Project Management Institute

Loyalty

an outmoded concept?

Institute

PM Institute

The Old Curmudgeon

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INTRODUCTION

Until recently it was assumed that if you worked hard and were loyal to the company, you would be rewarded, promoted and, in effect, taken care of until retirement. It was a reasonable expectation. The employee looked out for the company and the company took care of the employee. But according to many recent articles and surveys, this is no longer true. The “contract” between employee and employer has apparently changed. As Solomon put it, it now includes caveats such as “as long as the company remains profitable, and doesn't get acquired, and the economy doesn't get too bad” [14, p. 52].

WHO IS LESS LOYAL, EMPLOYEE OR EMPLOYER?

Recent surveys have indicated that companies are less loyal to employees and that employees are less loyal to companies than they used to be [7] [9], and the degree of loyalty is not improving. Industry Week's 1993 survey asked if companies and employees were less loyal than five years ago. Perceived company loyalty to employees was 77 percent. Employee loyalty to companies was 60 percent [10]. These figures were within 2 percent of the survey done two years previously [9].

Is this a new phenomenon? Prior to the last ten years, companies had layoffs, but they were mainly in the manufacturing” industry and not nearly so widespread as they have become. It was more likely to be a localized occurrence. So many companies are reducing staff today that the newspapers keep track, like they do with crime waves and body counts during disasters. Even if a company has been able to avoid downsizing, the threat is there.

DOWNSIZING AND THE LOSS OF JOB SECURITY

Since 1981 the Fortune 500 have cut 3.6 million workers [18]. Sixty-four percent of the top 50 companies (in terms of numbers of employees) downsized last year, releasing 289,012 employees [3]. And there are more cuts coming. Other reports indicate that 25 to 50 percent of companies are likely to downsize in 1993 [5] [11] [13].

When companies let employees go, it used to be that they were able to find new jobs without much difficulty. According to Warren Boeker, a professor of management at Columbia university, this has changed. Boeker says that “in the 1970s, 90 percent of laid-off white-collar workers soon found similar jobs. In the late ‘80s, only about 50 percent did. Now the figure is down to 25 percent” [2, p. 1]. And they may never be able to earn the same salary. This obviously has an impact on the perception of job security. David Bruce Robbins, a psychiatrist, has said that white-collar workers now have a “pervasive sense of betrayal” that is different than what he heard in previous slow periods [2, p. 5].

The downsizing may just be a response to the economy and increased competition. But it has also become a quick answer to short-term problems. Eliminating employees cuts costs which creates “a financial boost and provides company shareholders with tangible evidence of the company's commitment to competitiveness” [1, p. 27].

 

Loyalty is earned, not something to be demanded.

 

All of the downsizing and looking for the quick financial improvement have had a negative affect on employees.

MORE OVERWORK AND STRESS

A headline in a recent New York Times Business Day section indicated that productivity in the U.S. rose 4 percent in the last quarter of 1992 without hiring. According to Stephen S. Roach, a senior economist quoted in the same article, “It is good for the improved efficiency of our companies and thus for competitiveness. But it is tough on workers, who are the victims of the downsizing that has been required to boost productivity” [19, p. D1]. There is more work being done by fewer workers. Sirota & Alper Associates, an employee survey company, has monitored over one million workers over the last 18 years. In 1990 they reported that the number of managers who say they have too much to do has increased from 34 percent to 46 percent in the last five years. Nonmanagers also report increased overwork, 39 percent vs. 30 percent five years before [16]. An AMA survey reported that 41 percent of middle managers say they have more work to do than time available to do it [5]. In a survey of chemical engineers, 46 percent reported that they had too much to do [8].

Because of the increased workload and more-with-less environment, there is increased stress. According to outplacement firm Right Associates, 80 percent of 11,000 human resource managers they interviewed said that their workers were not able to manage their new workloads without stress [17, p. 45]. Thus, the barrage of news items about downsizing, neighbors who relate tales of lost jobs or overwork, and increasing overwork of the “survivors” of downsizing leads to feelings of stress and an unavoidable assault on the feeling of job security, even if one's job is not currently in jeopardy.

