Firm Performance, Worker Commitment and Loyalty

Abstract

Using matched employer-employee level data drawn from the UK Workplace and Employee Relations Survey, we explore the influence of worker commitment and loyalty on firm level labour productivity and financial performance. Our empirical findings suggest that worker commitment and loyalty enhance both labour productivity and financial performance at the firm level thereby highlighting a hitherto neglected conduit for improved firm performance. Using employee level data, we also explore the determinants of worker commitment and loyalty in order to ascertain how such attachments to the firm may be engendered. In general, our employee level analysis suggests that it is firm level characteristics (such as appraisal schemes, supervision, suspensions and redundancies) that influence attachments to the firm. Such findings suggest that firms may be able to exert some influence over the loyalty and commitment of its workforce, which, in turn, may affect firm performance