The Right Kind of Loyalty

A great deal has been said about loyalty recently. But the term often is misunderstood, if not misapplied. It can be interpreted as anything a trusted relationship based on the good of the enterprise to blind obedience. And it’s the latter that can have dire consequences, if not immediately, certainly down the road.

At the business or organizational level, it’s about the prime objective. This is what everyone in the organization should ultimately be working toward. For the typical business, that would be maximizing shareholder value. For institutions such as a government or religious institution, instead of “maximizing shareholder value,” their prime objective is to fulfill the charter of that institution in best serving it citizens or members under its founding principles.

In either type of organization, no one person within the organization should come ahead of, or subvert, its charter to obtain that prime objective. If any person, from the Board and CEO down to a manager or employee, places their personal interests ahead of the prime objective, that person is derelict in their duty. For example, a company CEO awards business under a no-bid contract to another company in which he is invested. That is questionable behavior in itself, but when he does so knowing the company is being overcharged,  that is dereliction of duty. Or, when a manager hires a friend or relative over someone more highly qualified, because he knows that person will cover his back, that is also dereliction of his duty. If an employee of a staffing company places a person on assignment who is not fully qualified for that position, but does so to ingratiate himself with someone for potential favors down the road, that too is wrong and disloyal to the company.

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Some acts would be handled at the organizational level. The manager who hires his friend may be terminated, as could be the recruiter who places the unqualified candidate. Their reputations would also suffer. The CEO, meanwhile, might have a golden parachute, but public perception and backlash could still cause his harm. And certainly the company could take years to recover from the results of his deceit.

Some acts might lead to legal turmoil as well. Perhaps the company is sued by a candidate who was passed over in favor of that unqualified candidate. Or shareholders pursue legal action after the CEO’s actions come to light.

An institution can likewise be disloyal to its founding principles. Examples are all around us. One need look no further than the US Olympic Committee, which turned a blind eye to the abuse of young female gymnasts; or in a case where government employees have a misplaced loyalty to their superior, instead of the actual institution they have sworn to serve.

Loyalty is heralded as an honorable trait. And indeed, it can be when applied correctly. When a company achieves loyalty from all involved, loyalty to each other but with the overall prime objective still being the ultimate goal, the organization will thrive. That’s the type of loyalty to strive for.

Michael Neidle

Michael Neidle
Michael Neidle is president and CEO of Optimal Management, an advisor to staffing firm owners and managers.

Michael Neidle

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