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May 12, 2003

The Death of Loyalty?

Not quite two years ago, I was contracting at a company that had a lot of potential but that was going under rapidly. Although just a startup, the company had a good product and even some solid customers--big names that anyone would recognize. So what was the problem? Why, with millions of dollars of venture capital being poured into the company, were they experiencing massive layoffs, and why was the company dead within the year?

My Credentials

Before I begin talking about this subject, allow me to present my credentials. My first post-graduate degree was a master's in library science. While that may not mean a lot to most of you, essentially it is a kind of specialized MBA (master's in business administration; in other words, a degree in the course of which you learn all about how to run a business).

Not everyone you see working in a library is a librarian, any more than everyone you see working at a company is a high-level manager, director, or CEO. The librarian is the one in charge who has the skills and knowledge to run the place; the others are library staff or even volunteers doing their best to make available to you one of the great American inventions: free books. But I digress.

When earning a degree in library science, one studies business models, finances and budgeting, staffing, and every other aspect of running a business. In this case, the business is a library, but most of the principles apply to any business.

In addition to earning this degree (and working as a librarian for a few happy years), I also have maintained a lively interest in management practices my entire life, and have read a great deal on the subject. Some of the better books to read are listed at the end of this article. Without going into details, I have learned much that applies to any business practice and model, and have seen companies thrive when they practice those principles, and die when they violate them. And one of the basic, essential principles that is repeated over and over again in the better business management books is that excellence is a worthwhile goal, and as part of striving for that goal, people are to be honored and respected.

The Proponents of the Death of Loyalty

While contracting at the company I mentioned at the start of this article, I had the opportunity to speak with one of the higher-level managers. I am not sure how we got on the subject, but he spoke proudly of how he was the co-author of an article that he felt explained the "new direction" that companies had to go in order to be competitive. I don't recall the title of his article exactly, but its theme was that loyalty was dead. There is no obligation, he said, between companies and their employees; it is just a business relationship, and either may end that relationship at any time without justification.

In fact, he continued, people weren't even needed for the long term, and could just be brought in to do the work needed and then laid off again when the work was no longer there. I think he called this "just in time" employment. He used as an example the documentation team. There was no need, he said, to have someone on hand at all times working on the product manuals; instead, just bring in writers a few weeks before the product was to ship to have them write or update the manuals.

Although I listened politely to his explanations, in part because I wanted to understand his point of view, after hearing him out, I was not convinced. In fact, his attitude and beliefs, apparently shared by others in high-up management at the company, coupled with the fact that the company was dying and no one could figure out why (I could have told them), proved the counterpoint I made to him about how loyalty is the engine that drives good commerce. Not that I convinced him, any more than he convinced me. But let's take a look at some of his core assumptions, starting with the phrase "just a business relationship."

"Just" a Business Relationship? So What, After All, is a Business Relationship?

Yes, the relationship between a company and an employee or contractor certainly is a business relationship, consisting essentially of these terms: The employee agrees to perform tasks for the company, and the company agrees to compensate the employee for it, not just through a paycheck, but also, generally, through benefits as well, such as health insurance, savings plans, stock plans, social security taxes, and other things of value.

But to assume then that the "business relationship" means no loyalty, no affinity, the treatment of workers as interchangeable parts instead of as people with valuable skills and knowledge that you just can't hire off the streets, is to make a large assumption indeed. There are certain intangibles that make the difference between a company that lasts and a company that dies, and I (and many more stellar business managers than I) would firmly set loyalty and an attitude of respect toward the employee as two of those intangibles. Each of us is unique, with unique strengths and skills. People are not interchangeable, neither at the bottom or the top or anywhere in between. The knowledge that people develop of a company's products is in a large part what drives innovation and constant improvement, ultimately resulting in better products and happier customers. And if you are selling anything at all, happy customers are the bottom line.

Without customers, your company is going to die. I guarantee it.

For that matter, going beyond the vertical relationship between empoyees and company, let's address the idea of a business relationship between two companies. How can you have any kind of relationship without loyalty, trust, and respect? Did that manager's idea of "just" a business relationship mean that he felt he could end any "business relationship" agreement he had on just a word? Apparently so.

But let us return to the vertical relationship.

