On Loyalty – What Price? What Benefits?

The Barometer’s students often explain that they are not entirely forthright during their job interviews. They expect to move on withint a few years from their “starter” jobs, but, say they, “We always tell the recruiter how we plan to be a lifer.” Their theory is that they can make more money by job-hopping and taking the next better offer. Wait, just a moment. What about the ethical issues here?

Never mind the ethics – sometimes ROI (i.e., those numbers) supports the ethical choice and back up the ethical value of loyalty. The students’ theory on how to make more money may be just that – theory. New studies indicate that loyalty does have significant ROI for employees. The work of Kathryn Shaw of Stanford and her colleagues indicates that the bulk of wage growth among 50,000 software employees comes from staying with one employer, not through job-hopping. Those with single employer experience had wage growth of about 8% per year whereas the job-hoppers averaged about 5% per year. Dr. Shaw found similar results with a different level of worker (windshield installers). “Reaching for the Stars: Who pays for Talent in Innovative Industries?” (with Fredrik Andersson, Matthew Freedman, John Haltiwanger, Julia Lane), 119 Economic Journal 308-332 (2009).

Loyalty has its benefits in sports. The Miami Heat could tell a tale or two about that, with LeBron serving as narrator, but the Wall Street Journal’s football statistician has the data to show loyalty matters. While players may perform better for the first year after they hop to a different team, players who stay with a team for five years or more actually have better statistical performances. Shirley S. Wang, “A Healthy Dose of Loyalty,” Wall Street Journal, June 21, 2011, p. D1.

Other research points to benefits for companies that retain employees – creativity doesn’t come from new blood. Creativity comes from established teams whose members are comfortable enough with each other to go out on a limb with the brainstorming process. Work to retain employees. Those pay raises halt the wandering eye and tempting interviews. Raises have ROI: enhanced creativity.

About mmjdiary

Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD. The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards. Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio. She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News. In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles. Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
This entry was posted in Data and Studies on Ethics. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.