The New Loyalty Grasp It. Earn It. Keep it

November 1, 1998
The gold watch -- it used to be the ultimate goal for the American worker. It was bestowed on the most loyal of employees at the end of a long career and was coveted by all. But today’s worker has changed dramatically from the days of the 1950s “organization man.” These days, you’d be hard-pressed to find a worker who’d be loyal to your firm for a decade, let alone a lifetime.

But how has today’s worker changed exactly? What’s the pulse on employee commitment these days? It’s not as bad as you might think. Although there’s been much said about the death of worker loyalty, employees are generally more satisfied with their jobs now than they were only three years ago in 1995 (72 percent are happy now vs. 58 percent then) -- according to Boston-based Towers Perrin’s “1997 Workplace Index” study. Towers Perrin is an international management consulting firm that tracked the attitudes of 3,300 employees in 1995 and 2,500 employees in 1997, who were working in U.S. companies with at least 500 employees.

However, the newest survey on the pulse of employee commitment shows that employee loyalty actually took a slight dip (2.2 points) again between 1997 and 1998, according to the Workforce Commitment Index (TM), a national measure of employee loyalty that’s part of the 1998 America @ Work (SM) study conducted by Aon Consulting Worldwide Inc., an HR consulting firm based in Chicago. Aon’s study included data from 1,800 U.S. workers in organizations of 20 employees or more.

Workers have seen the light.
These types of ups and downs are to be expected. After all, the American workforce -- 131-million strong -- has been through a lot over the past years leaving many employees feeling disenfranchised. “Society in general walks around on a daily basis ever ready to utter the words, ‘Screw you!’” says Carrie Pierce, a former cosmetic company VP who quit her job last year because of extreme disloyalty on her employer’s part. “I was tired of feeling like a prostitute and working with others that felt the same way,” says Pierce. For her, loyalty died when her employer betrayed her.

And while it’s difficult to nail down exactly when the old style of employee commitment died for most American workers (it has been slowly decaying over the past few decades), everyone agrees that the layoffs, rightsizings, reorganizations, mergers and acquisitions of the mid-’90s were the final dagger to the heart of the old employee contract.

Through it all, employers, for the most part, took the attitude that those who were left should just be glad to have jobs. Those workers left warming the seats were, after all, the “chosen” few. Even five years ago, many U.S. managers still saw employees as disposable commodities. They hadn’t yet realized how important those employees were going to be to future business. Now those same managers are being forced to admit they were wrong. In the Information Age, employees have become companies’ biggest assets, and perhaps the only sustainable source of competitive advantage to push corporate and employment growth -- growth that is picking up steam.

Although the layoffs haven’t stopped completely, job creation is far outpacing jobs eliminated. “Companies announced plans to cut 332,665 jobs during the first eight months of this year,” says John Challenger, executive vice president of Challenger, Gray and Christmas, an international outplacement firm based in Chicago. But more than 1.5 million new jobs were created in the same period, according to the U.S. Labor Department.

“Only three years ago, people were still coming out of the trauma of the layoff era,” says Stephen M. Bookbinder, a principal with Towers Perrin and author of both his firm’s employee commitment studies. “Remember, the height of the layoffs came in ’92 and ’93 -- and in ’95 there were still a lot of residual effects.” Most workers have now gotten used to the reality that there’s no job security.

Because of this, you’d expect workers to be bitter and withdrawn. “But when you look at the data, American workers -- for the most part -- aren’t bitter and they aren’t cynical,” says David L. Stum, president of The Loyalty Institute (TM), an Aon Consulting Worldwide division, based in Ann Arbor, Michigan. “But I’ll tell you what they are -- they’re more aware.” Here’s the psychology behind it: Workers now are aware that companies are going to do what they have to do to succeed and to survive, and they understand that sometimes companies will have to start doing manufacturing in South America, or eliminate three layers of management or close down plants.

Just as companies have taken stock and taken responsibility for doing what’s right for business, employees have also taken a step back and asked: What’s in it for me? “That, to me, isn’t bitterness, it’s a new understanding that the old idea of the paternal company taking care of employees [has died],” explains Stum. Employees have realized they need to take more responsibility for their professional and personal needs, like developing their skills and balancing work with interests outside the office. The whole employee commitment picture is more adult, more honest, more realistic. And employees are coping better than they did in 1995. “There’s been a dramatic increase in people’s ability to handle the stress and pressures of their jobs,” Bookbinder adds.

Reality has hit, and people are dealing with it. They have a lot of energy for their jobs, but they want more in return. They’re committed -- but they’re offering a different kind of commitment: High-impact performance for rewards that are meaningful to them (what they want rather than what their company thinks they need).

