Who loves the firm today?

Downsizing has turned workers into couldn't-care-less cynics. Even the companies are worried. So don't be surprised if your boss starts being nice to you, says Jack O'Sullivan

Have you ceased to care about your company's future? Do you give telephone callers short shrift, treat them in an offhand manner that's just the right side of civil? Do you dream of finding something better, walking into work one morning, sticking two fingers up at the management and leaving them high and dry, having first let rip with that torrent of abuse you've been composing for years?

If you answered "yes" to any of these questions then you have a loyalty problem. Or, more precisely, your company has a loyalty problem. It's not a problem over which companies have lost much sleep in the past few years. "Downsizing" has been on their minds - the energetic pursuit of cost-cutting as a means of survival or a route to greater profitability. The theory has been that the survivors of downsizing, fearful for their own jobs, would keep their heads down, work harder and cling enthusiastically to the wreckage. And, if their endurance failed, there would always be plenty of others only too ready to take their place. After all, the thinking went, any prospective employee, having previously been sacked, would have learnt a keen respect for a full-time job.

But things have not worked out quite as anticipated. Employment surveys are finding that those who escaped downsizing, far from feeling happy with their lot, are suffering "survivor's syndrome" - chronically insecure, and fearful that the fate which befell their colleagues will strike them, too.

"Levels of trust within companies have collapsed," says John Drummond, managing director of Integrity Works, a leading business ethics consultancy. As for those who actually lost their jobs, they have been left deeply suspicious of any claim to loyalty that employers might seek in the future.

David Feeney was a marketing executive with a large company but was tempted into joining a small firm in the early Nineties. "There was lots of talk about how we were a team, that we should work together. The MD said he was open - you could go to him with issues and ideas."

And then David went on his honeymoon, amid turbulent times for the business. "The day I got back, he took me into his office and forced my hand, saying our world was a small one, and it would be more in my interests to resign than be made redundant."

He left, feeling bitter. "My experience has made me very suspicious of owner-managed businesses. No matter how much he talked about us being a team, in the end he could pull the plug on me. Now, when I look for an employer, I look for people who are a lot more measured. I'm not seeking someone apparently avuncular and jolly. I carefully check out with other staff what the company is really like." As result, David has not taken up the permanent employment that has been available to him, but opted for short-term, contract work.

Darrell Alden, 32, from London, also had a nasty shock that has changed his attitudes toward employers, perhaps for life, making him unwilling to take a permanent job, even if he were offered one. Until January last year, he worked for the computer company Siemens Nixdorf as a member of the network support team. Then he was made redundant. "I'd been employed for two years and nine days so they had to pay me off with a package. I'm a single man, so it was no skin off my nose, though I know why I ended up on the list, because the new manager didn't like long hair and I wouldn't have it cut.

"The same day that I was fired, 300 other people were made redundant. There were guys who were married with kids and had been there for 15 years, but it counted for nothing. They were just surplus to requirements and were shipped out. Afterwards, I had an extended holiday and a friend said I should try contracting instead. I made a few phone calls to computer contracting companies and Reed and I haven't looked back. If you offered me a permanent job now, I wouldn't believe you. There's no such thing. I'd just say: 'no'. No job is really secure any more."

These unexpected outcomes of the cutbacks in white-collar jobs have been outlined in a recent book, The Loyalty Effect, by Frederick Reichheld, director of Bain and Co, one of the best-known US management consultancies. "The victims of these layoffs," Reichheld argues, "can have a tough time regaining their balance. They also carry an important lesson: never, ever to give that kind of blind dedication and loyalty to any company again. Survivors have a tough time as well.... They have to cope not only with their natural anxiety about future rounds of cuts, they also have to take on the added workload of those who were laid off. And for this increased workload, they see little in the way of increased compensation.

"The view that loyalty is a thing of the past is gaining ground, even among non-cynics. More and more, the conventional wisdom is that employees must take full responsibility for their own careers and that the key to success is watching out for number one."

The big downside of this new attitude is now being felt by companies. All smart firms realise that healthy profits depend upon loyal customers. And the best way to keep them happy is through loyal employees who treat them well, are a name and a voice in an otherwise faceless bureaucracy and can build a long-term relationship with customers.

Company restructuring has thrown this delicate balance into jeopardy. As a result of endless corporate churning, says Reichheld, US companies now lose half their customers in five years, half their employees in four and half their investors in less than one year.

The picture is not that different here: loyalty is becoming a big problem, particularly among young recruits. According to a TSB survey published recently, nine out of 10 young people believe that their qualifications and commitment are undervalued. Research by the Institute of Personnel and Development has found that only 37 per cent of younger workers describe themselves as loyal. Another study has reported that less than a quarter of educated staff report "a lot of trust" in their companies.

Research by Reed Employment, the recruitment agency, has found a great deal of anger among permanent staff who had survived the upheavals of recent years. "They felt tension between, on the one hand, holding on to their precious, permanent jobs as experienced incumbents and getting out now to become accustomed to the new environment, make contacts and acquire skills. They were the most fearful, insecure sector of all - and somewhat aggrieved that values of loyalty and employer-related skills were being discounted against the bottom line."

Job insecurity accompanied by low wages has resulted in company secrets being sold to the highest bidder. The Serious Fraud Office has dealt with more than 100 cases of "information broking", all of them involving sums of pounds 1m or more. Researchers at Loughborough University have concluded that "the controls companies put in to stop fraud or the selling of company secrets are breaking down. Loyalties are broken and, as a result, some employees decide to get the most out of the company while they are there."

According to Robin Buchanan, one of Frederick Reichheld's British-based colleagues, many companies here have been slow to recognise the consequences of their own short-termist cost cutting. But companies are beginning to take action. For example, Abbey National, which employs 18,000 people, this month said that it is moving back to the notion of jobs for life in an attempt to improve staff morale and thence the quality of consumer service.

The problems created by downsizing are large. "One firm we have been advising," says Robin Buchanan, "discovered that when customers wrote to the company, they were not getting a reply for six weeks. And, instead of the problem being fixed, they received a standard form letter. When a customer rang up with a question, the person responsible for dealing with it could not answer it or did not know who to refer the question to. We looked into what was going on. We found that they had a good IT system - that was not the problem. The problem was that staff in customer service were staying with the company on average for 10 months. There was a massive turnover of personnel. So the people dealing with the customers did not know either the product or the customer."

The solution was to make line managers responsible for the recruitment and training budgets, so that if they lost someone, it was a cost to their department. Suddenly, managers who had little interest in whether people stayed or left, became very concerned about inspiring staff and working on their morale and sense of loyalty.

In another company dealing in financial services, Mr Buchanan's consultants found that the paperwork was being done but in a sloppy way. "An employee's attitude was: 'I'm going to be here for 18 months and then I'm gone.' They saw no long-term future in the company, no career advancement. No one had an idea of how they could get up the ladder." The cure was for managers to explain to employees how they could have a career with the company. "We encouraged supervisors to do simple things to build team spirit, like going out for a beer with their staff."

All this seems like little more than common sense. It is, perhaps, a comment on how bad things have become that even these basic measures have to be explained to managers by highly paid consultants. Companies are still a long way from dealing with the fundamental loss of trust among employees. Many, particularly in financial services, admit privately that further waves of downsizing are only around the corner. It is hard to see how they will shake the opinions of Britain's most cynical workforce since the Thirties. Loyalty is dying now. It could be dead by the millennium.