Employee loyalty – What do I get?

I have never been loyal to an organisation. Ever. I feel the same way about loyalty as I feel about passion. It’s a big word and not one I use lightly.

That doesn’t mean I’ve never been committed to my job. I’ve been committed to all of them (well, most of them) for the time I have been with the company. I have been employed by some great organisations which have done some amazing things and, for the most part, I have been proud to work for them. But loyal? No, that’s something I reserve for my family and friends and the things I believe in.

It seems that a number of people may be coming to a similar conclusion. A recent article from Wharton business school reckons that employee loyalty is “a casualty of the new workplace”.

Wharton management professor Adam Cobb sees another reason for what is clearly an evolving relationship. “When you are talking about loyalty in the workplace, you have to think about it as a reciprocal exchange,” says Cobb. “My loyalty to the firm is contingent on my firm’s loyalty to me. But there is one party in that exchange which has tremendously more power, and that is the firm.”

Cobb suggests that at a minimum, “loyalty is not something a company can rely on. But when people say that employees have no loyalty to their firms, you get into a chicken-and-egg kind of argument. Imagine a different world where firms took care of their employees, and loyalty was reciprocal. Would employees be job hopping to the extent they are now?”

Employee behavior, Cobb says, has been influenced by the dramatic organizational restructuring that began 30 years ago. “Firms have always laid off workers, but in the 1980s, you started to see healthy firms laying off workers, mainly for shareholder value.” In their announcements of pending staff cutbacks, “firms would say, ‘We are doing this in the long-term interest of our shareholders,'” Cobb notes. “You would also see cuts in employee benefits — 401(k)s instead of defined benefit pensions, and health care costs being pushed on to employees. The trend was toward having the risks be borne by workers instead of firms. If I’m an employee, that’s a signal to me that I’m not going to let firms control my career.”

This was an interesting take too:

Wharton management professor Matthew Bidwell divides the term into two parts: “One piece is having the employer’s best interests at heart. The other piece is remaining with the same employer rather than moving on.” Management experts, he says, describe this as “organizational commitment.” And that, he notes, is changing. “There is less a sense that your organization is going to look after you in the way that it used to — which would lead you to expect a reduction in loyalty as well.” But Bidwell questions how much loyalty people ever felt to their organizations, in good times or bad. “Employees are often more loyal to those around them — their manager, their colleagues, maybe their clients. These employees have a sense of professionalism — and loyalty — that relates to the work they do more than to the company.”

Now that strikes more of a chord with me. It is often said, both by military historians and  war veterans, that soldiers fight as much for each other as they do for their country. The stakes are nowhere near as high, of course, but you find a similar dynamic in some work groups.

If I think about the times I have stayed in the office until 4am, flown half-way round the world at short notice and dragged myself into work still suffering from a stomach bug, it is because I didn’t want to let my team members down. They were the people I felt close to, relied on and who relied on me. OK, in the back of my mind there were also the usual sticks and carrots; rewards for good performance and black marks for lack of commitment but, for the most part, when I went the extra mile, I did so not out of loyalty to the company but to my colleagues. Most of these people have now left the organisations where we worked together but I’m still in touch with a lot of them. Our career paths and behaviour neatly illustrate Professor Bidwell’s distinction. While we worked for the company, we worked hard. We were always open to other offers though.

Having said all that, I have met people who are loyal to their organisations. In the place where I first started work, there were lots of them. The company had been running, in one form or another, for over a century-and-a-half, had a rich history and tended to recruit from families. Employees joked that, if you cut them open, the company colours would run though them like a stick of rock.

This was the late 1980s, though, and the world was changing. Family membership was once a secure route to employment. Fathers and sons worked as engineers and fitters, mothers and daughters worked in billing or in the call centres. But now the company was insisting on recruitment and promotion by merit. One of my early tasks was explaining to bewildered employees why their sons had not been selected for apprenticeships; something which, only a few years earlier, had been regarded almost as a hereditary right. The company was downsizing at speed too, raiding its pension scheme to shovel out the fifty-somethings with early retirement deals.

At first, this did not dent people’s loyalty. The reaction was another example of the organisational patriotism that I have written about before. People saw what they regarded as their company being messed up by a new breed of numbers-focused managers.

This kind of loyalty can be as much of a problem for managers as a lack of loyalty. A strong attachment to an idea of the organisation that is at odds with that of the senior management can be a powerful barrier to management initiated change. The NHS has organisational patriotism in spades. Many of its employees see no contradiction between loving the organisation and loathing the people who run it.

