How should leaders manage loyalty? Some bosses hang their hats on it—to them, loyalty differentiates good employees from bad. But it has been my observation that marginal employees who are retained because they are loyal can really drag a company down. In your opinion, when and where is loyalty important?
—George DeTellis Jr, Orlando, Florida
For starters, we can certainly tell you at what point loyalty feels like the most important thing in the world: during layoffs. Under such fraught circumstances, long-time employees very naturally tend to think of all the years they have served, all the hours they have toiled, and all the times they have “been there” for the team or company, and they wonder, “Didn’t my loyalty mean anything?”
Meanwhile, their managers are also feeling shaken, although not from shock and anger, but from embarrassment and guilt. Because most managers know full well that employees shouldn’t discover which organizational values count—and how much—on their last day of work. Values should be a first day and everyday topic, especially in preparation for recessionary times such as these, when people deserve to know which behaviours constitute job-protecting performance.
And that is rarely loyalty alone.
Now, we are not revving up here to pronounce, “Loyalty is dead”—the line that has been bandied about since the early 1980s, when foreign competition forced many American corporations to lay off armies of people who had presumed they had guaranteed lifetime employment. As you note in your question, plenty of managers still “hang their hats” on loyalty in its many forms.
There is personality loyalty, in which a loyal employee puts the boss at the centre of his world in a fawning, obsequious way that everyone can see—except the boss. And there is full-attendance loyalty, based on relentless showing up. And there is good, old-fashioned loyalty to the firm, as though it is some sort of nation state. All such behaviour does warm the cockles of some managers’ hearts and can be rewarded with job security.
But not often. These days it is far more common for managers to protect and reward employees who consistently deliver results. We are not saying that loyal employees aren’t given any due. When the economy is strong, a record of loyalty can be enough to give cover to an employee with mediocre performance. But when the going gets tough and staff reductions become necessary, the vast majority of managers act in the interest of the company’s survival. Their top performers will stay—loyal or not. And marginal employees—again, loyal or not—will be asked to move on.
Is that wrong? Not in our view. Companies can only win if they have the best players on the field, and should that sound particularly harsh or mercenary in these difficult times, it is important to remember that, ultimately, everyone in a society benefits when companies are thriving, able to pay taxes and grow. Indeed, if the US economy is to get back on its feet again, we need companies that are meritocracies—now more than ever.
In other words, loyalty isn’t dead, but rewarding loyalty without performance should be. It is short-sighted and wrong-headed.
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But more wrong still is how few managers communicate the truth about loyalty before they are forced to. Instead, it is usually only when they are handing poor, unsuspecting Joe or Mary their pink slip that they finally admit: “Look, all these years you came in every day and you did your job, but you weren’t actually very good. And now that someone has to go, it needs to be you.”
What a shame. And how unnecessary, too. Any company—no matter what its size or business—can have a candid, rigorous performance appraisal system that clarifies which values and behaviour matter and in what measure, and just as importantly, informs employees where they stand in relation to their peers.
Granted, even the best, most consistently conducted appraisal systems won’t make layoffs easy. But they can go a long way towards taking out the surprise and, at the very least, they bring the usually hushed-up matter of loyalty versus results to the surface for all to see and understand.
Over the next year, the recession is sure to teach every manager at least a few important lessons the hard way. If you haven’t been clear until this point about your organization’s real values, you will likely never again allow a vague or phoney performance appraisal to slip by you. When it comes to loyalty, guilt is a great teacher.
Write to Jack & Suzy
Jack and Suzy are eager to hear about your career dilemmas and challenges at work, and look forward to answering some of your questions in future columns. Jack and Suzy Welch are the authors of the international best-seller, Winning. Their latest book is Winning: The Answers: Confronting 74 of the Toughest Questions in Business Today. Mint readers can email them questions at firstname.lastname@example.org Please include your name, occupation and city. Only select questions will be answered.