Friday, 6 February 2009

Are you an idiot if you are loyal to your company ?

A couple of months ago, I had the honour to be associated with a very special event ; one of my colleagues was completing 40 years in the company. Pause for a moment and let this sink in. 40 years in the company. I myself had completed more than two decades in the company, but I am a positive chicken in front of this legend.

I am willing to bet that this is the last time in this company (or for that matter in most companies), that this will happen. The days of jobs for life are long gone. Gone is also the practice of a person starting and ending his career with the same company. Average tenures in an organization are now down to lean single digits. I know of a friend who was in tears because she was going to get a long service award from the company for having spent 5 years and would be classified by her peers as “an old foggy”.

I believe this trend has gone too far in the business world. Loyalty, at least in terms of long service, has become a four letter word.

Is company loyalty a bad thing ? 40 years may be unusual, but is it naïve to stay with a company for a long time ? What can loyal employees bring that job hoppers cannot ?

Firstly company and domain knowledge. Stayers know the company and the industry inside out. They know what works and what doesn’t. They have deeply imbibed the culture of the company; in many cases they have helped shape it. It’s a complete myth that the longer you stay the more resistant you are to change. It may happen that way, but there is no cause and effect.

Secondly history. They know what happened in the past. In business, as in every other sphere, history has an uncanny knack of repeating itself. I have personally seen innumerable times when corporations have made the same mistake again and again, just because somebody new decided it must be so. People with long tenure and experience tend not to fall into the same trap.

Thirdly reliability. If you have spent a long time with a company, you have probably seen good times and the bad. And stayed on and fought the bad times. In moments of crisis any organization needs people it can depend upon and who wouldn’t desert. Witness the ongoings in Satyam Computers, an Indian IT company in grave crisis. On the day the crisis broke, the entire operating management, who had grown with the company, vowed to stay on and fight. If they hadn’t, the company would have sunk by now.

Fourthly the company knows them well – their strengths and weaknesses. Only in business is the popular saying twisted – an unknown angel is better than the known devil ! Business syllogism is strange : something on the lines of "Change is necessary; bringing a new guy is change; hence bringing a new guy is necessary (and to hell with whether that is good or bad !)".

And finally, and most important of all, passion. Long stayers are intensely passionate about their company. Typically they would not even use a competitor's product in their homes. This is the indefinable quality that separates an also ran company from a great company. Business success requires the passion of its employees. You can’t be passionate if you are applying for the next job.

No company was built without the deep passion of its people. Think Thomas Watson, Jack Welch, Rob Goizueta, Helmut Maucher… the list can go on and on. All professional managers who spent their entire working life in their company and built them into the great institutions they are today. They weren’t idiots.

Do companies deserve their long staying employees ? That’s of course another matter altogether. Subject of a forthcoming post.


hansjoerg said...

Hi Ramesh,

good to see your blog is up. Your first blog reminded me on the time when I started my live in busines in 1972 (a very long time ago - I was young kid) the first event I remember was that the company celebrated a seasioned employee for his 45 year with the company. I was shocked and I could not imagine what it takes to work for 45 or 50 years for one company. As you rightly wrote the concept of live long employment is long over, but now beeing seasioned myself I see a lot of benefits for more serious commitments from both sides the employee and the employeer for a long lasting relationship.

Anyway this is an interessting start of a blog and triggered some thoughts on my side. I am looking forward reading more of your blog, I am sure it will be very inspirational.

Ramesh said...

Thanks Hansjoerg. Yes its a different business world these days, but I believe we've swung to the other end of the pendulum in terms of short stints and some sort of equilibrium will be reached.

Anonymous said...

I feel the question of 'lifelong employment whether it is good or not' has to answered both for the company and individual. If the company is a mining company and what i can do is only to mine the mineral, this question is irrelevant.

The question hence is 'is lifelong employment good for an individual who is for example creative or a leader or a manger or an entrepreneur. Even some thing like IBM benefited from an executive of a biscuit company to reinvent itself. My personal feeling is in any industry whether the change is rapid, is helped a lot by infusion of new blood at various levels. The period of stay where company and individual feel good about each other may vary from situation to situation.

In my experience I have also seen individuals who stick to a company too long, define the way things need to be done and do immense harm to creative minds that challenge them.

Ramesh said...

Yes of course, if long stayers become blockers of change, then they have to go. And some proportion of fresh blood is required to prevent "inbreeding". Yes I too have seen "old foggies" who have outlived their utility and have little sympathy for them. You are right, the ideal tenure varies from situation to situation - my point was simply to articulate that there is also value from a longer tenure.

Adam said...

There is another aspect connected to the loyalty of the employees: sustained competitive advantage.

One of the key factors to attain sustained competitive advantage constitutes the inimitability of resources. Employees of a firm - being the most valuable resource - are able to build very complex and sophisticated social phenomena, which are very difficult to imitate for competitors. The examples of socially complex resources could be a culture of the firm, its reputation among customers/ suppliers, or interpersonal interactions among staff.

There is a very interesting article, which describes this phenomenon. It was written by Barney already 18 years ago (Barney, J.B. (1991): Firm Resources and Sustained Competitive Advantage. In: Journal of Management, Vol. 17, No. 1, pp. 99-120).

I agree that passion is decisive for every successful story. Not only in the corporate context!

Ramesh said...

Thanks Adam. Yes, another excellent arguement for longetivity.
The article referred to by Adam is available for download , but needs a subscription.

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