Wednesday, August 15, 2007

How loyal are employers to their employees ?


How loyal are you to your employer ? How loyal is your employer to you ? In todays fast pace world, where stiff competition is the order of the day, how do you know how long your company or industry will remain competitive (and survive) and thus keep you as an employee ? How do you know your skills will remain relevant to your industry ? In short, employment security does not exist any longer. Peter Cappelli, professor of management from The Wharton School, University of Pennsylvania speaks about the fallacy of job longevity. Read the article by the Star below. Read also a related post in this blog of how Peter Drucker would approach this new employee predicament.

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LOYALTY and the notion of a secure, long-term career are becoming increasingly difficult to grasp in today’s fast pace world, says a professor of management from The Wharton School, University of Pennsylvania.

Peter Cappelli was speaking at the Wharton Executive Series The New Deal at Work: Managing the Market Driven Workforce at PJ Hilton on Monday organised by KDU Management Development Centre Sdn Bhd.

Cappelli: Investing in employees is like investing in the organisation
“The issue of loyalty started in the US because American companies began laying off people. All the while, there was this belief that the employer will look after the staff, and the staff in turn should remain loyal and act in the interest of the company.”

Today, this lack of loyalty is found everywhere – at the office, in the hospital, at the CEO level and among young entrants into the job market. It cut across all sectors of the economy,” he says.

Cappelli says that in the 1950s, the tenure of the president or CEO was about 10 years. This was reduced to five in the 1960s. Now it is a mere three years with Japan having the highest CEO turnover today.

“US brags about it, Japan hides it. So you think it is happening only in the US.”

Since 1995, CEO and executive team turnover is up 53%. Cappelli says this is rising twice as fast in Britain and Europe as in the US. Firing for non-performance is the biggest cause, twice that of retirement. He asks: “If the situation is such at the top, what about those below?”

Restructuring, mergers and acquisitions add to the challenges taking place around the world, at a non-stop pace.

“At one end, employers have to deal with the issue of loyalty. At the other end of the spectrum, they have to deal with the uncertainties and manage changes and challenges.

“With such a scenario, is there little wonder that companies and corporations around the world have issue with investing in their employees?”

Cappelli was speaking to about 80 participants comprising vice-presidents, directors, CEOs and managers from industries from across the board.

He says the US used to invest 2% of their payroll in their employees but this has dropped. It is a bigger problem there than over this part of the world. Here, companies are continuing to invest in their employees and they must.

“When a company invests in its employees, it is ultimately and essentially investing in the organisation,” he says.

He says lest the participants think staff retention is difficult today, he says it is no different than from before.

“Staying on for years and years on the job is a fairly new phenomenon. In the 1910 and 1920, people go from job to job. Companies grew too fast, like today. And then came the 1930s and the Great Depression. The men went to war and the ladies and older men remain behind to work. After the World War Two, companies started to become more complex and the need for company specific knowledge became greater.”

The situation is pretty much the same today.

“The product cycle is becoming shorter. New products require new skills. Most companies have a one- to two-year business plan. Added to the short product cycle is variety.

“Added to this is the impatience of employees in their 20s. Young people act different from older people. They may be impatient, but they are also adaptable. With this scenario, companies cannot afford not to train.

“It is something beyond one’s control, it is driven by something out there, in the economy. As an employer, spot talent early and give opportunities before they can get it elsewhere. People thrive in challenges and opportunities. They want to know right at the beginning how far they can go with you.”

The Star

5 comments:

Anonymous said...

skrew it man. before my company "chup lap", I cabut first. loyalty is for idiots.

Anonymous said...

I just woke up and I read this post. the article reminds me what a shit life I have. got to drive to work, face the jam then see the same f#cked up faces at work...uggggh.

stanley said...

there is no employment security in Malaysia, for a long time already. everyone should look out for themselves. if business is doing badly, employees will have to take a pay cut. if business gets worse, employees will be retrenched, sometimes without proper compensation. the employer (business owner) is the last person to be affected by any downturn.

Anonymous said...

my previous company in 2001 retrench lots of workers and tried not to pay compensation..they thy to play dirty, transfer workers to other states or transfer you to different departments until you resign. better do your own business.

Anonymous said...

loyalty goes both ways. but looking at the current scenario, i think the employers are skrewing the employees.

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