What Happened to the Gold Watch?
Ever heard of a gold watch? It used to be a big deal. Not just a fancy way to tell time, but a traditional gift from an employer to a worker retiring after more than 25 years of service with that company. Pretty neat, right?
Well, that tradition is pretty much gone now. Why? Could be the cost of gold, or maybe everyone just uses their phone. But the biggest reason is probably that company loyalty isn’t really a thing anymore.
Think about it: How many folks do you know who have been with their current job for over 10 years?
- According to the US Bureau of Labor Statistics, about 29% have been.
- That sounds high, but remember, a large chunk of that group are workers close to retiring. Keep that in mind!
- For all workers in the US, the average time at a job (the median tenure) is just over 4 years.
Here’s the kicker: Multiple studies suggest that full-time workers who stick with their employer for more than two years actually get paid FIFTY PERCENT LESS on average. Yeah, 50%!
This pay gap is huge, especially considering that the average for the “loyal” group is boosted a lot by senior folks and the C-suite (the big bosses) who naturally stay longer. For regular people like you and me, that 50% number is likely even understated.
Why Don’t Companies Care About Loyalty Anymore?
You’d think companies would want people to stay. Hiring is expensive! Shelling out tens of thousands for job ads, interviews, onboarding, training, and waiting for new staff to get up to speed… doing that every couple of years seems crazy, right?
You’d think so, but there are reasons businesses don’t stress about employee loyalty like they used to. It’s time to peek into the “terrifying mind” of HR and see what employers actually value.
Here are the main reasons:
- An abundance of skills
- Standardization of tasks
- Globalization
- Broken corporate ladders
- And, of course, an ever-changing demand for different roles.
Understanding these will help you get the most out of a career you might be in until you’re, well, maybe a hundred.
Reason 1: The Ever-Changing Job Market
This one is probably the easiest to see. Just look at job ads today. You’ll find lots asking for dev ops engineers and hardly any for switchboard operators.
Technology keeps moving. It creates cool new jobs but also makes others totally useless. The speed of change means lots of people will finish their careers in jobs that didn’t even exist when they started working.
If your job can be easily replaced by a machine or software, you might get shown the door quickly, lowering how long people stay in roles.
But it goes the other way too! A bookkeeper might realize they could earn double as a social media manager and jump ship for a better opportunity.
Heck, the top job kids want today is “YouTuber.” Go back 20 years, and people would think that’s some kind of specific plumber!
This isn’t exactly new news, so we won’t dwell too long here. But keep this idea of changing demand in mind as we look at the other reasons companies aren’t prioritizing loyalty.
Reason 2: Loads of Skilled People Available
People are getting more education than ever before. Having a college degree isn’t rare anymore (for better or worse). Companies like hiring new grads for a few reasons:
- They’re often cheaper than experienced staff.
- They tend to be younger and more willing to put in overtime for project deadlines.
Take big accounting firms like the Big Four as an example. They have well-known graduate programs that pay poorly and demand massive hours. Both the firm and the grads kind of know the deal: almost none of the grads will stay long-term. They work hard for maybe two years to get that famous name on their resume and then leave for better-paying jobs with a better work-life balance.
A report at Deloitte (one of the Big Four) found they had about a 13% annual staff turnover. This potentially costs them a whopping 427 million dollars a year in hiring, training, and things like project delays from people leaving.
Sounds bad, but it works for both sides:
- Deloitte gets a pool of relatively cheap labor to bill out for a few years.
- The overworked juniors get that Big Four name on their resume to land a better job at a “regular” company.
Guess what? These regular companies love hiring former Big Four grads too, for three big reasons:
- Handling the Workload: Surviving two years at a Big Four firm shows you can handle a seriously tough job.
- Useful Insights: If a KPMG grad worked in consulting for pharma and then went to work at Johnson & Johnson, they’ll understand the basics of how that business works from day one because they were involved in projects there before.
- Knowing the Competition: Even better, they’ll often know how competitors operate. Not like corporate spying, but simple stuff like, “Oh, GSK streamlined their expense process using this software.” Small insights like that can save big companies millions.
This isn’t just about accounting firms; they’re just an extreme example. Businesses know that a great way to stay ahead is hiring talented people from their competitors. This is even more true thanks to globalization.
