they helped build. When any of those three went missing, even the well paid started looking. So here is the claim. Loyalty that helps a company cannot be bought with retention bonuses. It is built from three things people can see for themselves: a path they can name, recognition that is specific and frequent, and a fair share of the upside they help create. Make all three visible and people start to act like owners, not renters. Loyalty also drops recruiting cost and lifts discretionary effort, which is why I treat it as an operating decision rather than a culture project. This piece goes deeper on one focus area from the chapter [Getting good people around you](https://linusmurphy.com/guide/getting-good-people-around-you/). The chapter separates earned loyalty from bought, trapped and courtly versions of it. Here I want to stay with the three levers. ## Why people actually leave It helps to start with the evidence, because it rarely says what leaders expect. When McKinsey surveyed employees and employers across five countries in 2021, employers mostly cited pay, work–life balance and health as reasons people quit. Employees said something else. The top three reasons were that [they did not feel valued by their organisations (54 per cent) or their managers (52 per cent), or did not feel a sense of belonging at work (51 per cent)](https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/great-attrition-or-great-attraction-the-choice-is-yours). The same research warned that responding to attrition only with more money tells people the relationship is transactional. Pew Research Center asked American workers who had quit in 2021 why they left. Majorities cited [low pay (63%), no opportunities for advancement (63%) and feeling disrespected at work (57%)](https://www.pewresearch.org/short-reads/2022/03/09/majority-of-workers-who-quit-a-job-in-2021-cite-low-pay-no-opportunities-for-advancement-feeling-disrespected/). Pay matters — I would never pretend otherwise. But advancement sits at the same level, and respect is not far behind. And Gallup found that [52% of voluntarily exiting employees say their manager or organisation could have done something to prevent them from leaving](https://www.gallup.com/workplace/247391/fixable-problem-costs-businesses-trillion.aspx), while 51% said that in the three months before they left, nobody had spoken to them about their job satisfaction or their future. The same article puts the cost of replacing an individual employee at between one-half and two times their annual salary. At senior level, the hidden cost — lost judgement, lost relationships, a year of drift — is usually higher. Put those together and the pattern is clear. People leave when they cannot see a future, do not feel valued, and believe the deal is purely financial. Each of those is something a leader can change in the working week. | Signal | Renter | Owner | | --- | --- | --- | | Talking about the future | “I’ll see how this year goes” | Can name the next step and what would earn it | | Recognition | Hears thanks from the boss at year-end | Hears specific thanks from peers most weeks | | The upside | Gets paid the same whatever the company does | Can see their part of a good year | | Bad news | Keeps it quiet; it is not their problem | Brings it early, because it is their company too | | A better offer | Takes the call | Takes the call, then talks to you first | | Discretionary effort | Does the job description | Fixes the thing nobody asked them to fix | ## Lever one: a path people can name Advancement is one of the most cited reasons people leave, and one of the least designed things in most senior teams. Promotion decisions happen in private, criteria shift with the chief executive’s mood, and the only way to find out what the next step looks like is to watch who gets it. A transparent path does not need a ladder of titles. At senior levels it is usually a path of scope. I sit with each direct report twice a year and write down three things together: - **The next step.** A bigger decision, a new market, a turnaround, a seat on a board committee, or a broader remit. - **The evidence that would earn it.** Two or three specific outcomes or behaviours, agreed in writing. - **What I will do to help.** Exposure, a sponsor, a stretch project, coaching. Then I make the criteria for senior moves public inside the leadership team. Not who will get what, but what earns what. People can disagree with criteria. They cannot trust a process they cannot see. This links directly to the focus area on [your personal development plan](https://linusmurphy.com/guide/the-price-tag-of-leadership/your-personal-development-plan/). A development plan without a path is a hobby. A path without a development plan is a promise you cannot keep. ## Lever two: recognition that is specific and frequent Recognition is often treated as soft. The evidence is not soft. Gallup and Workhuman tracked nearly 3,500 employees from 2022 to 2024 and found that [well-recognised employees were 45% less likely to have turned over after two years](https://www.gallup.com/workplace/650174/employee-retention-depends-getting-recognition-right.aspx). The same work found that just 22% of employees say they get the right amount of recognition for the work they do. Two design choices matter most to me. **Make it specific.** “Great job this quarter” lands for an afternoon. “Your work on the supplier renegotiation gave us the margin to hold prices in Spain” lands for months, because it shows I understood what they did and why it mattered. **Make it peer-to-peer, not only top-down.