Loyalty seems like an old-fashioned concept, doesn't it? As it should--loyalty is indeed a very old word coming from feudal times meaning "of good quality, faithful and honorable" and "carrying out legal obligations"--with deeper origins in the Latin word legalem, or law.

Loyalty was expected in the past. At companies like IBM and GE, dominant employers from the last 100 years, they would expect you to work for them your whole career, and they would reward this loyalty with job security, benefits and a pension. That is a dream that lasted through the 1960s, but no longer exists in our current global competitive environment with pensions getting wiped out and companies downsizing in the blink of an eye. In today's world, loyalty is a word than can carry negative overtones; being loyal is sometimes synonymous with being blindly loyal, something that many people would be uncomfortable claiming as one of their key characteristics.

Yet, this concept of loyalty is very powerful when creating and growing a company. When people are loyal to each other--up, down and across an organization--they can move quickly, make mistakes and recover. They can make difficult decisions and fail fast, knowing that they won't get stabbed in the back if they are wrong. They can take a risk knowing that their boss, their peer, or their employee will support them and help them recover if the risk was too great.

As a CEO, building a loyal culture can make a big difference in how much risk you can take with your business, and how fast you can drive growth and change. In extreme cases, a CEO with a cult following, like Marc Benioff at Salesforce.com, can inspire loyalty in employees. This will help them feel empowered to take more risk, run faster and push boundaries because they are loyal to a risk-taking leader. And obviously nothing creates loyalty like success.

I'm old-fashioned, I think loyalty within a company matters. When people are loyal to the company, its goals and each other, they can make magic happen. Like trust, loyalty is efficient. Loyalty creates a system where everyone can focus on the task at hand without having to watch their backs or look out for their own personal interests. However, to build a loyal culture, you have to take care of individuals' growth interests and balance that with company growth interest.

As a leader you can build loyalty when you:
1. create an experience that is fun, intense and provides growth experience for every individual;
2. maintain fairness, even-handed and transparent in how you deal with people, pay and promotions;
3. have your team's back--especially in times of adversity;
4. stomp out politics and put the company first at all times;
5. stay direct. If you don't agree--say so. If you think an idea is dumb--say so. If you think an idea is great--say so. But be sure to respectfully explain yourself;
6. act quickly. If someone is falling behind tell them so, tell them why and then move on. If you have to let someone go for performance reasons, help them through it so they land in a better job for them. This will create long term loyalty for both the employees who are staying and those who are leaving;
7. aren't afraid to exercise authority. People understand that, in the end, your job as a leader is to drive forward and make difficult decisions, even if the choices are unpopular.;
8. are decisive;
9. are accessible and human.

Most importantly, loyalty begets loyalty. If you want to create loyalty in your organization, start by being loyal to your team and watch the magic happen.

Published on: Feb 17, 2015
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.