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Since when is loyalty a bad thing?

Avoiding layoffs in a down economy can benefit companies as well as their employees.

I recently received a press release that discussed what it called “labor hoarding.” Basically, it stated that despite the down economy, more than 90% of small and medium-sized businesses were retaining or “hoarding” employees at a time when others were starved for staff. It seemed that the authors were chastising these companies for holding onto employees they don’t currently need, rather than cutting them loose so bigger businesses can hire them.

My view is a bit different. I applaud companies for being loyal to their employees, especially if they expect loyalty in return.


I realize that my views might seem outdated. But I grew up in a family retail business, where some of our employees had been with us for three decades. Times are different now. Workers shuttle from job to job. One of my sons just began his fifth job in 11 years. By comparison, I have been with Agile Business Media & Events, the publisher of **{DC Velocity,} for 20 years. Most of our other editors have been with us for at least 10.

Many would argue that a continuous churn of talent brings fresh blood into an organization and keeps employees from becoming complacent. There is some truth in this. But I prefer to keep things fresh by challenging our staff with new opportunities that make their work engaging.

Companies often furlough workers during downturns to improve their bottom lines. But is disrupting the lives of these employees and the strain caused by dumping extra work on the remaining staff worth the trifling amount saved by the layoffs?

Employee churn also has its costs. According to statistics published last year by the Society for Human Resource Management, it costs nearly $4,700 on average to onboard a new employee. There are costs to advertise a position, search for qualified candidates, interview those candidates, conduct background checks and drug tests, and train the new hires. Training costs alone are estimated to run anywhere from $1,200 to more than $4,000 per employee, depending on the job.

And while that training is taking place, productivity is likely taking a hit. Studies show that new employees are only about 25% productive in their first month, not reaching full levels of productivity until after six months.

While bringing in employees with new ideas is always good, losing employees with institutional knowledge can hinder growth. In my experience, normal attrition from resignations or retirements usually provides an adequate level of churn.

As I see it, hoarding good workers can be rather a good thing.

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