Tuesday, November 20, 2007

Loyalty is passé; engagement is now name of the game

“O, where is loyalty? If it be banished from the frosty head, where shall it find a harbor in the earth?”—William Shakespeare, in King Henry the Sixth, Part II

IN these days of brain drain everywhere, there’s no longer any sense for companies to expect eternal “loyalty” from their employees. The game now—according to Russell Huntington, human-resource firm Watson Wyatt’s Asia-Pacific human capital director—is all about “engagement.” It means that if companies would like to hold on to their skilled or talented employees, both parties should be on the same page on where the company is heading for, and management should give workers more room to contribute to the achievement of company goals.

“Engagement is when employees help the company succeed,” said Huntington. “Loyalty is history.”

If loyalty is indeed passé, it’s not because workers have gone bad. It’s more because since in the 1980s, employers thought workers were disposable items in their pursuit of global competitiveness. Well, that’s the unionist’s perspective, anyway, although it seems to contain some grain of truth. The bigger reason really lies in the emergence of the “new economy” and the Information Revolution that accelerates the pace of globalization.

Manolo Abella, a Bangkok-based labor-migration expert formerly connected with the International Labor Organization, says the raging war for talent results from the growth of global-supply chains, as liberalization of trade policies has made it possible for transnational companies to move production to cheaper locations.

As an aside, globalization has diluted the notion of loyalty both ways: workers don’t have much qualms about leaving their companies because the “hooks” of those fishing for talent are numerous and varied, and there are so many choices and material attractions for anyone who’s skilled and determined and hardworking enough. But on the other hand, companies also tend to lose the kind of “loyalty” to employees as the past two generations know it—where they’d do everything to keep the workers who were there “at the creation” of the enterprise, so to speak. Indeed, what loyalty can one expect from a company based halfway around the world, and perennially looking to cut costs and stay competitive in a globalized industrial setting?

“The emergence of global production structures have been everywhere, accompanied by greater movements or transfers of technical and managerial personnel,” says Abella in a paper on labor migration. “Another important development has been the growth of informal as well as flexible forms of employment, opening markets for foreign workers willing to enter occupations or sectors abandoned by natives.”

And currently, it’s a lot easier for people to leave their companies or for companies to fire workers because of a paradigm shift in labor-management relations.

In the 1980s, “corporate downsizing” became the trend as companies moved heaven and earth to become “lean and mean.” There was a global economic slowdown and exports from the newly industrializing economies of East Asia were giving everybody hell in the global marketplace. It was easy to make the downsizing decision because powerful computers as well as new, better software enabled firms to use just-in-time production that didn’t require high inventory levels. Suddenly, the old labor-management ethos of “lifetime employment” and “company loyalty” vanished as hundreds and thousands of workers lost and found jobs across the globe.

What we are stressing here is that the old ways of doing things in human- resources management no longer apply. Workers, especially “knowledge workers,” can no longer be treated as inputs or disposable cogs in the production machine.

Company managers should take pains in explaining the future of the company and how each one fits into the overall picture. Companies should develop clear career paths for each. It should explain the goals, vision and mission and devise clear mechanisms by which each employee could contribute to the attainment of those goals. This way, employees can share in the company’s dream, giving them strong incentives to stay.

And employers shouldn’t forget about “base pay”—or that which employees get through payroll every 15 days! Huntington of Watson Wyatt said Filipinos, compared with their counterparts in the Asia-Pacific region (especially Hong Kong, Indonesia, Malaysia, Singapore and Taiwan), are not necessarily lured by money when they start seeking jobs fresh from university. Their main criteria for joining are the reputation of the company and career-development opportunities. In other words, they want to learn and grow with the company. That’s at the start, when they’re young and keener on learning from the best in the field. But inevitably, as they grow older and more settled in their careers, the base pay starts to matter more, if the experts are to be believed.

This information may imply that as these employees mature with the firm, they may start thinking about settling down, owning pieces of property like a house, lots or condominiums for their future families. That’s when base pay becomes a very important issue. Along this line, Huntington clarified that base pay has remained a very important reason why talented employees in the Philippines leave. Consider that that’s also the time when these employees, having gained significant experience and skills, become so attractive to headhunters here and abroad. The “pull” is very strong, and a company must be painfully aware at all times of such “lures” and do everything to “engage” or help them find greater sense in staying even if base pay can’t be substantially increased.

Without company “engagement,” they are likely to leave for greener pastures either here or abroad. That explains why increasingly we are sending skilled professionals, including IT engineers, construction engineers, nurses, doctors who became nurses, physical therapists, architects, managers, advertising experts, journalists and even soldiers.

The bottom line for a country like the Philippines is rather tough. That should mean local companies have a lot of “engagement” to do. And they should do it before it’s too late. (Drafted as editorial for BusinessMirror editorial, Nov 20 2007).

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