** The people who see the work best are usually colleagues, not the chief executive. I ask leadership teams to end one meeting a month with each person naming one colleague whose work helped theirs, and why. It takes ten minutes. Over a year it changes what the team notices — and it surfaces the quiet players who carry load that never shows in their own numbers. For more on making praise land rather than sound polite, see [give and receive praise and feedback](https://linusmurphy.com/guide/feedback-and-difficult-personalities/give-and-receive-praise-and-feedback/). ## Lever three: a fair share of the upside People act like owners when they share in what owners share in. That does not have to mean equity, although for senior leaders it often should. The economists behind *Shared Capitalism at Work* at the National Bureau of Economic Research studied [employee ownership, profit sharing and gain-sharing](https://www.nber.org/books-and-chapters/shared-capitalism-work-employee-ownership-profit-and-gain-sharing-and-broad-based-stock-options), including how firms overcome the classic free-rider and risk problems that come with spreading the upside widely. That is the honest caveat: shared upside works when people can see the link between their effort and the result, and when the downside is not more than they can carry. In practice I look for three things: - **Line of sight.** People can see how their work moves the measure that pays out. A group-wide pool tied to a number nobody can influence is a lottery ticket. - **Team over individual.** At least part of senior reward tied to the team’s results, so that helping a colleague is not a financial sacrifice. - **Fairness in a bad year.** If the leadership team takes a share of the upside, it takes a share of the pain too. Nothing destroys loyalty faster than a bonus at the top in a year of cuts below. In elite sport, a team that wins together shares the prize together, and the riders who did the unseen work are paid as part of the result. I wrote about that bridge on [from elite sport to the boardroom](https://linusmurphy.com/services/from-elite-sport-to-the-boardroom/). ## Arguments ### The case for The evidence points in one direction. People leave over value, advancement and respect at least as much as over pay, and much of that turnover is preventable with ordinary conversations. Recognition is strongly associated with staying. Shared upside gives people a reason to care about results they cannot personally control. Together these levers lower recruiting cost, protect hard-won judgement and relationships, and raise the discretionary effort that separates a good year from a great one. ### The case against The strongest objection is that loyalty is an outdated idea. Careers are portfolios, the best people will always move, and a company that expects loyalty is asking for something it will not return when it restructures. A second objection is that transparency about paths creates expectations a growing company cannot always meet, and disappointment can be worse than ambiguity. A third is that shared upside dilutes owners and rewards free riders. All three have weight. And sometimes the opposite of my thesis is true: in a turnaround with a short runway, a well-designed retention bonus for a handful of critical people may be the right move for a defined period. ### Where I stand I do not want loyalty as captivity, and I do not expect anyone to stay for ever. I want people to stay while the work is real, tell me the truth while they are here, and leave well when it is time. Transparency is safer than ambiguity if it is honest about what I cannot promise. Shared upside needs design, not avoidance. In my [seven-step process](https://linusmurphy.com/services/impactful-leadership-7-step-executive-coaching-process/), this work sits in step 6, Impact, where we tie behaviour to retention and engagement data, and step 7, Results, where we codify the practices so they survive as the company grows. It usually starts in step 1, Vision, because people cannot see a path in a company that cannot describe where it is going. ## Try this Run a loyalty review of your own leadership team over the next month. 1. For each direct report, write down what you believe their next step is, what would earn it, and what you are doing to help. Then ask them the same question. Compare the answers. 2. Count how many times in the last month you gave specific recognition — naming the work and its effect — to each person. Then ask how often they heard it from peers. 3. Draw the line of sight from each person’s work to the way they share in a good year. Where the line is broken, note it. 4. Ask each person, privately: “What would make you take a call from a recruiter this year?” Write down the answer without defending anything. 5. Choose one change for each lever and put a date on it. Reflection questions: - If my best leader left tomorrow, what would they say was the real reason? - Who in my team has not been spoken to about their future in the last three months? - Where am I paying rent instead of building ownership? - Does the leadership team share the pain in a bad year as visibly as the upside in a good one? - Which quiet players have never been recognised in front of their peers? ## Where to go next Loyalty is the end of a chain that starts much earlier. [Get good people around you](https://linusmurphy.com/guide/getting-good-people-around-you/get-good-people-around-you/) is about hiring so the right people arrive. [Players vs. pretenders](https://linusmurphy.com/guide/getting-good-people-around-you/players-vs-pretenders/) is about why the players stay only when the standard is held evenly. And because loyalty rests on trust, [earning trust](https://linusmurphy.com/guide/trust-under-pressure/earning-trust/) is the natural next read. If you want to design these levers with your leadership team, that is work I do in [executive team