Wednesday, 11 March 2009

Do companies deserve loyal employees ?

In the good old days, life was simple. You joined a company when you were young. You worked through the ranks and rose to a decent position in the company. You stayed with them for most, if not all, of your working life. The job offered you an anchor to your life, to your family. Most of your friends worked with the company too. If it was a big company, usually the local town was built around the company. You retired from the company with a decent pension. It was fairly clear what you expected from the company and what the company expected from you.

This sounds like a prehistoric story today. Sometime ago, I posted arguing that employee loyalty to the company was a good thing. In this post, I ask the question, do companies deserve employee loyalty ?

There was an unwritten , but implicit agreement between the company and the employee to be loyal to each other. Companies expected employees not to job hop. They expected them to be passionate to the company; to not even use competitor's products personally in some cases. Employees expected not to be fired (Utopian dream maybe, but an expectation nonetheless). This implicit agreement was first broken by the company. When employees got fired, it tore this unwritten agreement to pieces. Trust earned over many decades vaporised.

This happened partly because of a shift in the stakeholder priorities of the company. For a long time, the employee was the key stakeholder - not the customer, not the shareholder. When this started to shift decisively to the shareholder, the employee started to feel the tension. In today's age, the shareholder is the key stakeholder. In such a situation, the contract between the employee and the company has become a mercenary one instead of one of trust. How can loyalty survive this ?

The relationship between the company and the employee has become a power situation. Where employees are strongly organised into unions, the power equation firmly resides with the employee. Witness the US auto industry, where the powerful UAW can bring giants like General Motors and Ford to the point of bankruptcy. Where employees are not organised, companies can act at will. Gunshot firings are OK. How can loyalty even begin to raise its head ?

The real fact is that companies do not expect loyalty from their employees and employees have no intention of being loyal to a company. Its a pure mercenary relationship. Talent is a commodity, just like any other raw material, and companies buy talent - period. After it is consumed, and it has no more use, it can be discarded. Similarly if the price is not right, the talent can simply vanish away.

That's the reality today, but that can't stop me from musing that somehow there seemed to be merit in the good old days when employees wore the badge of their company with pride and honour. A badge they wore with pride even if they left the company !

No; companies do not deserve loyal employees.


Writer from Hell said...

You are as good as your last day's job. Darwinism wins i guess! An employee has got to remain of value to the company and vice versa. Why should either take the other for granted?

But somewhere this youthful job hopping has got to be tamed. I don't think companies sacked their employees at this rate.

Ramesh said...

I agree neither should take each other for granted. But then loyalty cannot be asked, or will be given. Companies should then tone down their HR rhetoric.

Anonymous said...

Hi Ramesh,

There is a story of the faithful dog (Orange Commercial) which actually disappeared when Orange became Vodafone... Moral of the story... Love your job not your company...


Ramesh said...

Thanks Mahesh for visiting. Yes I remember the Orange ad. I know its more approrpiate to be just professional, but how can you really enjoy your working if you are not passionate about your company ?

Follow by Email

Blog Archive

Featured from the archives