Is Loyalty Just for Chumps?

A recently published study was like a splash of cold water for do-gooders everywhere — and confirmed their worst fears. The study showed that loyal employees are selectively exploited by their managers; that those who agree to be exploited earn stronger reputations for loyalty, creating a “vicious circle of suffering”; and that, perversely, disloyal workers are the ones who are rewarded. 

Combine that with studies showing that job-hoppers make more money than loyal employees who stay with the same organization, and others that show loyalty can be a gateway to unethical behaviour, and you can start questioning the wisdom of being a loyal soldier. 

We tend to view loyalty as a shining quality of virtue and moral rectitude. Such behaviour often is. Loyal workers are rightly venerated for their ability to foster trust and co-operation and for their self-sacrifice. Loyalty engenders authentic relationships and strengthens motivation. Ruthless and selfish behaviour is not the solution but, as research shows, blind loyalty does carry risk and situational challenges.

If organizations were serious about encouraging loyal workplace behaviour, there’s an obvious solution, as Smith Business Insight senior editor Alan Morantz learned in this conversation with Matthias Spitzmuller, Distinguished Professor of Organizational Behaviour at Smith School of Business (on leave). Spitzmuller says employers could design incentives that align loyalty, citizenship and collaboration with financial rewards and growth and development opportunities in the firm. Here’s what else he had to say. 

Employees with a reputation for loyalty often get the short end of the stick, yet these are the people organizations should most value. What’s going on? 

I remember a talk from a few years ago by Henry Moon, who did research on multi-dimensional approaches to conscientiousness. Conscientiousness is one of the Big Five personality traits and he said it has sub-dimensions: One is duty orientation and the other is achievement orientation. 

Henry said these two facets don’t always work in tandem. In his own research, he asked a group of managers in an executive education program who they were more likely to promote: the individual who has a high sense of duty orientation or one who has a higher sense of achievement. It turns out that the overwhelming majority went with achievement. 

It’s simply about upward potential. It’s the feeling that if you want to come up with something new, if you want to take the organization to new heights, then you need those individuals who have the potential to rise to the level of a star and not those individuals who are always doing the right thing. That’s fairly widespread. 

There’s also research in the context of organizational citizenship behaviours that has looked at the dark side of helping others. This research finds that those individuals who go above and beyond the call of duty for organizations — who are loyal, talk positively about the organization, mentor younger employees and all of that — receive higher performance evaluations but are less likely to be promoted and less likely to receive a salary raise. There’s this distinction between someone who’s a star and someone who is the glue that holds a team together. 

If I feel that I’ll never be a star performer, maybe it’s smart to play the loyalty card. 

I agree with that. For some individuals, it may actually be a good strategy to advertise themselves as loyal because they might not be able to compete purely on maximum performance potential. And there’s certainly a role for those individuals on teams. 

But — and it’s a big but — to understand the value of co-operation and loyalty, you must shift the level of analysis from the individual to the collective. For the individual, it may not be an advantageous strategy to be loyal. But it’s a tremendous asset to the organization to have people like that. Organizations compete against other organizations, so it’s very easy to see how the group will only survive if you have more loyal members than the others. 

From an employee perspective, when do you think it makes sense to be loyal? 

First of all, I think loyalty is psychologically rewarding. Being a valued member of a team and cultivating meaningful and long-term relationships are not to be underestimated. Over time, you also develop firm-specific capital that can give you an advantage over others. You know how decisions are being made. You know which skills are needed. That might not give you a premium on the external job market, but it might make you valued internally.

It also pays for an individual to be loyal when the incentive systems in the organization rewards it. Firms have to train people to not just go for achievement and maximum performance and selfish individual behaviour. They must find a way to align incentives and reward those types of behaviours that are associated with loyalty, like being a team player. 

The study that I referred to earlier, about individuals who engage in citizenship behaviours having higher performance evaluations but lower salary and career progression, was conducted in a law firm. And the reason is very clear because what matters there are billable hours. If you’re nice to others, that can come at the expense of the time that you can bill a client. So you have to develop an internal currency in professional service firms that also recognizes when people are good citizens and puts a price tag on that. Or make sure loyalty is considered when you bring people to the next level. 

Should employees view loyalty through the lens of self-interest rather than through the lens of morality? 

When you say self-interest, you can say having meaningful relationships at work is selfish, right? So the question is whether we’re saying that it’s only economically motivated, and even there you have to differentiate between short-term and long-term. I’m not sure the dichotomy is clear cut. 

There are lots of nuances when we talk about self-interest or moral behaviour. You can be loyal and self-interested at the same time. So let’s not just look at the bad employees who exploit their employers or the bad employers who squeeze as much as they can out of their employees, but at how can they sometimes work in tandem.

There are those individuals who have always stayed put, who are always loyal and who are not as appreciated by their organization as they should be. And for those individuals, it makes sense to realize that their value is actually higher than they give themselves credit for. I wouldn’t say that’s immoral. I would say that this is developing awareness of how you contribute to the organization. 

A study from 2019 showed that employees known to be very passionate were also prime targets for exploitation. It seems to be a similar phenomenon as loyal employees experience. 

It absolutely is. A context that comes to my mind is nursing. Those are individuals who have a high degree of passion and idealism but who sometimes feel exploited, sometimes simply burned out, sometimes all of that. For me, it shows that in our health-care sector, the only resources that are basically infinite, that you can always squeeze more out of, are the idealism and the commitment of care providers to their patients. It’s the idea that, I only have one-third of the time that I used to have years ago, but if I don’t go above and beyond, then this patient will have adverse consequences. That’s a prime example of a setting where you’re taking advantage of the passion or the idealism of employees. 

There’s other research that has shown the phenomenon of citizenship creep. What this means is that if you go above and beyond the call of duty one time, the next time the expectation is that this is where you start. It’s this idea that your passion defines new norms that others will hold you accountable to. 

Post-Covid, there seems to have been a major change in the psychological contract between employee and employer. The issue of working from home is just one inflection point. This must have an effect on the ties of loyalty in the workplace. 

The trend is most certainly towards redefining the psychological contract that de-emphasizes loyalty and emphasizes a more instrumental orientation. You just see that in the rise of people who are not part of the permanent workforce. They’re essentially being bought for a very limited period of time and precisely for the value that they add. No benefits, no security attached. It reflects less value being placed on long-term loyalty. 

That has interesting implications. What does this mean for internal cohesion? What does it mean for the innovative capabilities of an organization, both good and bad? What does it mean for the ability of an organization to develop and maintain a unique culture? 

For me, these are really interesting questions that haven’t been answered yet. But I agree that the psychological contract is being redefined in radical terms, and this is an ongoing process.