Loyalty discount
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The Human Resources military-industrial complex
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Loyalty discount
ˈlɔɪəlti ˈdɪskaʊnt (n.)
The great falsification of the human resources dogma.
For the strictures of salary bands, forced ranking, gerrymandered performance appraisal system — all the great apocrypha of the HR canon — mean that through time how much a given employee is paid will decouple from the value she offers the firm, however meagre.[1]
Over time, those who remain loyal to the firm are progressively penalised. If they get pay rises they are anaemic, shrugged of with the two-way short optionality that characterises those who manage for a living.
“As part of infrastructure, you don't share in the upside, but you’re protected in a down year” they will say, in a good year, in a bad one, “we’ve managed to minimise the RIF, but we’re still under s a 15% cost challenge,” as if one is supposed to be grateful.
The net upshot, per worker, is usually stagnation; in real terms — inflation-adjusted — you may wind up going backwards, over long periods.
But over those periods, good employees get better. They learn things, they gain experience. They build networks. They bat themselves in. They may see less able, less loyal coworkers forge ahead with lateral moves.
By the way, none of this is to defend much less justify in absolute terms city pay which, however you look at it, is absurd. Only its allocation.
City pay is what it is. The multinationals are still remarkable flywheels: they generate extraordinary returns despite being staffed with mediocrity. They might generate more if they looked after good staff.
The longer good staff stay, the worse, generally, they are treated. Their only way to correct this — to mark yourself to market — is to leave. This seems a bit mad.
To be sure, salaries may drift upwards, decade by decade, courtesy of HR’s finely honed calculus, predicated as it is on abstract, but unshakable logic: a director is worth more than an associate director; a good associate director worth more than a bad one, and so on. All true, and fair, in the abstract, but here is the thing. Employees don’t work in the abstract. Only averages do.
But the modern world loves its archetypes. Just as the common law has its reasonable person, economics its rational one, the boxwallahs of personnel have their average employee.
But there is no average employee. This abstract average is an emergent property of an unstable group.
It includes the young savant, who with rude haste will be catapulted out of the cohort to bigger, brighter things, and the weak gazelle who should, insh’Allah, be torpedoed from it in the next RIF. Neither will be there in a year’s time. Those who mulch around the median have different skills, different attributes, bring different sets of tools to the table.[2] Yet HR insists on drawing an average from these varying trajectories and holding everyone to it. This average is a blended emulsion that reflects nothing about any of them.
To fit individual performance to an average — this is what forced ranking does — rather regarding it as an individual pathway, is a kind of ergodic switch. Each of those individuals has its own life history: a vapour trail, a trajectory, a unique collection of skills, foibles and attributes which the individual sorts, tests, burnishes and rejects. The individual who stays at the organisation adapts to it in a way an abstract average can’t.
See also
References
- ↑ As we have remarked elsewhere, it is more or less axiomatic that all employees contribute some positive value to their organisation: you would have to be pathologically antisocial not to. The exception that proves this rule is the unnamed Italian hospital worker who bunked off for fifteen years.
- ↑ Well, theoretically they should. Whether they do the firm’s recruiting methodology allows this is another question. If you only hire Russell Group grads and laterals with magic circle experience, we are talking about you.