I grew up in Rochester, NY where Kodak was founded. Rochester is not unlike several small towns across America. There are many towns across our country where one company became the mainstay of the community. Kodak was at one time the pillar of this community, participating in the quality of life of the community, being a voice in local issues and most of all a citizen of the community with a population of about 1.2 million. Today, Kodak is a quarter the size and struggling for existence after filing for bankruptcy and Rochester is a city where one can drive down Main Street only to witness a town which has seen its best days in the review mirror. A town once thriving and a center of technology, is now like many small cities in America, struggling to germinate a growth engine to propel it into the next millennium. However, this is not an essay about Kodak the company or Rochester the city. But one example among many across our country where a breach of loyalty between employer and employee was compromised as the company fell from grace.
The historical inferred relationship built on respect and loyalty between an employer and its employee or leader-follower is disappearing at an alarming rate. In part because we have migrated from a culture of character to a culture of personality which impacts how leaders emerge in corporate America. We have also embraced a new definition of capitalism where leverage, outsourcing and earnings on the margin have emerged. While capitalism dates back to the Constitution, the manifestation of capitalism has dawned a new age. It is not the principles of capitalism per se, it is disconnection from social responsibility in the name of capitalism which is at the heart. It is an omnipresent attitude of what’s in it for me, every man for himself with a loss ideas of the greater good. One may view this hardening as a positive as it makes us tougher or more resilient. I do not agree. The death of loyalty between the company and the employee has social ramifications. With the disappearance of loyalty goes the ability to trust. When a person or society loses trust, society begins to fragment as the only trust is in one’s self. With the orientation to the individual rather than society at large, historical moral character and sense of community dissipates.
In business today one observes a dramatic decrease in loyalty to the company. This statement is confirmed by a MetLife study published in the USA Today stating, “Employee loyalty is at a three-year low, but many employers are precariously unaware of the moral meltdown” (Petrecca, 2011). In 2007, The Walker Loyalty Report for Loyalty in the Workplace stated, “The number of U.S. workers who are not committed to their organization and likely to leave their workplace in the next two years is at an all-time high. These "high-risk" employees comprised 36% of workers, outnumbering those who are truly loyal (34%). Leaving employers in a situation "where the number of employees causing a negative drain on the organization outweighs those who are working to positively support it," (Walker, 2007).
Experts will debate the argument that companies’ economic necessity can no longer afford the loyalty standard of yesterday. Today’s capitalism states enterprises exist to generate an attractive return for their shareholders at all cost. If capital infusion is to be generated, an attractive return must be generated to its investors and shareholders. However, the debate should be what is the social cost to this new social paradigm? Having been in business for three decades in executive positions, I have witnessed the pain analysts can employ if the company misses “their” forecast by a penny, so I get it. Getting it is one thing, understanding the impact, is another. Some companies do as Sheikh points out, “Companies like Southwest Airlines, Toyota and Cisco, which are building profits by taking care of workers, have come to understand that employees’ commitment must be well integrated in its human resource policies and overall business strategies. Employee loyalty is as powerful as customer loyalty since enterprises entrust clients to employees and it is essential to combine, integrate and interpret information about employees to have a clear understanding of the need and expectations of employees. The relationship between employer and employee should be based on mutual respect and understanding, treating employees fairly and equally, no matter what their position may be” (Sheikh, 2007).
The loss of debatably one of the most powerful competitive advantage business, and the U.S., possesses is, and will continue, to have its impact within a larger context. In a statement regarding the employee relationship in terms of intellectual property, Sheikh of WIPO (World Intellectual Property Organization), “When working in an enterprise there is always a “psychological contract” between the employer and the employee. Different from a formal legal contract, it is a set of expectations that both employees and employers have relative to each other’s contributions to the enterprise and incentives they will receive for their contribution. Expectations learned and understood while working in the company” (Sheikh, 2007). Loyalty is that invisible bond, the strong feeling of support or allegiance to a greater good which comes from the psychological contract.
Throughout history, there is a long road of examples where Americans have excelled in the face adversity. Why? Because of the invisible force which energizes individuals to a higher performance. The commitment of employees to the organization can be an invisible force and can deliver unbelievable results. However, when employees develop a mindset of what’s in it for me only, a company will eliminate a force which is immeasurable. People are your brand; they are the glue; they are the force to propel an organization, especially during challenging times. It is easy to lead when all is well. Imagine what would have happened if George Washington upon returning to Trenton found an empty camp? Yes, they were conscripted soldiers, but I would debate without the loyalty to their General and the cause of the war, the camp would have been empty. Who would have chased them? This is a military example, but I would suggest loyalty transcends organizational structures. Wake up America, the pay for work concept may work economically, but if we are going to remain truly competitive, we must regain our invisible competitive edge. We must re-engage our employee’s loyalty if we are to be truly competitive in the continued emergent global economy.
References
Petrecca, Laura (2011) Employee loyalty is at a three-year low. USA Today Newspaper. Retrieved April, 29, 2011 from http://www.usatoday.com/...
Sheikh, Talhiya, (2007) Trade Secrets and Employee Loyalty, SME’s Division WIPO, Retrieved
February 29, 2012 from http://www.wipo.int/...
The Walker Loyalty Report for Loyalty in the Workplace. Indianapolis, Indiana. Walker Information Incorporated. 2007. Retrieved from http://www.walkerinfo.com/... April 29, 2011