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How to Revive Corporate Loyalty

By David R. Francis / November 2, 1990



`LOYALTY has been dying in corporate America.'' That's what Lee Wotherspoon, a counselor and career consultant based in Newton, N.H., says.

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Martin Yate, an employment consultant, agrees: ``Loyalty no longer exists because we have beaten it out of them.''

Mr. Yate has written a book essentially about rebuilding employee loyalty, entitled ``Keeping the Best: And Other Thoughts on Building a Super Competitive Workforce,'' (Bob Adams, Holbrook, Mass., $19.95).

Dr. Wotherspoon has just founded a group called UNFAIR, an acronym for United Network For Action Instead of Resentment. The support group includes members who complain of unfair treatment by their present or former company bosses.

One major factor weakening corporate loyalty was the dramatic surge in corporate takeovers, leveraged buyouts, ``downsizings,'' and restructuring during the 1980s. These have led to reductions-in-force, indefinite layoffs, early retirements - various names for the millions of people who lost jobs. Many employees have concluded that if their company has no loyalty to them, they deserve no loyalty in return.

Yate recalls that when he first came to the United States from Britain in 1973 to work in a personnel department, he was told to look for new employees with a ``steady work history.'' Asked what that meant, he was told that the prospects should have worked with their current employer for at least five years. Nowadays, he says, headhunters think three years with an employer is ``steady.''

The number of mergers and acquisitions has declined this year. W. T. Grimm & Co. reports that for the first nine months, the number dropped 12 percent to 1,745 from 1,977 in the same period of 1989. The total value of announced purchases amounted to $91.3 billion, less than half last year's $188.1 billion, according to the Merrill Lynch & Co. unit.

Nonetheless, the widespread shuffling of corporate assets and people during the past decade has added to employee concerns about the risk to their jobs of competition from domestic or foreign businesses.

A survey of 12 large companies in heavy process manufacturing, food processing, transportation, insurance, telecommunications and utilities by Brooks International, a management consulting firm, found most of their workers insecure about the future of their jobs. That uncertainty, the firm notes, makes workers more resistant to change and hinders performance.

Richard Kristensen, the consulting firm's executive vice president, states: ``Employees at all levels (including middle manager) see upper management behaving with an almost exclusively short-term focus. Downsizing to meet the next quarterly earnings target erodes employee confidence that management has made long-term commitments to achieving competitive advantage.''

What should be done about this loyalty decline with its damaging impact on the free enterprise system?

One possibility is to take some of the profit out of the financial manipulation often involved in takeovers and mergers, perhaps by limiting the tax advantages of leveraging up the debts of a company, a technique often used to finance the deals.

At the level of the individual, Wotherspoon, a psychologist, advises those cast aside in corporate shuffles to turn the loss of a job into a blessing in disguise by using severance or early retirement money to finance a career change, try doing what they love for a living, or to start a business on the side. They must get control over their lives, he says.

At the corporate level, Yate has numerous bits of advice for bosses, aimed at retaining a company's best employees and improving the abilities of the vast majority of workers that do want to do a good job. One step is to review performance more often than once a year - at least once a month for average workers, and daily or weekly for the ``walking wounded.'' Give each individual worker a chance to evaluate themselves. Delegate tasks to employees, don't dump chores on them. That means give them space to make mistakes and learn from them. Give employees the feeling of making a contribution and of being important.

Especially, says Yate, don't manipulate employees. It is sensed quickly. Treat employees decently and this will win loyalty.