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September 12, 2019

Loyalty in the Workplace

MHT Partners  | Business & Information Services Investment Bank

The old adage about the finance industry was “if you want loyalty on Wall St., get a dog.” That mentality has slowly crept onto Main St. as cultural norms have shifted, a strong job market has persisted, and the options for job seekers have exploded and are just a click away. The change in employee loyalty is reflected in the fact that, over the last 20 years, the number of companies people have worked for in the first five years out of college has nearly doubled. The days of slowly moving up the corporate ladder during a 40-year career are largely gone. These secular trends have led to the emergence of employers looking for ways to engage with, influence and retain employees to ensure longer-term, stable workforces, which ultimately drive value to organizations.

The change in employee loyalty is being driven by the new breed of millennial employees, many of whom are already well into their 30s. Understanding how to engage and retain millennials is now front and center for employers because millennials make up the biggest demographic in the workforce – more than one in three U.S. employees. As a result, the $5.8 billion market for employee incentive and recognition programs is expected to grow to $30 billion in the next 10 years.(1)

Growth in the employee incentive and recognition industry is further supported by the expectation that, within a decade, the millennial and Generation Z population will make up nearly 60 percent of U.S. workers. Studies have found that these new generations of workers are unlikely to feel engaged by traditional perks such as bonuses and employee-of-the-month awards. Instead, they are more likely to value policies that promote work-life flexibility, training in “soft” skills, and corporate social responsibility, one major study found.(2)

In order to address the issues caused by changing norms related to employee loyalty, numerous players have emerged to provide data-driven technology platforms to help employers engage with and retain employees. MHT Partners, a leading business services investment bank, has been following this trend closely and is actively involved in the loyalty and rewards sector broadly. We believe, as the issue of employee loyalty continues to expand, there will significant M&A activity involving innovative technology companies that provide unique solutions to improve employee engagement and retention.

(1) Future Market Insights
(2) 2018 Millennial Survey Report, Deloitte

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