LACK OF TRUST OR CONFIDENCE IN MANAGEMENT

Employees who trust their management are more likely to stay with their company. But there is a serious decline in trust or confidence in management. Perhaps it comes from all the mergers, acquisitions and downsizing. As many as 60 percent of employees do not believe their management tells them the truth [6]. Two Industry News surveys found that 47 percent of employees do not believe their managers are honest and 40 percent say their confidence in management in general has decreased in the last year [15] [20]. This lack of trust and confidence surely has a negative impact on employees’ loyalty.

CAREERS AND REWARDS AREN‘T WHAT THEY USED TO BE

In the “old days,” one joined a company expecting to progress within the firm, gaining knowledge and experience, being promoted and receiving increases that enabled one to have the tangible rewards that come with success. Today, the work-hard/get-ahead paradigm is no longer operative. According to Ross Webber, a professor of management at the Wharton School, the length of time to be promoted has doubled from the “fast trackers” going from 18-24 months in the ‘60s and ‘70s to four years or more today. Also, the mid-manager who started 20 years ago could expect to triple his or her pay in ten years. Today they are likely to double it in the same time frame [21].

The way to get ahead used to be up the corporate ladder. It is more likely to be sideways or not at all today. Downsizing is hitting all the middle-level managers, those who had garnered the fruits of the previous up-the-ladder career paradigm. As the number of positions available for promotion decline, there are more workers to vie for the positions. With the more-with-less strategy there will continue to be fewer positions available. All of this adds up to a large shift in what career advancement means.

While this has happened, the real wage employees earn has fallen. The decline started in 1973 [4]. Pension benefits and paid health benefits have been falling since at least 1979 [19]. And, finally, the balance between work and family has become a major issue. Victor Senge, the author of The Fifth Discipline, conducts leadership workshops that have as one component the work-family issue. He says that the number one issue his workshop participants have is “finding balance between my work and my family” [12, p. 307].

Whatever happened to getting ahead? It's not as easy as it used to be and it may not be as desirable as it used to be.

CAREER SUCCESS

In a survey conducted in an engineering firm, employees completed a self-report called the Career Success Map. It creates a profile of how they define career success. The results are very enlightening.

The Career Success Map is based on work done by C. Brooklyn Derr and explained in his 1988 book, The New Careerists. He points out that while many people have a career, not every one is career-oriented and few have a career plan. Becoming aware of what one values can help with the decision that one makes at work. In brief, Mr. Derr identified five career orientations:

  1. Getting Ahead … Advancement and Status
    • The job comes first
    • Likely to be competitive
    • Likely to have a career plan
    • Willing to sacrifice to get ahead
  2. Getting Secure … Recognition, Job Security, Respect
    • Hard working, loyal
    • Wants security, stability
    • Wants fairness
    • Willing to sacrifice for the company
  3. Getting Free … Control the Work
    • Wants independence
    • Expertise is path to freedom
    • Often a workaholic
    • Rule bender to get job done
  4. Getting High … Excitement, Challenge from Work
    • Thrives on hard work
    • Work more important than freedom
    • Often creative
    • High inner work standards
    • Likes risk
  5. Getting Balanced … Balance Among Work Relationships and Self-Development
    • Likes work not too hard or too easy
    • Job part of life but not most important
    • Family needs as important as work
    • Equal priority to relationships, career and self-development

The easy assumption would be that many employees would have getting ahead orientations or, in the engineering firm where these Career Success Maps were solicited, that getting free (independence) or getting high (exciting, challenging work) would predominate. However, the results are quite different. The scores on the Career Success Map can range from O to 12 with anything over a 6 representing a strong orientation. For 139 employees (technical professionals, most of whom are managers or in lead positions) the scores showed getting secure and getting balanced as the strong orientations. Forty-one percent of there-spondents had secure, balanced, or secure and balanced as their strong orientations, and 29 percent had secure or balanced in some combination with the other orientations. The averages for these employees were as follows (any score over 6 is a strong orientation):

Secure 7.4
Balanced 7.4
High 5.6
Free 4.8
Ahead 4.6

SIGNIFICANCE OF CAREER SUCCESS ORIENTATION

Getting ahead is the lowest of the five career success orientations. Stability, job security and a balance between work and the rest of life are the only strong orientations. What is intriguing about this is that the firm's top management exhibit behavior that would lead one to characterize them as having getting ahead and getting free orientations. If this is true, there may be a values difference, perhaps even a values clash, between the top management and at least the first and second levels of management. Thus, when top management sets high (some would say unacheivable) objectives, reorganizes quarterly, does not communicate well, changes plans before they are even started, and suggests that all employees should sacrifice for the sake of the company, they seem disappointed when everyone doesn't “jump on the bandwagon.”

