Employee Loyalty’s Been Downsized
Come fall, AT&T; will launch an experiment allowing employees to roam like nomads from project to project, unaffiliated with old-style departments.
Texas Instruments shortly will offer a second kind of pension plan--one more easily transferred to a new job and more rewarding for employees who quit the company after just a few years.
The aim of the changes? To keep good workers. If that sounds confusing, it often is.
Like suitors who once spurned a lover and are worried about losing another, employers are struggling with how to retain talented employees--and keep them committed--at a time when many bonds of loyalty between them have weakened.
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Downsizings, restructurings and vast changes in the way we work have demoralized employees and left them distrustful. Workers have been told--either indirectly or straight out--that they are free agents, responsible for their own careers.
Now, with jobs plentiful, more workers are taking employers at their word and quitting, leaving companies scrambling to rekindle the loyalty that only a few years ago many eschewed.
“We were focusing on the wrong things,” said Patricia Nazemetz, director of human resource policies at Xerox. “Employees have asked or expected us to back off” focusing on “the concept of . . . no-guarantees.”
Xerox, one of the first companies to realize that making workers feel disposable can cripple a business, now gives bonuses to lower-level workers, makes benefits more flexible and gives workers more of a say in their jobs to help persuade them to stay.
Other companies are shelling out bonuses and raises, making work more flexible--and bending over backward sometimes to such an extent that they seem to promote leaving.
“We struggled with whether the new pension plan won’t create more ambiguity and uncertainty in the work force,” admits Brian Gelles, director of compensation at Texas Instruments. Ultimately, the company decided that other new benefits, including a simpler profit-sharing plan, would outweigh the pension plan’s mixed message.
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Such head-scratching shows how thorny the issue of loyalty can be. It drives to the heart of what a company should be for its workers and what employees should do for their company.
Once, loyalty meant “sticking around for as long as the company would have you and doing whatever they want,” says Faith Wohl, a work-family specialist who works for Vice President Al Gore. “That just doesn’t seem appropriate in the 1990s.”
The old kind of loyalty has been swept away amid a flood of changes, from outsourcing to downsizing, that left companies trim and agile but employees anxious.
“I’m hoping for another 10 years with my company, but you never know,” sighs Kim Ebling, a customer service representative with a Buffalo, N.Y. insurance agency. “With any employer, there’s no security, no matter where you go.”
Workers today mostly are satisfied with their jobs, but don’t trust management, studies show. A recent survey of 2,500 workers by Towers Perrin reported that 60% of workers wouldn’t recommend their companies to a close friend.
The Bureau of National Affairs, a Washington-based research and publishing firm, has been struggling with commitment since computerization led to an influx of young hires a few years ago.
When Chief Executive Paul Wojcik gives his customary talk on two-way loyalty to new hires, he notices young people rolling their eyes. Median length of service is slipping, from eight years in 1989 to seven years in 1996.
Even workers who are happy have a different mind-set than their parents had. “I came into the work force very cynical,” says spokeswoman Karen James Cody, who’s worked for the company three years. “I’ve had a free-agent mentality since I’ve started work. Loyalty is a double-edged sword.”
How to foster commitment--that willingness to go the extra mile--in workers who think like that? “Pay,” Wojcik says with a grin, adding that the company’s employee-ownership plan helps. “It’s almost like a golden handcuff,” he says.
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Other companies are also trying to sweeten workers’ pots. Companies are giving more bonuses to lower-level employees, starting programs to sell shares of stock at discount or frozen prices and handing out slices of company profits. Nearly 40% of companies offer bonuses to blue-collar workers, up from 34% the year before, according to Buck Consultants.
Some worry that such efforts boil down to buying loyalty. Just giving stock options and bonuses “is a little bit like creating mercenaries,” says Fran Rodgers, head of WFD, a Boston-based work-life consulting group that’s broadening its work to focus mainly on commitment.
Texas Instruments and the Bureau of National Affairs realize money isn’t everything: Both won a place on Working Mother magazine’s 1997 list of top 100 companies to work for. Elsewhere, efforts to give workers a better balance between work and home and more flexibility on the job are also getting a boost from worries about loyalty.
AT&T;, which made headlines with recent layoffs and restructurings, is trying to win over workers with a new kind of flexibility: setting them free within the company. Under its Workforce 21 experiment, employees will be affiliated only with “knowledge centers” that dispatch them from project to project.
“It’s intended to keep skills and competencies inside the business,” says Mary Anne Walk, vice president of labor relations.
Most agree that old ideas of loyalty are gone. Yet striking a balance between commitment and agility is frightening, both to employers and employees. That’s why many employers aren’t sure what to do or say.
“Promises of job security sound hollow . . . if you’ve just seen 30% of your colleagues out on the street,” says Harold Salzman, director of research at Jobs for the Future, a Boston-based nonprofit.
