Married? Or Just Dating? - analysis of decline in employee commitment

Workforce, August, 2000 by Michael N. O'Matley

Commitment in organizations shares many of the same elements we find in other relationships

"BUSINESS IS BEAUTIFUL BECAUSE IT PACKS ALL of human emotion into an eight-hour day," Michael N. O'Malley says in his introduction to Creating Commitment: How to Attract and Retain Talented Employees by Building Relationships That Last. "In business, people are let down, left out, given up, or passed over. They are also befriended, helped, encouraged, and celebrated. Human passions and needs do not mysteriously dissolve in the corporate parking lot. People don't forget what it is like to be a person when they arrive at work. They hope for the same considerations and are guided by the same expectations--and so it is with commitment."

In his book's first chapter, O'Malley describes why commitment is crucial in work today. He talks about the way employees describe their employers. Some see themselves as "renters" in a company. Others describe themselves as owners. Some see themselves as dating a company. Others are married to it. What kind of relationship do your employees have with your company? Are they committed? Is your company?

It is rare to have a discussion with corporate executives without the topic of commitment eventually arising. Many executives appear to be genuinely "shocked...shocked" by the exodus of their most esteemed employees, often noting a similar thinning within their own ranks. An employee's corporate life is a flurry of activity punctuated by offers, counteroffers, and job moves. Commitment appears to be waning at every institutional level. In fact, a recent survey conducted by the Hudson Institute found that only 42 percent of employees believe that their employers deserved their allegiance.

The decline in commitment comes at a time when employers need employees more than ever. About one-half of all employees once again own the tools of their trade--their knowledge--which they can readily pack up and move from employer to employer. The days are gone when workers showed up, were handed their implements, and were told what to think and do. Today, companies' success depends on having a stable, talented workforce whose ideas coalesce into productive group actions. What they often get, instead, are collections of individuals, each of whom is prepared to walk out the door and through someone else's.

There are two reasons for the rebirth of an old-fashioned value--commitment. First, commitment is perceived as a business necessity Worker shortages are seen as a barrier to growth among fast-growing companies...Put simply, without people, these companies will not be able to keep pace with demand and their growth will stall.

Indeed, a recent survey of executives across industries indicates that skilled-worker shortages are now having a pronounced effect by limiting sales by as much as 33 percent. The demographics aren't favorable for improvement. There is a year-200 1 problem upon us: In 2001, the baby boom generation will come of age for early retirement. There will be roughly 2.75 million Americans who will turn 55 in 2001, and the number will increase to 3.75 million in 2002--and gradually, the number will rise over time.

Some companies and plants could lose more than one-half of their workforce to retirement over the next five years. The average age in many organizations, particularly within manufacturing, is relatively high: Layoffs pruned the younger, lesser-tenured ranks, and new technologies replaced the need to hire as many young employees. One could optimistically presume that many of the employees who will be eligible for retirement (and, in many instances, full pension benefits) will elect to postpone. Without further inducements, that may be unlikely. Nevertheless, even with the most advantageous assumptions, many in this age group will be lost to the workforce, because retirement often isn't a matter of choice: Many people will retire for health-related reasons. What actually transpires will have enormous consequences on both the economy and the financial markets.

Senior management and executive ranks are not immune from the changing demographic landscape. Coincident with an aging population, there is a projected 15 percent decline in 35-to 44-year-olds over the next 15 years--the traditional reservoir of future management talent.

The second reason why commitment is back in style is because it is becoming very hard to replace workers--and not just because they are hard to find. Employees' knowledge and skill sets are more refined. Today, the work of organizations requires more intimate knowledge of the industry and of the specific company, as well as constant skill renewal and updating. If Betty leaves, the company has to find another Betty to maintain performance; an Al or a Pamela won't do. The learning curve is long and the ranks are thin: When an employee leaves, it really hurts.

I can see desperation setting in by the lengths to which companies will go to attract and retain people. I have seen prospects promised trips for two to Hawaii upon joining a company, and the employee with the most company referrals given a brand new Ford Explorer. Then, of course, there are the lavish sign-on and retention bonuses.