When Does Employer Loyalty Become a Negative? | DCR Workforce Blog

When Does Employer Loyalty Become a Negative?

loyaltyIf you are working for a company which is a leader in its industry, you may have witnessed a colleague being courted and lured away by a competitor. Your former colleague may have bragged before leaving about receiving an offer of 2X or 3X. (For the uninitiated, that is headhunter jargon for someone whose current remuneration X is doubled or tripled when agreeing to make the switch.) While this may be true of a few individuals operating in certain rarefied circles of executive success, most people could expect a raise of 10% to 20% when they change jobs and go to work with a different employer. The size of the increase is often dependent on the scarcity of their skills and the industry they are working in.

So, does this mean it would be a mistake to stay employed at the same company for more than 2 years? Are we hurting our chances for growth by being loyal to our employer? Will these effects be higher over a lengthy career of more than 10 years – and less when compared to a shorter career – as with an older person?

Salaries have a way of trending downward in a recessionary economy which is vacillating between optimism and despondency. Most Human Resources consultants report that today’s average annual raise ranges from 1.3% to 4.5%. By staying with the same company, you may continue doing the work you enjoy most, but will be earning less, given the 2.1% inflation rate which is calculated using the Consumer Price Index as its base. Taken together, the real annual raise works out to 0.8% at its lowest to 2.4% at its highest. However, one must also factor in the trend toward “merit increases” in which top performers receive an average increase of 3% while the majority of workers receive significantly less or do not receive an annual increase at all. This results in a weighted average of about 1% at most.

Here is a sample calculation, for a career spanning 10 years, which shows how one could lag behind by staying in the same job. The initial salary is estimated at $100,000 in both cases, where the person stayed on for 10 years with the same employer, contrasted with the same individual making 3 transitions, earning a conservative 10% raise each time. The difference is a staggering $ 31920 or 29%! These numbers could vary greatly, depending on actual base salary, percentage of merit increase, and size of increase.

When Does Employer Loyalty Become a Negative

This almost appears to be a punishment for people who choose to stay with the same employer.

On the flip side, too frequent transitioning could get a worker blackballed by recruiters for their apparent unwillingness (or inability) to settle down. A Bullhorn survey reported that 39 percent of recruiters believe that the single biggest obstacle for an unemployed candidate in regaining employment is having a history of leaving a company before they have been at a company for a year.

For individuals in the enviable position of being actively recruited into a position offering increased competition, the issue of “job hopping” is probably not a concern. However, for others seeking to “test their marketability”, it’s important to weigh the trade-offs. What is the “right” amount of time to stay in a position? It depends. While changing jobs within a year may not be a problem when done once, a pattern of short-term positions is a red flag to recruiters.

The median number of years that wage and salary workers had been with their current employer is currently 4.6 years, according to an Economic News Release issued by the Bureau of Labor Statistics in 2012. However, that varies by age and occupation. “Millennials”, the name given to workers born between 1977 and 1997, average 3.2 years of tenure. Workers in management, professional, and related occupations had the highest median tenure of 5.5 years, while those in service occupations averaged 3.2 years.

Some insights which are useful for workers:

  • Young workers need to be more wary of staying too long with the same employer.
  • Not everyone merits a huge raise for changing employers, so it is necessary to decide based on one’s specific circumstances and industry.
  • Salary alone is not the issue. By changing positions, workers frequently also are promoted to more senior job titles, which strongly position them for any future changes. Negotiating for a better salary with a current employer is often a useful strategy, especially when a counter-offer is in hand. However, one must watch out for lingering resentment if the employer or coworkers feel that the move is merely a ploy to renegotiate compensation.
  • To avoid the “job hopper” trap, verify in advance that the new position offers more than increased pay. The position should also offer challenging work, learning experiences, potential for career advancement and a great work experience.
  • The same stagnation can result from temporary work assignments in which the individual is placed on long or near permanent assignments, and becomes a “perma-temp”.   Before accepting long-term assignments, workers should negotiate automatic salary increases that occur after specified periods of satisfactory performance.

Each of us must consider our specific circumstances, weighing all career goals, to determine whether it is time to move on.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.