The new rules of workplace loyalty

Last month, AT&T CEO John Stankey sent an unusually blunt memo to his staff. There was a lot in his 2,500-word missive, but one part really stood out to me. “Some of you may have started your tour with this company expecting an ’employment deal’ rooted in loyalty,” Stankey said. “We have consciously shifted away from some of these elements.” It’s hardly news that companies have become less loyal to their workers, but I’d never heard the head of a large corporation admit it so publicly, and with so little remorse. In a quick write-up, I described the memo as corporate America’s clearest attempt yet to overhaul the terms of the workplace.

The response was overwhelming. I received more than 100 emails and DMs from readers eager to share how their experiences shaped their views on the death of loyalty. Many laid the blame on CEOs who chase quarterly profits at the expense of their employees’ jobs. Others accused millennials and Gen Zers of being entitled and unwilling to do anything outside their job descriptions. The clear consensus, as I heard over and over again, was that the corporate workplace has now devolved into a Lord-of-the-Flies dystopia.

One reader, a retired auto executive, put it especially starkly. Companies “try to give people the perception that they are a ‘family’ at work, but they’ll gut you like a fish and toss you to the sea as soon as the metrics look bad,” he wrote. “Employees aren’t much better,” he added, as they’re “looking for the next rung in the ladder and will stab you in the back as they try to climb over your corpse.”

The employer-employee bond, like any relationship, is held together by expectations of what each side owes the other. Management scholars call this the psychological contract. When those expectations are broken, one side pulls back — often then prompting the other to pull back as well. The evidence of that vicious cycle is now everywhere. After years of companies rescinding job offers, it’s now common for college students to renege on the offers they accept. Workers skip the courtesy of giving two-weeks’ notice because they fear getting fired on the spot. HR departments, meanwhile, cut off employees’ email and Slack access before laying them off to prevent them from sending around angry notes, or the chance to say goodbye.

I’ve been worried that if this spiraling continues, we’ll soon end up with a workplace totally devoid of trust and goodwill — one where neither employers nor employees believe they owe each other anything. Many of my readers, whether they were executives or entry-level workers, seemed resigned to this soon becoming reality.

In our current reality, employers and employees everywhere are already profoundly miserable. Only 31% of Americans said they were engaged at work last year, according to Gallup, the lowest reading in a decade. CEOs know this is bad, and they see the uninspired work their demoralized staff are producing. That’s why they’re dangling threats of firings and forcing everyone back into the office — which is further demoralizing their workers and getting even worse work out of them.

Corporate America has a choice now. It can let itself fully descend into a dysfunctional hellhole. Or it can do the difficult and uncertain work of renegotiating the psychological contract with employees. After reporting on people’s changing relationship to work for the last four years, I’ve come to believe that has to start with reviving loyalty — and I’ve been thinking about how to adapt it for the modern era.

The story of corporate loyalty begins at the turn of the 20th century, in the wake of industrialization. Bosses drove their workers hard, putting them in grueling and dangerous jobs on the factory floor. This relentless drive for efficiency worked in the short run: Productivity and profits boomed. But the costs became increasingly obvious. Workers rebelled by showing up to work late, quitting in droves, and launching strike after strike. As hostility in the workplace reached a fever pitch, executives searched for a different approach.

Among the first to experiment with a relationship built on care was AT&T, which started offering a comprehensive benefits plan to staff in 1913. It gave disability to injured employees, a retirement pension to encourage longtime service, and access to company physicians. By the 1920s, AT&T was running rest homes for its telephone operators who were drained from the punishing work of connecting calls. It even employed full-time “counselors” who patiently listened to workers’ every complaint. “AT&T learned,” wrote one historian, “that a company that appeared sensitive to its employees’ problems obtained a better output from them.”

By the middle of the century, most major companies had followed AT&T’s example. They provided pensions, extensive training, and opportunities for staff to climb up the corporate ladder. Most importantly, they promised job security. In white-collar roles, layoffs were virtually unheard of, and you had to do something pretty egregious to get fired. In return, employees often stuck around for decades, and in surveys, the vast majority said they felt good about their organizations. Loyalty begat loyalty.

That began to change in the 1980s. The government broke up conglomerates like AT&T, and globalization meant that American businesses suddenly had to fend off nimbler companies abroad. Fierce competition led to shrinking profits, which gave birth to a cutthroat management philosophy that prioritized short-term returns to shareholders. “This push for results shifted senior leaders and even HR to think about workers as a commodity,” says Denise Rousseau, a professor of organizational behavior and public policy at Carnegie Mellon University. “If they don’t work well, we’ll switch them out. We will not invest in them.”

Over time, layoffs became routine, and CEOs treated their employees in increasingly transactional ways. Today, many companies won’t even lay workers off in person, cutting them off with a single email as if they’re machines to be turned off by the flip of a switch.

