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Employee Loyalty: why being too loyal can slow your success

I believe loyalty to a corporation as an employee is irrational - here’s why.

Corporations exist solely to maximize shareholder value. Any belief that they’re “for” anything else is really just self-delusion. As an employee, you’re being compensated a fair market rate for providing a service; nothing more, nothing less.

What that does not mean is that corporations are “evil” as many would have you believe. It just means that they’re motivated by very simple and selfish values. Aren’t we all?

It’s true that many corporations have values like providing special perks to each employee or reaching out to the community, but these activities, too, can be seen in the context of increasing the bottom line.

Put another way, most people just want their mutual funds to perform well. They’re not particularly concerned with how the CEOs got a 20% return as long as it was ethical and legal.

If cutting staff is necessary, then so be it. Layoffs are an accepted way to cut costs and reduce capacity. Just look at what’s happening in the financial and automotive industries today, or what happened during the dot-com bust of 2001.

So what does all of this mean for you, the employee?

It means that you can predict the behavior of your employer based on simple financial rules. Moreover, you can use those predictions to maximize your own profit (salary) and minimize your risk (joblessness).

Employee Loyalty Rule #1: your job can cut your job at a moment’s notice if the right business conditions arise

Since cutting you out of the picture is always an option for your employer, cutting your employer out of the picture should always be an option for you.

Always have all options on the table. Your CEO does. You should too.

If another offer comes along, or an opportunity for a consulting gig, or even just a discussion, consider it. It doesn’t have to lead to anything. It’s just an option.

You should never feel guilty about this sort of behavior. A good employer will even encourage you to do the best thing for you; they don’t want to take responsibility for your personal success, nor should they.

I have had the pleasure of working for people who have always reminded me to do what was best for me in the long run. If that meant going to work somewhere else, they respected that.

Employee Loyalty Rule #2: corporations will pay a high price for the specific talent that they need to maximize shareholder value

Just as your employer won’t feel too badly if he stops paying your salary altogether, he also won’t hesitate to pay you a lot more if the right business conditions arise.

If you have talent that is in-demand, your salary is not limited by what your employer feels like offering you. Your salary is limited only by the scarcity of people like you.

Imagine an oil company that needs extremely talented and experienced project managers to deploy a major new drilling site in the Alberta oil sands. Imagine also that such PMs are very rare in that area - or already employed elsewhere.

While a typical project manager might make $100K, it would not be unreasonable for the oil company we’re imagining to pay twice that. If the drilling site is an important part of the company’s growth plan, they’ll pay whatever price it takes.

Employee Loyalty Rule #3: corporations will pay the lowest price possible for talent unless they’re forced to pay more

People often have to switch jobs before they are properly compensated for their work. Many times, it’s not until you hand in your resignation letter that your current employer will offer you a higher salary in an attempt to keep you.

You shouldn’t feel cheated by this behavior; it’s predictable and it’s rational. It would be nice if the employer recognized your value before you were driven to resignation — and many do just that with formal HR-style salary reviews — but many will not. And that’s OK.

My belief is that you should always have a price. Even electrons that orbit close to the nucleus of an atom can be pulled away with enough force.

If you are making $100K and you’re really satisfied with your job, your price might be $250K. If someone came along with an offer that high, you would be forced to consider leaving. But if the offer were only $150K, you might consider staying at your current job for other non-salary reasons.

This isn’t to suggest that you should be jumping from one job to the next. But the reason isn’t loyalty to a corporation, it’s brand value — your personal brand. You’re selling your services. In the technology industry, many services are best performed over several years. People will judge you and your brand value, and that can impact your success.

As Steve Pavlina says in his You are self employed article, you should always see your career through an entrepreneurial lens.

“The only true boss of your work is you. Any external boss is just a customer of your personal services business. Maybe you’ll do a great deal of business with a single customer, but you’re always free to fire a customer you don’t like. Saying “I quit” to your boss is essentially the same as saying to a customer, “I’m sorry, but apparently our business is unable to serve you. Perhaps I can recommend a competitor who may be better equipped to meet your needs.””

Final word on loyalty - it’s the people that matter

A corporation is an abstract legal entity that is incapable of experiencing something like “loyalty.” That said, the people in a corporation are very much capable of being loyal to one another. And they should.

Be loyal to any single person who has been loyal to you. That person might be working somewhere else one day and they might be a potential friend or just a valuable networking contact.

One or more particular people can also provide reasons to be loyal to a whole corporation. Maybe that person gave you a big career opportunity — don’t embarrass them by giving up early.

Loyalty to people is extremely wise and rational. Loyalty to corporations you don’t own is not.

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2 Responses to “Employee Loyalty: why being too loyal can slow your success”

Kelly Brown
June 13th, 2009 at 4:12 am

The article is usefull for me. I’ll be coming back to your blog.

katie stevens
January 2nd, 2010 at 7:05 am

it’s nice to meet another person who thinks like i do.

i laugh to myself whenever this topic comes up during an interview. i tell them the usual about dedication and inspiration being necessary for loyalty as is respect.

but this is just part of the incredible dragged out process getting part of a job has become.

i think it’s time for applicant and employer to sit down and have an honest exchange as presented here.