Friday, October 26, 2007


The last time I asked a couple of American co-passengers whether they were ‘loyal’ to their organisation – as my motto was ‘loyalty until death’ – I was almost thrown out of the BA flight on suspicions of being a fanatic extremist! “Why did you even ask them? Even their personal lives have no loyalty,” shouted my most sceptical hypercritic, my wife, “Just look at their pathetically increasing divorce rates!” But what about their GDP being the highest in the world? Then, does it mean that it’s better to have high employee disloyalty for high corporate growth? “Of course dude, that ensures that the best companies get the best employees over a period of time,” accusing me of belonging to a primitive old-school era, my ‘friend’ since b-school days – and a master job-hopper – chided me, “These days, only terrorists – and jokers – are supposed to be loyal. In this world of high-decibel growth, an employee is supposed to change at least five to ten jobs – and wives – in his lifetime before reaching the CEO position in double time! Got it dude?” Frankly, I didn’t! And this is why...

Richard Branson famously said, “Loyal employees create loyal customers, who in turn create happy shareholders!” In one top class research on 750,000 employees, the benchmark annual 2006 Sirota Consulting’s Enthusiastic Employee report (Wharton School Publishing) reveals how, in 2005, firms that had “higher than 70% average employee satisfaction” showed shareholder value increases that were more than the industry average by a colossal 240%. Does it mean then that excellent corporations, to have high employee satisfaction, don’t kick out people? Not at all! The ever referred to research, The New Workforce Reality, a collaborative study by the Simmons School of Management, showed how a stupendous 80 to 90% of employees in organisations globally considered four factors – “rewarding of good performance,” “the organisation treating everyone fairly,” “opportunities for promotion,” and “learning opportunities” – as being the most important factors defining their “Ideal Job”. Astoundingly, ‘job security’ did not even find a mention in the massive study! It’s quite clear that loyal employees are not ‘loyal’ because of financial compensation (“Employee turnover actually increases loyalty... Money isn’t the only thing!” Forbes 2005 report). Out of those 100 making up Fortune’s 2007 list of companies giving ‘Best Compensation’, only 4 find their names in the top fifty of Fortune’s 2007 ‘Best Companies To Work For’ list, (which is headed by Google, that, amusingly, does not even figure anywhere in Fortune’s top 100 compensation list). “Employee loyalty is extremely critical to an organisation’s success,” proved the top-of-the-line Economist Intelligence Unit and Deloitte report (Employee Commitment, The First Link...). And US firms surely have bought the concept! The Walker Loyalty Report, the totem pole of all HR research globally, shows how in US companies, the number of ‘Loyal’ employees has increased to a whopping 40% in 2005 from the 28% it was in 2001. Consider this – an unbelievable figure of 75% employees now comprehensively say they are “satisfied with their job!” If that doesn’t astonish you, digest this – 81% of loyal employees said they’ve stopped looking for newer jobs, and 95% of the same said they would necessarily recommend their company to others as a good place to work! Fortune’s 2007 research also showed that a super 85% of respondents confirmed how “loyalty is alive & kicking!”

And for those lightbrains who thought the case with CEOs was any different, dirt is the best dish I can offer them, apart from this amazing finding by Forbes – a mind numbing 81% CEOs of America’s top 100 corporations have never changed their jobs (or have changed at best only one) throughout their lives! A monumentally similar 75% CEOs of leading non-US corporations have spent more than 35 years or more with the same company they lead. The solid Booz Allen Hamilton 2007 report (The Era of the Inclusive Leader) shows how, globally, the average CEO tenure now is the highest in all the years of their study (and for North America, the CEO tenures are the highest among all continents). Take that for loyalty again! And for my wife, I have this sweet piece of information. The US Census Bureau shows how US divorce rates have dramatically fallen since 1972 to reach the lowest ever now – 3.8 divorces per 1000 (a smashing 30% fall since the ‘70s) – as per the last recorded data. Did all this have any effect on my dawdling b-school ‘friend’? His statement would haunt me for a lifetime, “Dude, does it mean I now only have a 0.0038 chance of having more than one wife in a lifetime?!?? That’s too depressing pal...” Well, umm, er... no comments ‘pal’, not this time :-)


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