A new employer-employee compact

The old “job for life” certainties have gone but the laissez-faire approach which has replaced them is neither good for companies, nor good for employees argue Reid Hoffman, Ben Casnocha and Chris Yeh in the Harvard Business Review.

For most of the 20th century, the compact between employers and employees in the developed world was all about stability…..careers progressed along an escalator of sorts, offering predictable advancement to employees who followed the rules. Corporations, for their part, enjoyed employee loyalty and low turnover.

The arrival of globalisation and the information destroyed all that, they argue. Adaptability and entrepreneurship became the key to achieving and sustaining success.

These changes demolished the traditional employer-employee compact and its accompanying career escalator in the U.S. private sector; they are in varying degrees of disarray elsewhere.

The result is a break-down of trust between companies and their employees with a “winner-take-all economy that may strike top management as fair but generates widespread disillusionment among the rest of the workforce.”

The answer, they argue, is to build a new kind of compact between employer and employee based on three things:

Hiring employees for explicit “tours of duty”
“A tour of duty serves as a personalised retention plan that gives a valued employee concrete compelling reasons to finish her tour and that establishes a clear time frame for discussing the future of the relationship. ” These typically would be between two and four years and the end of the “tour” needn’t necessarily lead to the employee leaving the company (though that could be the outcome) but it would mean signing up to a further two or four year “tour”.

“Work with employees to establish terms of their tours of duty, developing firm but time-limited mutual commitments with focussed goals and clear expectations. Ask ‘in this alliance how will both parties benefit and progress?'”

Encouraging employees to build networks and expertise outside the organisation
To maximize diversity and thus innovation you need networks both inside and outside your company. Therefore, employers should encourage employees to build and maintain professional networks that involve the outside world. Essentially, you want to tell your workers, ‘We will provide you with time to build your network and will pay for you to attend events where you can extend it. In exchange, we ask that you leverage that network to help the company.’ “

Establishing active alumni networks to maintain career-long relationships
“The first thing you should do when a valuable employee tells you he is leaving is try to change his mind. The second is congratulate him on the new job and welcome him to your company’s alumni network.”The authors argue that having an extensive and active alumni network is extremely powerful.

“One obvious benefit of alumni networks is the opportunity to rehire former employees….They can share competitive information, effective business practices, emerging industry trends, and more. They understand how your organization works and are generally inclined to help you if they can.”

They recognise that this may sound counter-intuitive to many firms. “You might fear that running an alumni network is an admission of failure—a sign that your company can’t retain its best people. But your alumni are likely to form a network anyway; the only real question is whether your company will have a voice in it.”

They sum up:

The key to the new employer-employee compact we envision is that although it’s not based on loyalty, it’s not purely transactional, either. It’s an alliance between an organization and an individual that’s aimed at helping both succeed.

In the war for talent, such a pact can be the secret weapon that helps you fill your ranks with the creative, adaptive superstars everyone wants. These are the entrepreneurial employees who drive business success—and business success makes you even more attractive to entrepreneurial employees. 


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