How to Kill a Company

There are many ways to lose customers, but the most certain one is to produce a bad product and/or to have lousy customer service. And the most certain way to produce a bad product or have bad customer service is to treat your employees badly, so that you either have high turnover or you can only keep people who can't be hired anywhere else (with, if you are lucky, the occasional brilliant person who has no confidence in their skill). So even if you don't have the heart or soul to treat your employees right, then looking coldly at the bottom line should convince you that it is the right thing to do as part of a successful business model.

At a deeper, more spiritual level, those of us who believe that our attitudes and values influence everything we do will also understand how a lack of loyalty on the part of a company toward its employees (and, by logical extension, its customers) is going to be reflected by a lack of loyalty on the part of both its workers and its customers.

It may sound old-fashioned to speak of customer loyalty, but how else are you going to describe a customer returning to buy from your company again instead of buying a similar product elsewhere? That loyalty is made up of satisfaction with the product and, very importantly, satisfaction with a company. Many people refuse to deal with a company with a good product because of how the company treats them as customers.

Workers Owe Loyalty Too

Likewise, the loyalty of the worker is important. In return for the company treating them loyally and well, workers owe the company something as well. Their part of the bargain, that of performing the desired tasks, also includes the intangibles of a drive for quality, of not settling for adequate or mediocre, but instead always striving to make the product better. It also means behaving with professionalism, not allowing one's emotions or personal feelings to get in the way of creating good working relationships, and of behaving ethically and with respect toward the company, its property, and its other employees, even when the business relationship ends. That means that if a person is laid off, for whatever reason, no matter how angry he or she may feel about it, there is no justification in the world for lashing out at the company or for damaging the company or its property in any way. It also means managing your work and documenting what you do so that should you have to leave suddenly, it is easier for someone else to step into your shoes.

This isn't about making yourself dispensable; it is instead about making yourself valuable without making yourself irreplaceable. People have long memories, and the mess you leave behind, thinking you'll never need to deal with it again, may come back to haunt you.

I have worked side-by-side with some people whom I later hired, when I was in the position to do so, because I truly appreciated their work ethics and skills. I have also had people working for me who later were in a position to hire me, and they did. I have also worked for people who hired me who I would never hire in a million years, were I in the position to. I have even been in the position to see what were almost certainly acts of sabotage by disgruntled departing employees--not provable beyond a doubt, but based on the evidence, I am as certain of it as if I had witnessed the crime--and I would never hire those people were I in the position to. And I just might be.

Of course, there are the times when a person is treated well by a company but does not reciprocate, or vice versa. In those cases, one might assume that the business relationship is over because the agreement has not been kept. That still means that ending the relationship must be done professionally and with respect, no matter how badly the other party has behaved. After all, you have to look at yourself in the mirror every day--and you certainly want to be able to look yourself in the eye! Following ethical business practices is one good way to do so.

Recommended Reading

The first books I want to mention are by Harvey MacKay. His books have been steadily popular since the 1980s. Their popularity is due in part to the fact that they consist of short, pithy essays that make a point in few words, and don't rely on dry, technical, high-flown business language to do so. Unfortunately, their strength is also a weakness, as many people might overlook the deep wisdom embedded in these books because of how easy it is to read them. But I can guarantee that if you understand and apply the principles he espouses, you will do well in every aspect of your life.

The next author is one you may have heard of as well. Tom Peters is famous for his book, In Search of Excellence: Lessons from America's Best-Run Companies, but has some other good books out as well. Definitely an extrovert, nonetheless he offers ideas that even we less outward people can use and enjoy.

The third "author" is none other than the Harvard Business School. Take special note of the title and theme: loyalty is not dead.

I've only read this one book by the following author, but what a book it is! One principle alone from this book has stood me in good stead in both business and personal relationships, and that is that if someone takes the time to communicate with you (via letter or voice), even if they are unhappy or complaining, underneath, they are communicating a desire to find a solution so they can continue the relationship. In business, what this means is if a customer is unhappy and writes to you about it, that is an opportunity to retain that customer by making things right for them. If you assume you have already lost that customer and just blow them off, you have lost a golden opportunity. In personal life, if someone takes the trouble to complain to you, that's a good sign! It means the relationship is not lost. Yet. It may sound odd that this comes from a business management book, but the fact is that good people skills don't stop at home or work.

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Posted by Marina at 10:56 AM | | Comments (0)