Laetitia Vitaud May 2019

The End of Loyalty?

This article was written for the monthly newsletter Malt Inspire. To subscribe, click here.

Employee loyalty is dead. Or is it?

Yes, freelancing and remote work have been on the rise for more than a decade, traditional management has undergone a (quiet) revolution, andemployee engagement seems to be on the decline. Yes, today’s workers know more employers throughout their careers than did workers from previous generations. But it would nevertheless be a foolish mistake to declare loyalty dead yet. What if worker loyalty still had a bright future? And what if there were many things you could do to boost it?

Only we may have to redefine the concept, and the framework we’ve used so far to analyse and measure loyalty. Today’s loyalty no longer depends on being an employee. In fact employees may feel stuck in their company and resentful, while contract workers may feel very loyal to a client company whose purpose they fully embrace. Loyalty transcends the legal nature of the relationship that binds worker and company.

In this newsletter I aim to challenge the idea that worker loyalty is dead 🤓. I hope you will find inspiring ideas to rethink how you view teamwork, leadership and purpose as a result.

💡 Why has the end of loyalty become such a common trope?

There is no denying human resources and HR have gone through a profound paradigm shift over the past two decades. Freelancing has been on the rise since the late 1990s in the US (and early 2000s in Europe). The “Gig Economy has gone global”. The digital revolution is said to have lowered transaction costs and made real-time on-demand work a new reality for corporations and workers alike. In a Nexxworks post Laurence Van Elegem recently wondered why companies are “still owning employees”.

Since the financialization of the economy in the 1990s, long-term employment has been on the decline, with corporations increasingly reluctant to promise workers job security. This has led American author Rick Wartzman to write about The End of Loyalty. In this book he chronicles the erosion of the relationship between companies and their workers. Through the stories of four major employers (GM, GE, Kodak and Coca-Cola) he aims to show how “good jobs” have progressively disappeared in the US. See also this Stanford Business article titled “Why Companies No longer Reward Loyal Employees”.

The traditional definition of the firm is being challenged by a long outsourcing trend, which has led the Wall Street Journal to announce “The End of Employees.” “The outsourcing wave that moved apparel-making jobs to China and call-center operations to India is now just as likely to happen inside companies (…) and in almost every industry”.

So the shift is radically changing what it means to be a company and a worker. More flexibility. Less job security. A different identity. And less loyalty on both sides. For workers it is increasingly hard to answer the simple question “Where do you work?”. For employers it is increasingly hard to figure out how to recruit the talent they need.

🤕 In that context HR is a real headache now

More and more creative class workers seem to behave like “consumers” of jobs. They try a job on the way they would a piece of clothing, and discard it if it isn’t a perfect fit. More of them will use the trial period as a way to test their employer (as much as they will be tested by them). This is all the more relevant in jobs and sectors where demand largely exceeds supply. Software developers for example are in a position to be even more demanding. Also in many ways, “freelancers are redefining talent for HR people”. In other words HR was transformed at least as much as love relationships have been by the Tinder revolution: candidates and companies need to “market” themselves, have an appealing profile…

The lines are blurring between HR and marketing. That’s why HR people have become obsessed with “employer branding”, in the hope that applying marketing to HR will save them. Read this recent Hubspot piece titled “Everything you need to know about employer branding”: “nowadays, a company’s reputation matters more than ever. In fact, 86% of workers would not apply for, or continue to work for, a company that has a bad reputation with former employees, or the general public.”

Alas too many employees aren’t sufficiently engaged at work. Employee engagement is said to be declining (read this Forbes article on the subject“3 Reasons Employee Engagement Is Declining — And How Managers Can Improve It“). Long-term employment is often associated with “bullshit jobs”. Far too many creative class employees identify with the concept. The success of David Graeber’s new bookBullshit Jobs: A Theory, testifies to it.

Job security and employability no longer work hand in hand. In fact, the longer you stay in one job the more you are at risk of losing your employability! (“Have you been working in the same company for too long?”, asks The Telegraph). Talented workers increasingly seek to avoid long-term employment to try and remain as employable as possible, which means it is getting harder to retain them. Meanwhile management is increasingly project-based.

🤔 But what if we had the wrong lenses to look at loyalty?

Ifwe equate loyalty with long-term employment, then it may seem like loyalty is doomed. But shouldn’t the very definition of loyalty be revised? Why should loyalty be reduced to employment? Loyalty, i.e. a strong feeling of support or allegiance, can take many forms. Allegiance to a product or a mission can be expressed in different ways: you can express your loyalty as an employee but also as a customer, an ambassador, a connector, a supplier, and a freelancer. Likewise a strong feeling of support to a team or a leader can be expressed in different ways: some employees leave their company but would consider coming back a few years later (the so-called “boomerang employees”); others leave the payroll but come back as freelancers.

Workers seek a sense of purpose that can’t be satisfied by a paycheck alone. They want a company that is committed to their growth and development. (Read this Forbes article titled “How To Increase Employee Loyalty And Retention With 3 Key Strategies”).

Increasingly customer loyalty and employee loyalty tend to merge. It’s harder to distinguish between customer branding and employee branding, as it’s harder to distinguish between workers and consumers. That’s why many startups seek to recruit their best customers. See this Harvard Business Reviewpiece about “the benefits of hiring your best customers”: “superconsumers can exist in your company across all functions. And they’re sure to have great ideas about how to improve your products and business.”

🔑 4 keywords to boost worker loyalty

Culture. Wherever loyalty is down, a weak culture is generally to blame, claims this HRDive pieceStrong cultures are cultures where people can be vulnerable. I was very impressed with Daniel Coyle’s new book, The Culture Code, which I highly recommend reading: as Coyle demonstrates beautifully in his book, vulnerability precedes trust: “Normally, we think about trust and vulnerability the way we think about standing on solid ground and leaping into the unknown: first we build trust, then we leap. But science is showing us that we’ve got it backward. Vulnerability doesn’t come after trust — it precedes it”.

Purpose. Customers and employees both need purpose if they are to remain loyal. Loyalty is no longer a given: you need to earn it! Simon Sinek said, “Everything you do or say must prove your WHY.”

Flexibility. ”Work flexibility, the ability for employees to work remotely or shift their hours, used to be a distinctive perk. Today, it’s increasingly an expectation”(“These 4 Ideas Are Shaping the Future of HR and Hiring”, LinkedIn Report). 9-to-5 constraints are less accepted. So abandon presenteeism! “Workaholism is a contagious disease” say Jason Fried and David Heinemeier Hansson in their new book, It Doesn’t Have to Be Crazy At Work. (summary of the book here).

Development. If you commit to making your worker more employable in the future, you will produce loyalty. It’s easier said than done because more employable workers can go find work elsewhere. But do you want less employable employees who feel stuck at your company? Read this Forbes piece: “Developing Your Employees is the Key to Retention”