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Management Rules That Make No Sense #4: Company Loyalty Only Ever Goes One Way

March 21, 2014

Of all the 16 rules in my list of Management Rules, this is the one most misunderstood. Typically when hearing it for the first time people either nod knowingly, or shake their heads derisively.

Here’s what it means.
Of course, the “one way” is employees being loyal to companies. It’s never the other way around. And here’s the secret sauce: Companies are not loyal because loyalty is an emotion and companies not only can’t, but shouldn’t have emotions.

Let’s deal with the detractors first; people who think “Of course, they are loyal.” These people include my mother. My mother built two mult-million dollar companies. First was a CPA firm that she ran for about 20 years and sold for $1M. While running the CPA firm she also built a financial services firm. She later sold it for around $2.5M.

If anyone knows about business, and successful businesses, it’s my mom. (No, I’m not expecting to inherit anything, but that’s not really the point.)

During the economic downturn of 2008, my mother, like many companies struggled to keep her business afloat while riding out the storm. She was a fairly conservative investor and shielded her clients from much of the economic fallout. However, everyone had less money. And her business dropped off pretty dramatically.

She restructured her personal compensation so that she could put a big pile of money aside to allow her to keep her people employed. This was loyalty, right? Wasn’t she showing loyalty?

I love my mother, but no. She wasn’t being loyal, she was mitigating an economic risk. She had some very highly trained people. She didn’t want to lose them. She knew that eventually the market would come back and she’d need those people.

When you have employees, the state assigns you a percentage of your payroll that you have to pay in unemployment tax. The percentage is variable depending on how likely the state thinks you are to fire people, and thus make them take unemployment benefits. While she ran her CPA firm, my mother always paid the highest percentage. She went through people like water. As a small business it was very important that everyone not only do a good job, but fit in with the rest of the office. Numerous family members, including both my brothers went to work for her. She ended up firing every family member that ever worked for her.

Loyalty? Or rather was that disloyalty? Not from a business standpoint. She was making business decisions. And if you are measuring her success by business metrics, she made the right decisions. Her small business flourished and is still in business today under the stewardship of my brother.

Let me give you one more example. I told the story of Daryl, a sys admin we hired when I was running RESMARK. (You’re Fired. Fireworks in 3, 2, 1) Everyone loved Daryl. I loved Daryl. Unfortunately Daryl wasn’t very good at his job. I was running RESMARK on investment money. I couldn’t afford to keep someone on the payroll who wasn’t doing their job.

It wasn’t a question of loyalty. I would have loved to keep Daryl. But, I had to make a business decision.

The second half of this rule, of course is the danger of letting loyalty to a company keep you from making decisions that are best for you and your family. I had a great engineer who worked for me one time who came to me and asked if I thought he should pursue a position with a company that was trying to recruit. As his manager, I definitely did NOT want him to leave. He was my #1 engineer. However, as his friend, I told him that he should do what was best for him and his family.

Every company I know has done layoffs. Microsoft laid off 5,000 people last year. Novell, here in my neck of the woods did layoffs every year for a while. WordPerfect, a company that I LOVED did layoffs, and they weren’t pretty. Even the LDS Church IT department laid off people last year. (I know, who would expect a church to do layoffs.) In each case, it was a business decision.

So, while your company isn’t going to be loyal, realize that you really don’t want it to be. You want it to make good solid business decisions. In return, remember that you owe yourself and your family your first loyalty.

Rodney M Bliss is an author, columnist and IT Consultant. He lives in Pleasant Grove, UT with his lovely wife and thirteen children.

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  1. The reality is that churches have balance sheets just like businesses, and if the offering doesn’t cover expenses, you have to make cuts. A church I attended years ago shrank in membership to the point where we couldn’t afford to heat and cool our enormous building anymore. We had to sell it – and we’d been on that land since 1839! I’m sure you can imagine the hue and cry over that, but it was either move or fold.

Trackbacks & Pingbacks

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