Stay longer -- but with a different mindset.
There’s a popular perception that all this change in the employment contract has made workers more prone to job hopping. In fact, a new 1998 study, “Have Jobs Become Less Stable in the 1990s?: Evidence From Employer Data” by Watson Wyatt Worldwide, a management consulting firm based in Bethesda, Maryland, shows that the average job tenure of American workers at medium and large companies is 13.1 years. In the early 1990s, average tenure was 12.3 years. Watson Wyatt’s team examined the employment records of 1.1 million workers at 59 companies and determined that people are staying for longer periods these days, not shorter. And the highest average tenure (14.6 years) was at the nation’s largest firms -- those with more than 80,000 employees. “The rush of newspaper stories about downsizing and layoffs gives the impression that there’s less job stability than ever,” says study author, Sylvester Shieber, vice president and director of research at Watson Wyatt. “This anecdotal evidence simply isn’t borne out by our research.”

And, interestingly enough, HR pros aren’t the only ones who get employee turnover headaches. According to the first-ever “Shell Poll,” a quarterly opinion poll of 1,123 Americans sponsored by Shell Oil Co. and conducted by Peter D. Hart Research Associates based in Washington, D.C., most categories of workers share concerns about high turnover rates -- 72 percent say they prefer the security of long-term employment with one company.

Employees are realizing the grass isn’t always greener on the other side. But that doesn’t mean they’ll stay no matter what. The opportunity for employers and HR managers is that by embracing the concepts of the new deal, you have a good shot at keeping people engaged and employed.

Customization is the new employment deal.
Employees have gotten smarter, tougher, more aware, but they still aren’t ready to jump ship at the slightest provocation. They know companies need them more than ever, especially with the U.S. unemployment rate punching in at record lows -- 4.5 percent at press time. It’s a seller’s market, putting employees at an advantage, while companies need to have more confidence in their workforce than ever, putting them, ostensibly, at a disadvantage. The tables have been turned. “In this tight job market, loyalty has taken a back seat as people are more opportunistic,” says Gary Beisaw, director of ShopLink Inc., a personal services company (home food delivery) based in Westwood, Massachusetts.

Here’s the new deal: Employees won’t be checking into Corporate America Inc. for long periods of time anymore, so you’ll need to look at employee loyalty in a different way. Define it by performance rather than time, and seek to enhance that performance in ways that are most meaningful to workers for as long as they decide to stay.

Here’s the interesting twist for HR professionals: While employee commitment studies generalize what employees want under the new deal, the companies that will be successful are ones that can figure out how to align their business goals with each worker’s goals. “The analogy for companies is that mass marketing isn’t necessarily working anymore. Everyone’s looking for customized solutions these days. Why would employees be any different?” asks Barbara Madden, vice president of North American sales in the San Francisco office of Blessing White, a firm specializing in individual and organizational consulting. If managers are going to get the most out of employees, they need to look at individuals separately, which demands a higher level of communication. “Don’t assume that what works for one employee will work for another,” adds Madden whose specialty is employee development. “Although some managers might think it’s time-consuming, the small amount of time you can invest with an employee to better understand his or her talents and aspirations will pay back tenfold. Entering into a sincere conversation will lead to a better understanding of what the individual’s self-interest is, and how the organization might begin to satisfy that.”

Take the term “one size fits all” out of your vocabulary. You thought you had to customize solutions for customers? Get ready to customize an employment deal with every employee. You no longer can see the workforce as an army in which you treat everyone the same. You’ll have to learn how to balance fairness for all with recognizing individual contributions. You thought you were already walking a tightrope? This one’s even trickier.

Fortunately, experts see solid areas in which human resources professionals can have an impact on improving relationships between employees and employers. Employees want improvements in the areas of total rewards, including benefits and compensation; leadership and cultural change issues; employee selection, training and development; and work/life balance. They’ve already been big issues for HR, but having an employee view of it adds fuel to the fire.

Whether the employee commitment fire burns bright or fizzles out may have a lot to do with what you make of it. Says Art Sharkey, director of HR for Shipley Corp., a chemical manufacturing company in Marlboro, Massachusetts: “The effort starts with human resources. Think: I’m an employee, how do I want the company to treat me?” Perhaps the new employment deal can be summarized by employees as: “Treat me right, and I’ll treat you right. Treat me wrong, and I’ll leave you faster than you can say ‘high turnover.’”

Workforce, November 1998, Vol. 77, No. 11, pp. 34-39.