Factors Determining Employee Loyalty During the COVID-19 Pandemic

Building employee loyalty is a prerequisite for a company to achieve a competitive advantage, high organizational performance, and sustainability. The lack of voluntary leaves does not result in recruitment costs or reduced efficiency during the adaptation period of a new employee. It helps retain knowledge and experience within the organization. The article aims to explore employees' loyalty in terms of voluntary employment continuity during the pandemic slowdown of COVID-19, when employee loyalty was put to an exceptional test, and identify the factors that have had the most significant impact. This empirical study was carried out for Germany, mainly due to the strength and position of the German economy in Europe and the availability of a large, detailed micro dataset necessary for in-depth econometric analyses. The dataset used in the survey is the fifth wave of the German Linked Personnel Panel-LPP in 2020/21 (N = 7397). A multinomial logit model was used as a research tool. Loyalty appears as an explained variable in four ordered logit models that differ in the set of explanatory variables. The explanatory variables include demographics, job title, working conditions, compensation and rewards, job content, training and career development, teamwork, and relationships with colleagues and superiors. The results confirm the influence of extra-organizational factors, such as age and living in a four- or five-person household, on employee loyalty. However, age seems to be a factor of decreasing importance. Too much complexity of work, manifested by great task variety, working in multiple teams, and the requirement to perform work remotely, harmed employee loyalty during the pandemic. Findings justify building loyalty based on sustainable human resource policies to increase income satisfaction, reasonable workload, competence development, and greater autonomy at work. It is also clear that leadership issues (fairness in contact with superiors and recognition for work) mattered during this challenging time and have a high potential to improve employee loyalty in the future.