But even this kind of loyalty rarely withstands the sustained push for shareholder value. Employers can’t just expect people to be loyal because they buy into some great company vision. That might work in a few cases, and for a short time, but most employees want to see something tangible from the employer in return.

As Wharton’s Professor Cobb said, once healthy companies began to take from employees to pay shareholders, employee loyalty was on borrowed time.

This piece on the ASK blog links to John Lanchester’s review of Michael Sandel’s book, What Money Can’t Buy, which contains this fascinating story:

There’s one example in particular that comes close to summing up the entire argument of What Money Can’t Buy. It concerns an Israeli daycare centre, which responded to a problem with parents turning up late to collect their children by introducing fines. The result? Late pick-ups increased. Parents turned up late, paid the fine, and thought no more of it; the fine had turned into a fee.

The fear of disapproval and of doing the wrong thing was based on non-monetary values, and was a stronger force than mere cash. The daycare centre went back to the old system, but parents kept turning up late, because the introduction of market values had killed the old ideas of collective responsibility. Once the old “norm” of turning up on time had been marketised, it was impossible to change back.

Something similar happens with employee loyalty. Once the pensions, benefits, incremental pay-rises and security and jobs for the family have gone, even the most loyal workers start to question their commitment to the organisation. And when that commitment is gone, like the daycare centre’s goodwill, it is almost impossible to get back.

Perhaps it is because I started work at the end of the eighties and saw the way things were going that I never bought into the whole loyalty thing. To me it was always a strange idea that people would be loyal to something as ephemeral as an organisation. Odder still is the suggestion that they should be loyal to something which, often by its own admission, exists primarily to provide returns for directors, shareholders or partners.

I’m not surprised that employee loyalty is declining. I am surprised, though, that people have clung on to the idea for so long.

Hat Tip: ASK, for kicking of this train of thought, and reminding me of this great song.

This entry was posted in Uncategorized. Bookmark the permalink.

6 Responses to Employee loyalty – What do I get?

  1. Pingback: Employee loyalty – What do I get? - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

  2. I think most people’s experience over recent decades is that loyalty is personal rather than corporate, i.e. you feel a sense of obligation to a boss or co-workers who have helped you and who now rely on you. The flip side of this is the growth in the perception and practice that “people leave people, not companies”. The days when disgruntled workers could hope to ignore or sit out poor managers, or even appeal over their heads to “Mr Grace”, are long gone.

    There was clearly a major shift in sentiment in the 70s/80s. Up to that point, employees often identified strongly with their companies, to the point of considering themselves de facto part-owners. Some of this was down to stability (a job for life and children following parents), but some arose from the experience of WW2 and the immediate post-war reconstruction. While nationalisation soon ran out of steam, it coloured perceptions about common ownership.

    The reaction against this (from Fred Kite to The Rag Trade) was presented as the reassertion of the proprietorial rights of owners, i.e. shareholders. The irony is that this coincided with the growth to dominance of the institutional shareholder and the consequent empowerment of the new mediators: the City professionals and the modern executive class. As the puny “shareholder spring” has shown, even the ostensible owners nowadays are relatively powerless.

    A final point to note is that loyalty is not a practice that is valued by the executive class or shareholders themselves. If you’ve only worked for one business for 20 years, unless you are a family member of a family-dominated company, you are seen as lacking breadth and ambition. Serial executive job-hoppers (who often leave a trail of destruction in their wake) are only able to prosper because “an injection of fresh blood” is seen as a necessary lever for extracting short-term value, rather than a risk that could jeopardise long-term value.

  3. mikemacd says:

    Excellent blog, wish I’d written this

  4. Indy Neogy says:

    Great blog and I think a very pertinent comment from FATE about how the higher up you go, the less loyalty is admired – rather it’s seen as a lack of ambition.

    The question that this raises, however, is what is the effect on “commitment” (as you term it) of the decrease in loyalty?

    Options that spring to mind:

    a) No effect, team based loyalty and prof. commitment are enough to keep people giving discretionary labour (e.g. 4am stint, long travel, etc.)

    b) Some effect, but currently obscured by poor job market – commitment out of fear for now.

    c) Visible effect : company is finding it hard to cut costs any further, because people aren’t interested in overtime for free. Innovation stifled because of the rise of a “work to rule” culture.

    I feel like I’ve seen examples of all of these, but nothing to suggest which will dominate.

  5. Pingback: Employee Engagement, Recognition and Reward Commentary | Globoforce Blog » Blog Archive » Loyalty is Dead. Long Live Loyalty!

  6. Pingback: Why measuring employee engagement and loyalty is a problem - XpertHR's Employment Intelligence blog - XpertHR Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s