Column by Dr YRK Reddy - HRD Newsletter

LOYALTY IS DEAD, LONG LIVE LOYALTY!

"Rajah bola raat hi raat hai
Mantri bola raat hi raat hai
Court bola raat hi raat hai
Yeh subah subah ki baat hai…."

(By a prisoner in Tihar Jail, as read out to the press by Arundhati Roy, 7th March 2002)

If the minister differed with the King, would he be considered loyal? Whose affirmation is important to be declared loyal - the King, the family, ones own conscience, the calling one belongs to?

If the King demands blind obedience and laces it with sufficient threat, he can be Nero whose fiddling cannot be disturbed. His nudeness will be described as new clothes and stupidity as lateral thinking. If the minister is also able to fill his coffers in the crazy kingdom, the contract is triply sealed - with Kings expectation, fear, and greed. We had experienced the committed bureaucracy and judiciary during the days of "controlled democracy", when bosses were never wrong, trains ran on time and trade unions became lamb, even if public cried foul and a few people had to unwittingly undergo nasbandi.

In the corporation too, loyalty, which often gets mirrored in the "performance ratings", may be defined and managed in two main ways. I call these two constructs, the conventional and the emerging, as Type A (the archaic) and Type B (the benign).

Type A, the archaic believes in "tightly run ship", where managers expect blind loyalty from the employee. The nature of this loyalty is mostly personal though it often is camouflaged in a language to suggest that whatever is good for the boss, is good for the "company". Such an employee often will not be a member of the union or if he is, he will keep the boss "informed" loyally while staying away from the activists.

The employee will not flinch from lying a wee bit or covering up for the sake of the boss - in the expectation of a reward or to fend off a potential threat of transfer and a poor appraisal. In the worst of the cases, he may help filch through complicity and yet explain away as some form of loyalty.

Often, such loyal employees will do all for the bosses keeping the share-holders/owners in the dark - they intentionally or unintentionally attract greater risk for the owners. Thus, we find embarrassed managers and owners often hauled up in the courts for fudging accounts, under-invoicing, over-invoicing, product liabilities, gas tragedies, FERA violations, environmental incursions, illegal transactions, money laundering etc.

In this construct, the loyal employee is not expected to have any conscience or principles of his own. Even if he did, he better know how costly conscience is and quickly fall in line. To give comfort to the troubled minds of the few thinking professionals, there are always confusing anecdotes to suggest that loyalty to the boss and the company is as virtuous as fighting for the nation. I know a very successful company, that makes global standard intimate wear for women, using company produced visuals, songs, stories replete with symbols of the soldier, army and the enemy, often laced with folklore of the "Tigers" and "suicide squads". The language used in marketing, thanks to Sun Tzu et al, is also replete with the syndrome of war against the competitor - and that all is fair in war, if not love.

Managers extol the virtues of such "Casabianca" who would rather get drowned along with the burning deck than desert it. The managers would not want to answer why the ship had to be drowning in the first place! Why all these men had to be rowing haaaard and in perfect unison, even as the ship was being steered speedily, into an iceberg. We have legions of "loyal" employees of this variety in every corporate disaster - Enron included.

If the system were to perpetuate cronyism, sycophancy and ego-massage to bosses, it actually nurtures disloyalty. A narrowly defined loyalty, in reality, is disloyalty - the minister and the court in the above poem were actually disloyal.

It is not merely the foolish kings and the mostly dense brown sahibs of the corporate world who interpret loyalty in such a narrow sense - they are in good company. Thugs, gangsters, underworld dons also need loyalty of the Type A variety. It is oxygen to their actions. For Gabbar Singhs, loyalty is unswerving common pursuit of gang-interest against several odds and the mortal fear of discovery. That is why a member of the Sicilian clan cannot walk out - loyalty and life are often, a package.

Is loyalty arising from fear or greed, loyalty at all? And, relatedly if some person acted against the system by being loyal to ones own principles and for the larger benefit of the society would that be less honorable and virtuous?

If the answer is "yes", then Mahatma Gandhi should be devoid of any virtue of loyalty. The entire government machinery supporting the British rule should be more virtuous than he. The Nazis who massacred the Jews should be honored as loyal soldiers of the Fuhrer bringing honour to the fatherland. Mother Theresa should be indicted for deserting her motherland. So also Sister Niveditas. Vibhishana should have been declared scum.

A loyal hero for the winner group is the traitor for the loser! The referee then cannot be one group or the other. It has to be something else. Is this something else the inner conscience, the professional principles of the calling and the broad principles of welfare?

