Talent Strategies for the Post-Loyalty World

by Jörgen Eriksson on November 18, 2013

business-on-the-webGlobalisation and hyper competition brings increasing pressure on organisations in the world’s advanced economies. For years, serious forecasting institutes such as the International Labour Organisation have predicted fewer jobs and more social unrest.

At the same time,  income inequalities are rising as middle-income groups are shrinking due to rising long-term unemployment, weakening job quality and more and more workers dropping out of the regular jobs market altogether.

The World Economic forums Global Agenda 2014 report includes the graph below, showing the percentage of the population in major countries in the world who thinks that the next generation will be financially worse off than their parents. It is interesting to note the disparity between the advanced economies and the emerging ones. Click on the graph to see an enlarged copy.

WEF_GlobalAgendaOutlook_DigitalAsset_NextGeneration_2013

One would think that the negative trends in the advanced economies would make people hold on to the jobs they have got. Most common in recessions employees tend to stay with their current employer and the development we have since 2008 in the advanced economies is worse than a recession. It is a paradigm shift and this should be obvious to anyone.

Unemployment rates remain high and youth unemployment in many countries in Europe is disastrously high, as the graph below shows. Youth unemployment in United States is 17%.

2012 youth unemployment

It can be argued that the high unemployment rate and poor economic situation has given Generation Y a new name. The Unemployed Generation.  The young people of generation Y are better educated and way cooler than any generation that went before, but Generation Y is in danger of becoming the lost generation. The first lost generation since those who survived the great depression to face a downwardly mobile work life. They may not live to work but they certainly want to work to live, however most will not earn as much as their parents. Working in a mobile phone store, computer shop, call centre or IKEA just will not cut it.

Unemployment - social unrestOne would think that when the people in the younger generations would get a job, then they should hang on to it as hard as they can.

However, paradoxically, it seems that in the post crises society employee loyalty is dead.

Employee loyalty used to be about identifying and aligning oneself with the employers goals, with mission, vision and values and in everyday work life act and behave correspondingly, knowing that what is good for the employer would also be good for oneself.

Well, if loyalty is defined as being faithful to a cause, ideal, custom, institution or product, then there seems to be a certain amount of infidelity in the workplace these days. Both older and younger employees seem to shed loyalty for short term personal gains or freedom, not thinking of the long term security in belonging to an organisation.

Many employees are clearly feeling disconnected from their work. Among the reasons cited for this in media are the recession, during which companies laid off huge numbers of their employees with little regard for loyalty or length of service. Also, with hyper competitive markets, many companies can no longer afford to give benefits, training and promotions for those who remain. Further, Generation Y have a different set of expectations about their careers, including the need to “be their own brand”, wherever it takes them.

In a nomadic world, one of the casualties is a decreasing sense of commitment to the organisation. It seems to me that in large layers of the population this leads to a breakdown of morals and a general disbelief in democracy and the market economy, increasingly showing in lower numbers voting in public elections, and also in riots and other action based protests. During the EU summit in Nice, France in December 2000, protesters burned the local branch of my bank (100 meters from my home). At that time it was a chocking event. Since then I have got used to see riots and public violence in France.

Unrest

However the social change that is happening is in the long run not necessarily a bad thing, once we get over the painful transition period and learn to accept new realities of the global economy. After all, the megatrends that cause problems for us in the advanced economies in the short runs are the same trends that bring the emerging markets out of poverty. Later on in their development they will pull the world economy forward and the old “west” will find a new role in a more equalised world.

Long gone are the days recent graduates would dream of landing internships at companies and slowly moving up the corporate ladders until retiring after 40 years of faithful service. Today’s bright young minds want challenges and responsibility from day one. If they do not find this at home many of them move to where the challenges are, which at current and foreseeable time is in the growing economies of Asia and Africa. During the 20th century people moved to capital cities in their own nation. It is no stranger in the global world to move further to seek out opportunities in the international workplace.

However how should companies tackle the challenges in European economies and its companies? To understand what is going on I scanned the recent years articles in Harvard Business Review. As usual they are on track and have both noticed and analysed the trend at an early stage.

The new reality is very well described in an interview with Ben Casnocha and Chris Yeh, coauthors of the article Tours of Duty: The New Employer-Employee Compact. Below is a recording of a dialogue with the authors. It is well worth listening to. I provide two versions of the audio, as it may differ between web browsers which one will work.

company with wallsThe article and interview argue that while the majority of companies are playing defence and trying as hard as they can to protect their employees from the outside world and to retain them until the end of days, the most innovative companies are already playing offense and figuring out ways how to attract the masterminds of the future.

Companies that want to be successful in the future have to adjust their talent strategies to fit the post-loyalty world.

The most prolific employees are looking for a new, mutually beneficial employer-employee compact. We cannot have agile companies if we give employees lifetime contracts, and the best people don’t want one employer for life anyway. Companies have to understand their best employees will not stay forever, but for the duration of their employment, they should do everything they can to make each other more valuable. The companies objectives need to be aligned to the employees objectives in a new way.

Furthermore, the departure of a good employee is not the end of the world. Instead of having employees for life, why not have relationships for life? A lot of companies are already nurturing alumni networks to allow for their ex-employees to contribute even after their departure. Naturally such networks require that any separation takes place on mutually beneficial terms. Employees moving to competitors or taking trade secrets or customers with them must be cut off or the value base and incentive system of the company, and also the motivation of the people remaining, would suffer.

ApplesThe post-loyalty world is here whether you try to do something about it or not. Employers have the ball and are going to have to decide to play offense or defence. As the authors say in the interview, “companies need to become more innovative. Even if they’re 100, 200-year-old company, they need to bring innovation into their organisation. And we feel that the only way you can really have innovation, is by having innovative people. The only way you can have innovative people is by presenting them with a different way of working together.

About Jörgen Eriksson :

Jörgen Eriksson is the founder of Bearing and is the Chairman of the firm since it was created. He has successfully expanded Bearing into covering projects on four continents. He is also Adjunct Professor of Innovation Management at the International University of Monaco and at Universitat Politècnica de Catalunya in Barcelona and he is an active member of the Founders Alliance organisation.

Working with consulting engagements across Bearings practices, he has over the past fifteen years participated in and supervised a large number of client projects, from innovation system development and place development and branding, to merger and acquisition assignments and leading edge research and business development activities for key clients.

His new book, Branding for Hooligans, will be published in 2015. It is about how innovation and branding are key survival factors in our modern times of hyper competitive markets.

Prior to Bearing, he was Director of Europe, Middle East, and Africa for Trema Treasury Management, a technology and consulting services provider, supplying financial software solutions for the global financial industry, Clients included The European Central Bank, Citibank, SEB, South African reserve Bank, Deutsche Bank, Abu Dhabi Investment Authority (ADIA), as well as many other large financial institutions and Fortune 500 companies.

Early in his career Eriksson was educated at the Stockholm School of Economics, where he studied economics, financial economics and philosophy. He then worked in Scandinavian investment banks and also for the Swedish Institute of National Defense Research.

You can contact Jörgen on e-mail jorgen.eriksson@bearing-consulting.com, connect on LinkedIn on http://fr.linkedin.com/pub/jörgen-eriksson/0/38/8a0/ and follow him on twitter on joreri508.

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