Employee Loyalty

I was reading a book on the topic of training, and a point the author mentioned in passing bears more consideration than it was given in context: that there is a greater need for training in the contemporary workplace than there had been twenty or thirty years ago because employees are prone to changing jobs more often. As such, a firm is faced with the problem of a constant influx of new employees to train.

I can't argue with the notion that employees change jobs more often - it's plain to see that this occurs, and the notion of "lifelong employment" that was once a given has now become so rare as to seem naive and absurd - but I do take umbrage at how casually the phenomenon is attributed to the employee - as if hopping from one workplace to another is a common practice because employees choose to leave.

This may be the case in some instances, and companies are fond of laying the blame on some external problem and making themselves out to be the victim of circumstances beyond their control. But in truth, they are lying in a bed that they made for themselves.

I have never heard of a single firm that suffered the sudden and unexpected exodus of 10,000 employees who all decided, of their own volition, to leave all at once. Yet there are numerous media reports of incidents in which companies have dismissed that many workers, and more, in a single stroke. In fact, a layoff of only ten thousand would be considered by journalist to be too small to be newsworthy.

And when these same employees bemoan the state of loyalty, it is clearly an act of avoidance - not only avoidance of the blame, but avoidance of the responsibility for dealing with the problems they have brought upon themselves. When the propaganda of denial has become so widespread that textbooks and training materials casually assert that "employees are prone to changing jobs," it rankles.

After dropping this bombshell with the mien of a nonchalant observation, the author goes on to suggest how important it is to train employees, early and well, so that they may be productive for the short time they will choose to remain with a firm. I would agree with this notion, except that it is merely addressing a symptom of a larger problem that cannot be so blithely dismissed.

I am generally not the type to play the "pity the workers" card, and I don't expect that any firm would or should put the welfare of its employees before that of its customers if it intends remain in business for very long - but the short duration of employee tenure creates serious problems for a firm:

Primarily, when a firm dismisses experienced workers, they also dismiss the expertise of those workers. There is a corresponding loss to the quality of product and quality of service that will be reflected in a loss of customers and revenue. It is a simple matter to train a new employee in the basic tasks necessary to perform a function, but the knowledge of the value of that function, how it integrates with the myriad of other activities of a firm, and how to do the job in a way that contributes to quality, are things that are learned only from experience.

When firms lay off their most experienced workers (as they are the most expensive), this damages the quality of work they will get from the remaining workers. There are fewer experienced workers left to mentor the less experienced (hence cheaper) workers who are left behind. Granted, the less experienced worker will gain experience over time, but the trial-and-error process is a serious setback for the firm.

And even for the experienced workers who are retained by virtue of the value of their knowledge, there is less incentive for them to effectively mentor their junior workers. Given that their expertise saved them from the last layoff, their hope is that it will save them from the next. And in this way, to share knowledge is to make oneself more disposable.

The effects of morale cannot be underestimated: as the remaining workers consider the impact of layoffs, and consider that their own future with the firm is uncertain, they become less vested in pursuing the firm's long-term interests. Their own tenure being short-term, the long-term welfare of the firm has no impact on their own.

The damage to the firm's public relations is a secondary effect. Aside of the sympathy customers, who are themselves employees of other firms, feel toward the employees who are unceremoniously dumped, there is the negative word-of-mouth spread by the terminated employees that impacts the customers' perception of the firm even further, and damages its reputation as an employer, making it difficult for the firm to appeal to quality candidates.

I expect I could list additional outcomes of mass layoffs that are detrimental to a firm, but these are likely among the most damaging, and the lesson is generally learned only in arrears. I don't expect there are many firms that consider the effects of treating employees as disposable assets, and when they find they have shot themselves in the foot, it's evident their first response is to deny responsibility - to bemoan the state of employee loyalty, and conveniently ignore that they have poisoned the very notion of loyalty to their own firm.

As such, they seek more effective ways to deal with the problem - to be more effective in recruiting and training new employees. This is entirely practical, as crying over spilt milk is perhaps the third most pointless and idiotic thing. The first is spilling it to begin with, and the second is failing to consider how to avoid spilling it a second time.

I have a sense that the same principles can be applied to the relationship between firms and customers - as "customer loyalty" is much bemoaned and there is a similar emphasis on acquiring "new" customers to replace the ones that are being lost "to the competition" - but I've rattled on enough for one post and can consider that topic separately, at a later time.