The loyalty of Enron executives to their Vice Presidents and Kenneth Lay was virtuous from the point of view of the beneficiaries of that loyalty. Yet it was different from the loyalty exhibited by the executives of Johnson and Johnson during the Tylenol crisis in the 80s. The latter met the ethical standards of every profession involved and the expectations of human welfare apart from making the executives proud.

The concept of loyalty and its use and misuse in the corporates has their roots obviously in culture and politics. The Japanese corporations, for example, can trace it to their society, which had borrowed the concept of loyalty through Confucianism of the Chinese. In the orthodox Confucianism, benevolence and filial piety were important and considered virtuous in social relationships. Loyalty was also a virtue as long as one is loyal to oneself and ones belief rather than to a particular "political" source of authority. Blind obedience was not considered as virtuous.

Loyalty was intended to be tempered by the virtues of justice or righteousness. When Japanese adopted it, there has been a discernable reinterpretation noticed particularly with the internal injunction to their armed forces in 1882. It is reported that during this reinterpretation, loyalty was elevated to the first rank and dropping the virtue of benevolence altogether. Some believe that Maoism has similarly altered the Confucian concept of loyalty, making it uni-dimensional, unswerving and blind. Lee Kuan Kew of Singapore did in the 90`s what the Japanese did at the turn of the last century, fortunately to a good effect, thus far.

The folklores of Hara-kiri and the associated blind loyalty have been carried into the Japanese corporation and adored for long - they became symbols for lifetime employment, attention to seniority and family situations, and "commitment". The simple belief was that if employees were loyal, the corporation would prosper and all can have a free ride to prosperity for generations. The assumption was shattered during the last decade with problems of competition, downsizing, and out sourcing when even the workaholic, loyal, third generation employees had to be shown the door.

This type of loyalty served well when the corporation was well protected and survived on the basis of a gangster like approach to manipulating the system - at least, so long as it lasted. Three developments seem to be working against this type of loyalty: (a) true competition supported by transparency and free markets whereby the scope for ganging up and "rent-seeking" is narrowing; (b) crumbling of social distances amongst employees due to increasing proportion of knowledge workers, flatter structures and some degree of egalitarianism; and (c) the shifts from scalar chains and chains of command to self-managed teams and group accountability.

The old type of loyalty appears to need a burial. Is there a new type that will live long?

Type B, the Benign, is apparent in the case of new age companies such as the software. In several of these, employees have an evidently strong relationship with the company. They are proud of their company, their team, their job, their contribution and their profession. Yet, they may not serve beyond an average of five to seven years in that company. On the other hand, some companies, like Infosys or Wipro, may not look down upon employees who want to become entrepreneurial - they may actually continue their relationship and strengthen it as a supplier or as a business partner.

The new type of loyalty is not blind and unconditional - it is conditional to ones professional ethics, ones principles and common good. Such a loyalty does not arise from fear of the boss, or for self preservation and hopefully not from the desire to gang up to exploit the system. It arises from a host of strong conditions such as ones own principles, ethics and justice. It expects that employees will be true to their professions - that chartered accountants will abide by their standards; that surgeons will be loyal to their profession than to those employing them.

The new type of loyalty is best evident from the books of Frederick Reicheld (Loyalty Effect, 1996 and Loyalty Rules, 2001, Harvard Business Press). These as well as several new writings have been equating employee loyalty with that of building customer loyalty. The onus is on the company to prove as to why it deserves loyalty and commitment from employees. The premise is that loyalty/commitment is a two-way traffic and is sealed with trust and fidelity. That a company will establish a relationship with the employee by convergence of principles, values and mutuality of interests, to get the best out of them. Employee feedback surveys help companies determine the quotients of commitment, and importantly, how they can improve the conditions to enhance employee loyalty and commitment.

There are no exit barriers. No threats. No rewards and punishments for loyalty to the boss and no free riders into the unknown. In the new type of loyalty, each individual will have an obligation to his own values, profession, and contractual duties and to his team/group. He will be as trustworthy as the company is to its employees and customers. Stock plans thrive and reinforce loyalty effects in such an atmosphere.

Interestingly, reflecting the new interpretations, a Police Department (City of Clearlake, North Carolina, USA) has listed Loyalty below Professionalism in its value statement and reiterates the mutuality of obligations. It reads:

"LOYALTY Loyalty to employees as well as employees` loyalty to the organization is important, as is positional and personal loyalty. A commitment to provide honorable service to City government and community is expected of all. We recognize that personal loyalty is based on trust and organizational loyalty is based on professionalism."

Amen?

 

April, 2002 Issue


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