Companies don't care that much about employees anymore... and that's okay

How the changing economic landscape ruined employee loyalty

Happy new year and welcome to the first Second Guess edition of 2023! May this year be kind to us. Amin!

Did you know that a job like Sewer Swimmer exists? In Mexico City, a group of workers has to dive through human waste, animal corpses, and rubbish to maintain the sewer system and undertake repairs. And people actually enjoy the job!

And now, to today’s story.

Photo by Ketut Subiyanto

In 2021, at the height of the pandemic, the US Bureau of Statistics reported that over 47 million people voluntarily quit their jobs. That trend—what we know known as the Great Resignation—upended the relationship between workers and the labour market.

But the Great Resignation didn’t happen overnight just because of the COVID-19 pandemic. It was the culmination of a trend that started after the 2008 economic collapse, as from 2009 to 2019, the average monthly quit rate increased by 0.10 percentage points each year.

At the outset of the COVID-19 pandemic in 2020, the resignation rate slowed because the uncertainty made workers hold on to their jobs for dear life. However, that pause was short-lived. In 2021, as the government rolled out stimulus cheques, some of the uncertainty waned and millions of workers quit their jobs, creating what we now know as the Great Resignation.

Even as the economy underwent a harsh year of hundreds of thousands of layoffs in 2022, it’s still very much lucrative to job hop. But this trend doesn’t exist on the workers’ side alone.

Here’s an example of how employee benefits once worked in the years of yore.

In the 20th century, some companies gifted gold wristwatches to staff members on retirement, a tradition said to have been started by Pepsi Co. in the 1940s — a tradition that’s now all but forgotten. Companies found several ways to reward loyal workers for long years of dedicated service. It was common to see people work at the same job for decades. Until now.

The US Bureau of Statistics reports that as of 2022, only 28% of wage and salary workers had 10 years or more of tenure. If this figure doesn’t sound too low, keep in mind that most of these people are already on the verge of retirement.

In today’s job market, a rule of thumb (and generally good financial advice) for upwardly mobile workers is to switch jobs every two to three years. I’m a living testimony of that. I’ve switched jobs twice in four years and more than 10Xed my average monthly salary in that time. It’d have taken me at least 10 years to hit my current salary if I’d stayed at my first place of employment.

Multiple studies suggest that full-time workers who stick with their companies for more than two years get paid 50% less on average. Of course, as you grow in your career, you’re advised to optimise for stability and switch jobs much less later on, but I digress.

So how did employee loyalty become a thing of the past and why is it so lucrative to switch jobs (rather than stay loyal to a company in 2023?

You’d think that with all the stress and cost that comes with having to hire and onboard new hires, train them, and wait for them to grow into their roles, companies would try to keep people longer. Yunno, because this model is unsustainable if it has to be done over and over again every two years, right?

Wrong. It turns out that companies don’t really care. And for good reasons:

Changing demand for roles

Technology has grown at stunning speed in the past 20 years and the majority of roles that exist today didn’t even exist five years ago. As new jobs are being created, more traditional roles are rendered redundant. What this means is that the average worker today is most likely doing something they might not have expected to be a thing back in 2010.

In 2023, much more likely going to see a (well-paying) job posting on Twitter for a Dev Ops engineer than a data entry operator.

If you’re working in a role that can be replaced by a piece of software or machine, you’re likely going to get laid off, thus reducing the average tenure of the workforce. On the other hand, when you realise you’re going to earn more money in another field, you’ll probably consider a career pivot. A call centre operator, for example, who realises they can easily make 5X their current salary if they learn UX design or data science will likely jump ship.

Abundance of skills

A university degree is no longer as much of a big deal as it once did in the 1970s. This doesn’t mean degrees are worthless; it just means that the chances of getting a high-paying job straight out of university these days are very low. What big companies (eg Big Four, finance, banking, accounting) typically do is launch graduate trainee programs that pay shitty wages and demand huge sacrifices knowing that their employees are there for the prestige, opportunities and CV clout. No wonder these companies often have high turnover rates.

After two or three years, these junior-turned-mid-level workers seek out high-paying jobs with more flexible schedules. While such turnover rates may cost companies huge amounts of money to hire and train, the companies get a cheap pool of labour to pick from. A win-win of sorts. Then again, other companies love the system because they get to poach available talent. It’s not uncommon to see high-growth startups poach mid-level professionals from more established companies.

And then there’s also the rise of remote work which has widened and depeened the pool of skilled talent.

Wonky corporate ladders

It’s simply far easier to replace senior staff with external talent than to promote employees to higher roles, train them, and wait for them to learn the ropes. Mentorship is expensive and time-consuming work, especially for larger companies.

If a senior manager retires or leaves a company, and someone is promoted to fill that position, someone lower down the ladder would have to be promoted. Suddenly, they’re left a bunch of empty roles that need to be filled. The fallout is that the company has to train and wait for these newly promoted workers to undergo the learning curve of the new, more senior role than they’re used to. This could result in missed deadlines and delayed projects. The easier road would be to just bring in a senior outside hire and keep it moving.

And well, with software and process standardisation, it’s now easier to onboard new hires than ever before.

This brings us to the hard truth: the dream of a stable 35-year career is dead. And oh also, no one is irreplaceable anymore.

But it also outlines a positive reality: it’s a transparently transactional relationship. The employee is there to squeeze out every drop of value from the worker, and the worker is there to make the most out of the opportunity until a better alternative comes along.

Make no mistake: companies will screw you if and when they can. It’s nothing personal. So go ahead and switch jobs especially if you’re a star hire, because the fastest (and most efficient) way to climb the corporate ladder is to jump between them. Ace your deliverables and meet your KPIs but also be selfish for the sake of your career. There’s (little or) no reward for loyalty on these streets.

Have a great weekend and see you next Friday!