Loyalty is Important, But...

...make sure it is smart loyalty.

One suggestion we've made for dealing with the recession is to try to keep your workforce on, since if you cut them now you're probably going to have to hire them back later when things get better, and you'll have a better relationship with them if you keep them engaged throughout this period.

Having said that, you may feel like you must let some people go if your firm is to stay in business (As Caiphas and Mister Spock taught us, "the needs of the many outweigh the needs of the few...or the one"). Or, you may simply feel someone's not pulling their weight, whether in good times or bad, and it's time to let them go. Either way, you're going to have to deal with the conflict inherent in loyalty.

You hope for loyalty from your Creatives, and so in turn you must demonstrate it to them. People who do good work for you deserve to be treated fairly and respectfully, and if they work hard for you then you should try to keep them in the job. The basis for that loyalty, though, needs to be something important to the firm. Ideally, you should be demonstrating the strongest sense of loyalty based on performance and potential rather than simply on longevity and seniority.

Unfortunately, the later criteria often become most important. A colleague in Asia told me that his firm is preparing to lay off as much as 20% of their workforce in December (I tried to explain the "that's just not right" aspect of laying people off right before Christmas, but I don't think it resonated as strongly there as it would in the U.S.). However, the CEO has identified one person who absolutely will not be laid off because "he's been here so many years."

Now, it's nice that this employee has been with the firm so long, but is that really relevant? The real question should be what he's doing for the firm. You'd like to think someone with that much longevity is a contributor, but it might simply be that they knew no one else would hire them because they're so bad, so they managed to stay on. Do you want to be cutting skilled people while holding onto somebody for the simple fact they've been around a long time, regardless of their abilities? If so, that's a recipe for trouble.

That's not merely a hypothetical situation; in this case, the employee in question not only doesn't do much, but also, since learning of the CEOs decision, now does even less because he knows he can't be fired. Removing his external motivation to do good work leads him to be an even less productive employee.

If you want to consider longevity in your layoff decisions, fine. Just don't make it the only factor, or even an important one. While you want to be loyal to individuals, you also need to be loyal to the firm as a whole, and keeping individuals who aren't as talented doesn't satisfy that need. Reward those who do well and you'll end up rewarding the whole company instead of just a few individuals who may not even deserve it.