There have been frequent reductions of the firm's staff in the last few years, reductions in benefits, a tolerance of getting ahead behaviors to the detriment of quality, obvious cronyism, delayed merit increases, elimination of bonuses, treatment of employees as replacement parts, a lack of interest in performance review systems, and more. In fact, a quote from an article referenced earlier, by a chemical engineer, would sum up what the employees are feeling: “The big companies all bemoan the lack of employee loyalty; how can you be loyal to someone or something that treats employees ‘like commodities’” [8, p. 65].

CONCLUSIONS

Loyalty should be a two-way street. In the terms of expectancy theory, people will be motivated to perform (or be loyal) if they have a reasonable expectation of being able to perform and their performance obtains some valued outcome. When the company demands but does not deliver, why should they be loyal?

If the experience in this firm is indicative of the way that many, or even the majority of firms, are operating, there is likely to be an even greater decline in employee loyalty. Employees all want the same thing: good work, clear direction, feedback, reasonable rewards, fairness in treatment. Employees would rather produce something they can be proud of. No one tries to produce poor quality, and in over 20 years of working, this writer has seen very few people who really don't want to work. Where there is good management, there will be more loyalty.

What is happening in the U.S. is not the death of loyalty as one Industry Week article proclaimed, but a serious problem with management. Unless and until there is more attention paid to the employees than to quarterly or even more frequent financial, until employees are not seen as a burden (cost) but as a resource, there will be no resurgence in loyalty. Loyalty is earned, not something to be demanded.

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REFERENCES

1. Baggerman, L. 1993. The futility of downsizing. Industry Week (January 18), 242, pp. 27.29.

2. Cowan; A.L. and Barron, J. 1992. Executives the economy left behind. The New York Times (November 22), Section 3, pp. 1,5.

3. Drake, S. 1993. Building a new corporate order. Human Resource Executive (January), 7, (l), 20.

4. Ehrenhalt, A. 1993. Right again, but somewhat left. The New York Times Book Review (February 21) p. 12.

5. Fisher. A. 1992. Welcome to the age of overwork. Fortune (November 30), 126, (12), pp. 64,66.

6. Goldfarb, S. 1992. Little white lies. Across the Board (May), 29, issue 5, pp. 53-54.

7. Goman, C.K. 1989. Earning employees loyalty. Management World (March/April), 18, issue 2, pp. 39.40.

8. Irving-Monshaw. S., Basta, N. 1990. Salary and benefits. Chemical Engineering (June), pp. 58,65.

9. Mckenna, J.F. 1991. What can restore fading loyalty? Industry Week (February 4), 240, pp. 50, 51.

10. Moskal, B.S. 1993. Company loyalty dies, a victim of neglect. Industry Week (March 1), 242, p. 12.

11. Quinn, J.B. 1992. The good-job market: RIP. Newsweek (November 30) VCXX, (22), p. 64.

12. Senge, P.M. 1990. The Fifth Discipline. New York: Doubleday Currency.

13. Sherman. S. 1993. A brave new Darwinian workplace. Fortune (January 25), 126, (2), pp. 51.52.

14. Solomon, C.M. 1992. The loyalty factor. Personnel Journal (September), pp. 52,54,56.

15. Sommer, D.W. and Frohman, M. 1992. American management (still) missing some basics. Industry Week (July 20), 241, pp. 37.38.

16. Stewart. T.A. 1990. Do you push your people too hard? Fortune (October 22), 122, (lo), p. 121.

17. Sugarman, J. 1993. The survivor syndrome. Human resource Executive (January), 7, (l), p. 45.

18. The economy: problems … 1993. The New York Times (February 14), p. 26.

19. Uchitelle, L. 1993. Strong economic signals lift DOW to a record. The New York Times (1993) (February 5), p. D1.

20. Verespej. M. 1992. Workers rate their bosses. Industry Week (August 3), 241, p. 34.

21. Weber, J., Driscoll, L., Brandt. R. 1990. Farewell fast track. Business Week (December 10), issue 3191, p. 192.

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This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

JUNE 1993

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