Loyalty in the Age of Downsizing

  • Linda K. Stroh and Anne H. Reilly
  • July 15, 1997

“Today, the employer’s attitude is that making money is number one; the employees are not number one any-more. Constant changes in company structures create less loyalty. In the past ten to twenty-five years, employees have acted more like free agents. . . . There is less trust, more anxiety, and less loyalty on the employee’s part. . . . Loyalty to the company has to be fostered by the company.” — Mid-level manager

“We were almost taken over, and a lot of people were let go; the loyalty that people had for this company has changed. But the company’s loyalty to the employee has changed also. This is bound to affect . . . what an employee is willing to do for a company. We’ve seen a lot of good employees and good performers lose their jobs, and we’re all less sure of ourselves. This is true not only in our company, but in our whole industry.” — Mid-level manager

These quotes point to a disturbing trend in many corporations: the decline of employee loyalty associated with the dramatic downsizing, restructuring, and re-engineering occurring throughout corporate America. The titles of some business and popular press articles reflect this decline (e.g., “Loyalty No Longer a Model for Corporate Life,” “Corporate Loyalty Not What It Was,” “The New Deal: What Companies and Employees Owe One Another,” “Whatever Happened to Corporate Loyalty?”1). Some management scholars claim that managers have never felt more alienated,2 and others argue that the view of organizational life, hard work, and loyalty will never be the same.3 Are employees no longer as loyal to their organizations as they once were? If so, can organizations do anything to counter this trend?

The issue of loyalty is important to companies for several reasons:

First, individuals with high levels of commitment to their organizations identify highly with the companies they work for.4 Not surprisingly, therefore, companies view loyal employees as very desirable.5

Second, there are systemic links between employee loyalty and organizational performance, manifested in employees’ willingness to assume responsibility for their work and to perform their tasks in a highly reliable way.6 Managers who are loyal to their organizations are motivated to work hard and to stay with the company.