Loyalty Vs Performance ?

A recent event prompted me to ask this question. What is the nature of the relationship between the firm and the employee - is it of Performance or is it of Loyalty?

Well, I asked this question to my peer groups within the industry. The answers I got were equally polarised with a bias towards loyalty [well the sample size consisted of senior folks doing fairly well]. I wonder what it would be if I extended this question to the entire spectrum of employees.

Will the answer be different at two different time periods, junior vs senior, retained vs fired or at-risk, geography to geography, expanding or contracting economy, etc., etc.? Thinking through this prompted another question, Is Loyalty a fallacy? Or the earlier clamor when professionals saw large-scale retrenchment in the US, that ’Loyalty is dead’?

Let me put forth some scenarios …

1.       You have been in the firm for years. Toiled hard. Sweat. Have done fairly well. You have had 2 bad years in a row. You are asked to move on.

2.       You have been doing extremely well. The firm promotes you. You quit the firm for a better opportunity.

3.       You are doing extremely well. Have been with the firm for years. Toiled hard. Sweat. Turn of events-Economy contracts. Assets have to be sold. The firm decides to exit your business line. You are at-risk and eventually asked to move on.

4.       You have been with the firm for years. You are doing extremely well. The firm decides to exit your business line. You are taken care of and placed in a different department. You do well. You have now received a good offer and you move on.

5.       You have been in the firm for years. Your performance isn’t up to the mark. The firm continues to support you. Other high performers emulate you. The firm goes down in performance. Profit goes down and so do the Taxes paid. Society is hurt.

6.       You have been a star performer. You keep moving up. You find a very good offer where you can create more value. You move on and actually create more value in another firm. Others emulate you in that firm. The other firm does well. Pays higher taxes. Society is benefited.

7.       You get hired from campus. The firm spends a couple of years training you. You have been consuming value so far. You are now in a position to pay back and deliver value. You receive a good offer from a competitor and you move on.

What if in the above scenarios the person who moved on had the opportunity to move-on on earlier occasions but had stayed back [may be at a significantly lower salary]? I can create many more from actual life examples. By the way, all the above are inspired by real life.

Some of them will resonate with you. Maybe the you mentioned is YOU? or your friend ? and the firm could be one known to you, your current firm or your earlier firm?

Does expanding economy and contracting economy produce different results? In growth, tolerance is high, performance coupled with loyalty may fetch you senior roles. In recessionary trends tough choices have to be made to save the firm and managers most likely will vote for consistent performers?

Has globalization had an impact? Has employee mobility had an impact?

Or is it that both are aware that, 1. You are not expected to be here lifelong; 2. The firm may/may not (be able to) keep you lifelong[ job security is dead], but both are maximizing their positions?

Legally both of them signed a contract with an option to resign or terminate with a notice period?

Has the definition of long-term change? Should one have long-term awards?

Are Loyalty and Tenure being seen interchangeably by the Employee? Who is a more loyal – tenured underperformer or recent top performer?

Loyal but discouraged, new but motivated? Who is more preferred? [Research suggests that happy and motivated employees create more value]

Interestingly when I spoke to Headhunters and leading B school professors, they were quite unanimous in their answer, the relationship is of ‘Performance’. If it’s coupled with Loyalty, it's great but fundamentally it's of Performance.

The answer is still a difficult one. So I have to put you in a spot? Here is the voting machine with only two buttons – Press 1 for Performance and Press 2 for Loyalty [ there is no don’t-want-to vote button ]. Initially, I too had pressed button no 2. But having stayed with this problem for some time and debated with me, I finally pressed 1.

Which one will you press?