Reason 3: Globalization and a Big Talent Pool
The rise of offshore service centers and a huge increase in skilled migration means companies have a massive pool of talent to pick from in almost every industry. The pool is wide and deep!
It’s totally normal now for companies to advertise even entry-level jobs GLOBALLY, especially since so many people are working from home anyway.
Reason 4: Corporate Ladders Aren’t What They Used to Be
Here’s the third reason businesses love hiring from the outside, particularly for higher-up jobs: it stops massive chain reactions in staffing.
Imagine a company that only promotes from within. Sounds nice, right? Like a fairy tale of climbing the ladder. But it can cause problems.
Say a senior manager retires. Good for them! The company promotes a floor manager from one of the four departments the senior manager oversaw. Then, a project team manager replaces that floor manager. And a senior associate replaces the team manager.
Lots of people feel good about their promotions! But look at the problems:
- The business lost a senior manager.
- Now, four other people are in key roles they are totally new to, all at the same time.
- Even with experience, there’s a learning curve for a senior job. Projects could get delayed for months because a whole part of the company is basically getting up to speed.
Compare that to just hiring an outside person to replace the senior manager.
- The business avoids all that internal reshuffling nonsense.
- They might even be taking a talented person away from a competitor.
It’s a win-win… for the business, anyway. The employees might feel less funded (meaning less chance for promotions themselves).
You might think this internal vs. external hire thing isn’t new. But ironically, as companies have moved towards flatter structures with less defined roles, it’s become harder to map out who does what. This makes internal promotions trickier sometimes.
The classic line “you’re irreplaceable” suddenly has a different, less positive, meaning for the employees hoping to move up.
Luckily for companies, hiring from outside has become much easier thanks to the standardization of tasks.
Reason 5: Jobs Are More Standardized Now
Hey, office workers watching this, what program do you use most? Probably email? Or a Microsoft Suite product (like Word or Excel)? If not, maybe you’re a programmer using specific coding tools.
Computers have made us way more productive. A spreadsheet that took a team of bookkeepers weeks decades ago can now be done by an intern with Excel in an afternoon.
Beyond saving time, computers have made most jobs way more uniform. If you’re in sales, customer service, admin, accounting, or anything else using a computer, there’s likely an industry-standard software suite most companies use.
So, onboarding someone used to take weeks just getting them familiar with the company’s unique system. Now it can be as simple as: “Okay, you’ve used Salesforce before? Great, here’s your client list, start calling!”
Think about the bank manager. Decades ago, that was a huge job, almost as respected as a doctor or lawyer. Why? Bank managers decided who got loans. This wasn’t just checking a credit score like today. It needed a deep understanding of:
- Business functions
- The local economy
- The national economy
- Regulations
- The bank’s own financial health
Plus, they built strong relationships with local businesses and the community to get customers. Replacing one 40 years ago was a massive undertaking, and they almost had to be replaced by someone already from the branch because their role relied so heavily on local knowledge and relationships.
Fast forward to today: a bank manager is basically a glorified customer service role. Loan decisions aren’t made by them. They’re handled by an offshore credit department which mostly just plugs numbers into a computer program for an approval or decline. Replacing a bank manager today is easy – put up a job posting, and you’ll get a line of candidates.
What This Means For You
If this all sounds a bit depressing, it doesn’t have to be. The dream of a super stable job for 40 years might be dead, but the current reality is… kind of refreshing in its honesty.
- Companies are there to get the most out of you until they find a better option.
- You are there to get the most out of a company until you find a better option.
Switch jobs! Seriously, the stats show you’ll probably be better off. The way up the corporate ladder these days often involves jumping between ladders.
Yes, employers are businesses, not charities – they’ll try to maximize their benefit. So, look out for yourself:
- Keep your LinkedIn profile looking sharp.
- Accept any certifications or training your current company will pay for.
- Don’t fool yourself into thinking you’ll be rewarded just for being loyal. You simply won’t be, financially speaking.
What’s Next?
Okay, there are two other big things at play here. All the stats and trends we’ve talked about focus on full-time employees. The situation is even crazier if you include the growing number of casual workers and gig economy contractors. I’m planning a video on that soon, so keep an eye out!
The other thing we didn’t dive into is the rise of increasingly service-oriented “bull jobs” that are being created every day. These types of jobs inherently have less staying power than traditional roles. Luckily, I’ve already made a whole video just on that point, so go check it out to keep learning how money works!