Rule 14: Value Loyalty, but do Not Depend on It


Rule 14: Value Loyalty, but do Not Depend on It

Overview

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SNAPSHOT

Do you require loyalty to you and your company or organization?

Very much so: 30 percent

Not essential: 70 percent

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The typical American college student who graduates in the year 2003 will have twelve to fifteen jobs in his or her forty-five years in the workforce. This simple fact about the employment world today dictates that you cannot expect long-term loyalty from your employees.

Thirty years ago, it was quite common for employees to spend their entire careers at one organization. The reason was simple: loyalty was a two-way street back then. Companies had a policy of "employment for life," according to Mike Sears of Boeing. Your company would virtually guarantee you a job, so the company, in turn, expected you to stay with the company until retirement. No more. With the new corporate environment—global, fast-paced, and cutthroat—companies must always consider downsizing, outsourcing, mergers, and layoffs to keep their competitive edge—all of which means that your company can no longer guarantee you a job. Now, according to Sears, the best and most conscientious companies guarantee only "employability for life"—meaning that you will learn skills that you can transfer to other companies or industries if your own company cannot keep you. That shift in emphasis from "employment for life" to "employability for life" changes the dynamics of professional loyalty significantly.



Loyalty with a Little "L"

Since companies have downsized their loyalty to their employees, managers must also downsize the loyalty that they expect from their employees. The "Big L" loyalty demanded from employees of the past was an undying, patriotic, and almost spiritual commitment to the company for a lifetime. Those days are gone. Rather, in return for the new, limited promise of employability, you have the right to expect employees to remain loyal only with a little "L."

Loyalty with a little "L" means little more than a commitment to put the company's interest first while you work there. Invincible executives, therefore, expect their employees to refrain from such activities as insider trading, antitrust or anticompetitive actions, bribery and kickbacks, pirating software, harassment and discrimination, and other illegal or unethical acts showing that personal interests or the interests of others are more important than those of the company. Successful executives also have a right to expect that employees do not do personal activities on company time, do not lie about lateness or sickness, and refrain from other activities that, while not serious legal infractions, cost the company money. The only loyalty that an invincible executive expects from an employee is that the employee do his or her job ethically and well.

But that is the extent of it. Sure, it is wonderful to have employees who wave the company flag at all times, and those employees should be rewarded. But the invincible executive does not expect or require that sort of loyalty from employees to the organization because he or she cannot guarantee a reciprocal level of loyalty by the organization to the employee.



True Believers and Forced Believers

In this context, there are two means by which invincible executives protect the interest of their companies over the interests of individual employees—and these two means are diametrically opposed to one another. They develop "core loyalists" and "contract loyalists."

First, the invincible executive develops a few true believers—core loyalists. Executives who enjoy long-term success always have a personal charisma that inspires loyalty. Unfortunately, there are a limited number of people top executives can get to know well enough to make them true believers. So the most successful professionals focus their efforts to build true loyalty with a few very talented people. Indeed, virtually every top professional I interviewed said that he or she had a handful of long-term confidants whom he or she could trust entirely. They may be older mentors, younger protégés, or trusted contemporaries—and are often a mix of the three. But it is unlikely that in an entire career you will be able to find and cultivate more than five such people, and it is a waste of time to attempt more.

That's when the more Machiavellian side of the invincible executive steps in. Top professionals force loyalty where they cannot earn it. They do it through three mechanisms: (1) employment agreements, (2) confidentiality pacts, and (3) covenants not to sue. This is contract loyalty.

Invincible executives value employment contracts. They get such contracts for themselves, and they require their top talent to sign them as well. An employment agreement defines loyalty as a matter of law, not a matter of organizational patriotism. The agreement specifies the pay, benefits, and severance that the employee gets—that is the company's guaranteed loyalty to the employee. But the agreement also contains clauses that prohibit the employee from working for competitors in specified geographic areas for specified periods of time after he or she leaves—that is the employee's forced loyalty to the company. State laws govern the extent to which you can preclude a former employee from competing with you, but there is a lot of leeway to do so, and invincible executives take maximum advantage of their ability to restrict top talent from competing with them in the future.

Next, invincible executives require all employees at all levels to sign confidentiality agreements at the time they start work. These agreements define the type of information that the company deems to be proprietary, and the agreements preclude employees from disclosing this information outside the company—even after the employee leaves the company. Confidentiality agreements also require employees to promise to not take any company documents or electronic files with them when they depart.

Finally, top executives seek waivers of legal liability from departing employees. The rules on obtaining such waivers are tricky and require legal counsel, but they have become an essential part of doing business successfully these days. So many executives—even very senior ones—are done in by disgruntled former employees that top managers have become very familiar with legal waivers and the necessity of using them at all possible times. Often the company will offer a more attractive severance package in exchange for the departing employee's promise not to initiate any sort of legal action against the company. Some companies also elicit statements that the employee is unaware of any illegal or unethical conduct that occurred at the company while the employee was there. Remember, however, that there is a fine line between getting an honest statement of exoneration and looking like you are paying to sweep problems under the rug, so waivers of this type should be negotiated and drafted by professionals.

The standard for professional loyalty has changed with the times. Most of today's invincible executives neither show pervasive loyalty to their employees, nor do they expect it from them. However, they do require observance of basic integrity and professionalism. Then, they cultivate a small core of true believers. And finally, top professionals use contractual mechanisms to protect their organizations in an era when you can no longer depend upon traditional notions of loyalty to do so.