coaching](https://linusmurphy.com/services/executive-team-coaching/), and for growing companies through [business coaching](https://linusmurphy.com/services/business-coaching/). [Book a 30-minute strategy call](https://linusmurphy.com/contact/) and bring the name of one person you cannot afford to lose. Where this came from The most useful thinking on loyalty came from an economist, not a management writer. In Exit, Voice, and Loyalty (1970), Albert Hirschman argued that when an organisation declines, members can leave or speak up, and that loyalty is what keeps them speaking up rather than leaving. Loyalty, in his account, is not silence; it is the reason people bother to tell you the truth. In 1996 Frederick Reichheld of Bain made the commercial case in The Loyalty Effect, linking the loyalty of employees, customers and investors. What has changed since is the labour market: senior people now have more options, more information about other employers and less patience with a company that treats the relationship as a transaction. ## Questions I am asked **Aren’t retention bonuses the fastest way to keep key people?** They are fast, and occasionally necessary for a defined stretch, such as a sale or a regulatory deadline. But a bonus tells someone why to stay until a date. It does not tell them why to stay at all. If money is the only reason I can give, I should expect the next better offer to win. **How transparent can career paths be in a small leadership team?** More transparent than most chief executives think. There may not be a ladder of titles, but there is always a path of scope: bigger decisions, new markets, a seat on a board committee, a turnaround to lead. I write those down with the person, with the evidence that would earn each step, and review them twice a year. **Doesn’t peer recognition become a popularity contest?** It can, if it is vague and public for its own sake. I ask for recognition that names a specific piece of work and its effect on someone else. That shifts it from who is liked to what helped. I also look at who never gets recognised, because that list often includes quiet players carrying the load. **What counts as shared upside if we cannot offer equity?** Equity is one form, not the only one. Profit share, gain-sharing on a specific improvement, bonuses tied to team rather than individual results, and a real say in how a saving is reinvested all count. The test is simple: when the company does better because of their work, can they see their part of it? ## Sources 1. [Majority of workers who quit a job in 2021 cite low pay, no opportunities for advancement, feeling disrespected](https://www.pewresearch.org/short-reads/2022/03/09/majority-of-workers-who-quit-a-job-in-2021-cite-low-pay-no-opportunities-for-advancement-feeling-disrespected/) — Pew Research Center, 9 March 2022 2. [‘Great Attrition’ or ‘Great Attraction’? The choice is yours](https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/great-attrition-or-great-attraction-the-choice-is-yours) — McKinsey & Company, 8 September 2021 3. [This Fixable Problem Costs U.S. Businesses $1 Trillion](https://www.gallup.com/workplace/247391/fixable-problem-costs-businesses-trillion.aspx) — Gallup, 13 March 2019 4. [Employee Retention Depends on Getting Recognition Right](https://www.gallup.com/workplace/650174/employee-retention-depends-getting-recognition-right.aspx) — Gallup, 18 September 2024 5. [Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options](https://www.nber.org/books-and-chapters/shared-capitalism-work-employee-ownership-profit-and-gain-sharing-and-broad-based-stock-options) — National Bureau of Economic Research (University of Chicago Press), April 2010 [Editorial standards](https://linusmurphy.com/editorial-standards/) ![Portrait of Linus Murphy](https://linusmurphy.com/images/portraits/linus-headshot.jpg) **[Linus Murphy](https://linusmurphy.com/about/)** Elite executive coach. Linus spent 25+ years as a CEO in technology and services, where the businesses he led averaged 45% annual growth, and has coached hundreds of people from more than 20 countries. He is a former Irish National Cycling Champion. [Book a 30-minute strategy call](https://calendly.com/linusmurphy-coaching/30min) ## Related parts [![An open leather notebook with a blank weekly planner, a fountain pen and a cup of coffee](https://linusmurphy.com/images/series/your-personal-development-plan.webp)Part 27 of 30 · Chapter 5**Your personal development plan: run it like the R&D budget for your leadership**](https://linusmurphy.com/guide/the-price-tag-of-leadership/your-personal-development-plan/)[![Blank cream index cards pinned with brass pins to a cork board](https://linusmurphy.com/images/series/give-and-receive-praise-and-feedback.webp)Part 24 of 30 · Chapter 10**Give and receive praise and feedback: one card for good news and bad**](https://linusmurphy.com/guide/feedback-and-difficult-personalities/give-and-receive-praise-and-feedback/)[![A rowing eight resting upside down on racks in a quiet boathouse, oars aligned beside it](https://linusmurphy.com/images/series/get-good-people-around-you.webp)Part 14 of 30 · Chapter 7**Get good people around you: a scorecard, a real interview and a 30-day sprint**](https://linusmurphy.com/guide/getting-good-people-around-you/get-good-people-around-you/)[![An empty theatre stage with one spotlight on bare boards and red curtains half drawn](https://linusmurphy.com/images/series/players-vs-pretenders.webp)Part 15 of 30 · Chapter 7**Players vs. pretenders: make ownership visible, and the performance fades**](https://linusmurphy.com/guide/getting-good-people-around-you/players-vs-pretenders/) ## Bring the live problem into the room [Book a 30-minute strategy call](https://calendly.com/linusmurphy-coaching/30min)