The State of Employer-Employee Loyalty

The social contract between employer and employee has changed dramatically in recent years. Loyalty has been the loser. Employee loyalty and retention – it’s not what you think!

Business and the public sector are into a phase of creative disassembly where reinvention and adjustments are constant. Hundreds of thousands of jobs are being shed by United Technologies, GE, Chevron, Sam’s Club, Wells Fargo Bank, HP, Starbucks etc. and the state, counties and cities.

Even solid world class institutions like the University of California Berkeley under the leadership of Chancellor Birgeneau & Provost Breslauer are firing staff, faculty and part-time lecturers. Yet many employees, professionals and faculty cling to old assumptions about one of the most critical relationship of all: the implied, unwritten contract between employer and employee.

Until recently, loyalty was the cornerstone of that relationship. Employers promised job security and a steady progress up the hierarchy in return for employees fitting in, performing in prescribed ways and sticking around. Longevity was a sign of employeer-employee relations; turnover was a sign of dysfunction. None of these assumptions apply today. Organizations can no longer guarantee employment and lifetime careers, even if they want to.

Organizations that paralyzed themselves with an attachment to ‘success brings success‘ rather than ‘success brings failure‘ are now forced to break the implied contract with employees – a contract nurtured by management that the future can be controlled. Jettisoned employees are finding that the hard won knowledge, skills and capabilities earned while being loyal are no longer valuable in the employment market place.

What kind of a contract can employers and employees make with each other? As pointed out ono eeoc.gov the central idea is both simple and powerful: the job or position is a shared situation. Employers and employees face market and financial conditions together, and the longevity of the partnership depends on how well the for-profit or not-for-profit continues to meet the needs of customers and constituencies.

Neither employer nor employee has a future obligation to the other. Organizations train people. Employees develop the kind of security they really need – skills, knowledge and capabilities that enhance future employability. The partnership can be dissolved without either party considering the other a traitor. See this article for more.

The new social contract between employer and employee that Moravec describes is based on trust with a heavy dose of reality. Employer and employee must be able to trust that each is making the best decisions given actual market and financial conditions. Although, as Moravec says, they don’t have a “future obligation” to each other, they do have an immediate implied obligation to do the best they can for the organization under the circumstances.

Employees should do what they can to help their organizations be successful and employers should help employees develop the competencies they need now and in the future, even if that will be with a different organization. This is also true for temporary employees who have become the norm, not the exception. To get the most from these workers, an employer must create mutual trust quickly and sustain it until the temporary employee leaves.