Given this decadeslong pullback from employers, why did it take until now for all this anti-work sentiment to erupt? Rousseau’s research surveying workers helps explain the delay. Employees see their companies giving them less, but many still report giving just as much as to their companies as before. There’s something powerful about the old deal of mutual care, and people have a hard time letting it go.

“It’s only when something really drastic happens — you get laid off, they treat you really abysmally — that people get mad and mentally rework everything,” says Rousseau, who coined the concept of the psychological contract. “You have to get really hurt.”

For one longtime AT&T employee I’ll call Steve, that moment was a long time coming. Over the years, he watched the company pull further and further away from its workers. Employees caught in restructurings got less notice before being let go. Insurance premiums rose. Retirement benefits dwindled. He and his colleagues started to joke that the business’ initials stood for Always Take & Take. Yet he kept giving and giving. “There were times I went: Why are you working so hard for this place that doesn’t value you?” he tells me. He still can’t really explain it, except to say that he wanted to work hard. As a Navy vet, he didn’t think he had a quiet-quitting bone in his body.

But last year, when AT&T decided to consolidate its hubs, his bosses gave him an ultimatum to relocate. Steve explained that he had a sick family member that made the move impossible. Still, they wouldn’t budge. Something finally broke in him. “I busted my butt,” Steve says. “I worked 50, 60 hour weeks. I expected that, in my time of need, they would be forgiving.” From that moment on, he checked out, and he hated it. “I allowed them to change who I was.”

While most of my readers had stories like Steve, a few described workplaces where loyalty’s still very much alive. Paul, a software engineer at a midsize company, feels genuinely cared for by his employer. In his department, only one person has been fired during his three-year tenure, and there’s never been a layoff. When his bosses planned the company’s hybrid return-to-office policy, they asked employees about their preferences. Paul builds tools for his colleagues and avoids sloppy shortcuts because he knows who he’s writing the software for. “I feel like I’m part of something,” he says. “That drives my work ethic to go above and beyond.”

Gillian Fitzpatrick Alicea, a marketing professional at a global industrial automation company, realized how loyal her company was during the pandemic. The CEO warned them right away that if things got worse, he might need her department to take a temporary pay cut — but he promised not to lay anyone off. In the end, no one lost their job and no one’s pay was cut. “We all knew we would be in this together,” Gillian says. “I know this isn’t the case for a lot of people, but the company actually does feel like a family.”

I once worked for a company like that, too. I joined Bloomberg’s Tokyo newsroom straight out of college. Two years in, I lobbied my editor to get transferred to one of the US offices. My pitch was simple: It was impossible to date as a lesbian in Japan. If I stayed, I told him, reminding him that I was already 24, I was destined to die alone. He laughed the way a dad would, told me he understood, and ran my request up the chain. Soon after, I started in Bloomberg’s San Francisco bureau with a visa and a temporary apartment the company had secured for me.

Loyalty doesn’t have to mean forever. It just has to mean for real.Tatiana Finkelsteyn

That was the kind of place Bloomberg was. When I suggested creating a new section, I was given the resources to run with it. When I started to get bored with that, a three-month assignment to run the Tokyo newsroom suddenly fell into my lap. There were occasional small job cuts, but most of us believed we’d be around for the long haul. More importantly, I felt like my bosses, their bosses, and my peers cared about my growth as an employee and my well-being as a person, and that made me want to do right by them too. I worked incredibly hard — at times a little too hard for my own good — but it felt really good to give it my best around so many others who were too.

Experiences like this are rare in today’s corporate world. Global competition, shifting skill demands, and fickle investors mean most businesses just can’t promise jobs for life anymore. But loyalty was never just about lifetime employment. For me, it was Bloomberg investing in my growth. For Gillian, it was her CEO’s transparency. For Paul, it was being included in big decisions.

We tend to equate loyalty with permanence: lifetime employment for a lifetime of service. But what if loyalty could mean something broader?

In his 1908 book “The Philosophy of Loyalty,” the American philosopher Josiah Royce gave loyalty a far more expansive definition than how we think about it today. At its core, loyalty is simply a devotion to a cause bigger than ourselves, he said. That cause could be heroic, like dying for your country, or totally ordinary, like keeping a group of kids safe on a field trip. And he didn’t think it needed to last forever. People need to remain faithful to the cause, he argued, only “until the work that you can do for it is done.” Big or small, permanent or temporary, Royce believed that serving a collective cause is what brings us together with other people, and makes life worth living. Loyalty, he wrote, is “something which we all, as human beings, need.”

In the following decades, psychologists dug deeper, asking what lies at the root of our various needs. One influential theory boiled down Maslow’s famous hierarchy into three fundamentals: existence, relatedness, and growth. In a sense, Royce was right: Workplace loyalty touched all three. Job security gave people assurance they’ll be able to keep paying the bills and comfortably exist. Long-term employment fostered meaningful relationships with colleagues. And a system of internal advancement helped employees build new skills and take on more responsibility over the years. By meeting their employees’ needs, companies got great work out of them as a result.

The question is whether today’s businesses can still meet these needs without promising jobs for life. Could they invest in employees’ growth, not just for a career at their organization but at a different one? Could that growth give workers confidence they’ll be able to land a new job even if their current one disappears, alleviating some of the anxiety that comes with the possibility of layoffs? And most importantly, could employers treat employees with the respect and honesty they deserve? Could they create a culture where colleagues trust and depend on each other?

In practice, that can look like reimbursing tuition for additional degrees, or offering robust training programs for new grads that rotate them through different corners of the business. It’s the difference between Meta quietly blacklisting some of the people it lays off and Salesforce giving workers two months to look for another internal role before taking them off payroll. It’s the remote startups flying in their staff for quarterly off-sites, not just so people can sit in meetings together, but also so they can get to know each other outside of work.

Out of all my recent conversations with readers, the one that left me feeling the most optimistic was with Tatiana Finkelsteyn, a serial entrepreneur. At her first startup IQ Wired, her mission was “business for life”: Some 80% of the people she hired have retired there or are still working there. At her current company, zLinq, she emphasizes long-term employment a little less, but she says she’s still deeply committed to her staff. Her no.1 rule is transparency. She shares even difficult news early; when she had to lay someone off last year, she warned them of the possibility six months in advance. She also stays in touch with many of her employees who leave, offering some of them a role on the company’s advisory board. “It’s not just a transaction of ‘I’m giving you a paycheck and you work for me,'” she says. “It’s a relationship that could last outside of that.” And her approach pays off: zLinq has 94% retention this year, an engagement score nearly triple Gallup’s benchmark, and employees who she says truly go above and beyond.

“Loyalty doesn’t have to mean forever,” Finkelsteyn tells me. “It just has to mean for real.”

For a long time, I thought I’d stay at Bloomberg for my entire career. But after a decade at full speed, I wanted a break. I traveled for a while, and then joined Business Insider, which turned out to be a very different place from Bloomberg. BI is a much younger company, and the benefits aren’t as comprehensive here. There have also been a string of major layoffs. Still, to my surprise, I’ve been happy. My editors go out of their way to recognize my stories and respect my expertise. They let me work from home. And I’ve grown enormously as a writer, thanks to the freedom I’ve been given to take on the kind of ambitious stories I’ve always wanted to write. If I end up back on the job market, I’ll have a portfolio I’m proud of that I think will help me land my next role.

We’re all very much these little atoms that aren’t producing something that has benefit beyond our existence.Denise Rousseau

That’s why I’m writing this sentence at 11:30pm — not out of some naive hope that my hard work will keep me safe, but out of a clear-eyed commitment to deliver the most deeply reported, most honest writing to readers like you. I’ll probably move on from the company at some point, but that feels like a fair deal. My bosses get the best version of me right now, even if I might leave down the road. In the meantime, I get to do meaningful work that also makes me more employable in the future, whether or not BI decides to keep me. If I felt the old kind of loyalty at Bloomberg, I feel the new kind of loyalty at BI.

It’s on employers to take the first steps toward this new loyalty. They broke the old deal first. They also have much more power than individual workers to set the culture of their organization. And even if they worry employees won’t reciprocate, I think they’ll find that most will.

Take the disheartened AT&T employee Steve. At the end of last year, he left after almost 25 years at AT&T and started working for a new company. He knows his new employer isn’t immune to layoffs — it’s a large publicly traded company just like AT&T — but he says the culture feels different there. Colleagues welcome his feedback and discuss it instead of dismissing it offhand. Executives talk openly about their missteps and take pains to credit employees for the successes. And because of that, he’s back to going above and beyond.

Most of the professionals I know are like Steve. They want to do great work. They want to believe in their companies. And I think that’s why AT&T’s death-of-loyalty memo sparked such an outcry. “We’re all very much these little atoms that aren’t producing something that has benefit beyond our existence,” Rousseau, the organizational psychologist, says. “We have that longing for some bigger connection.”

Rousseau believes this with the benefit of an entire century of research in her field. Royce believed something similar. Writing in the early 1900s, he was alarmed by the individualism that was sweeping the country. Industrialization, urbanization, and immigration meant that the common norms that used to hold society together were breaking down. He was preaching to a country that had grown mercenary and skeptical of collectivist ideals as a result. Nowhere did he see that breakdown more clearly than in the corporate world, where the bond between employers and employees had unraveled.

The antidote, he argued, was loyalty from both sides. And his prescription proved more prescient than he could have imagined. Starting with AT&T more than a century ago, executives saw the dysfunction inside their mercenary organizations and chose loyalty — ushering in decades of shared prosperity with few parallels in the history of capitalism. As today’s businesses slide back into the same dysfunction Royce saw all these years ago, his remedy feels as relevant as ever.

“What we want, at present, from some of the managers of great corporate interests is more loyalty, and less of the individualism of those who seek power,” Royce wrote. “Precisely the same sort of loyalty is what we want both from the leaders and from the followers of organized labor. There is here one law for all.”

Aki Ito is a chief correspondent at Business Insider.

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