The Long Service Award. Cherished by organisations as a sign of how great they are as employers. Sought after by employees as a recognition of their loyalty to the company (and hopefully to get a gold watch). Lauded by leaders as a sign of their excellent people management skills. But are companies and employees doing themselves a disservice by failing to part ways? Is it time to retire the long service award?

In the past, the loyalty of an individual to a company and vice versa has been measured primarily by their length of service in the company. However, in the age of millennials, is the longevity of an individual in the company really a good barometer of their loyalty?

As a leading HR professional said to me recently;

“the workforce is getting younger and younger, and for this population it is not considered a “great” thing to work for the same organization for years and to work one’s way up the ranks.  They will move whenever and wherever an opportunity presents itself -looking for the fastest way up the career ladder.  So we may have to re-think what loyalty looks like in the modern day workplace – can it be measured purely by length of service?”

There are clearly advantages of retaining the best individuals in a company for longer periods – lower recruitment costs, more committed employees, improved company morale, and hopefully a better organisational performance. However, are employees staying in the organisation because they are loyal, or simply because either they are too lazy to move or feel unable to find a better role outside? Are they staying simply because they don’t feel there is anywhere else for them to go?

Companies that have low levels of churn and very stable workforces are often admired for their ability to retain talent. On the other hand, are employees who jump ship every couple of years really disloyal, or do they allow for a continuous refreshment of ideas and enhancement of energy in the organisation? As the senior HR professional we spoke to mentioned:

“On the flip side, there are also those organisations that have become terribly risk-averse and do not want to take the risk of hiring new employees… one would say they are exceedingly loyal to their employees.  The employee turnover rates in those organisations are extremely low, which in turn leaves no room for new talent to come in and breathe fresh air into the organization”

In addition to the lack of room for new talent, the organisations with a very stable workforce also become unattractive to new talent. If there is no churn in the management structure of the organisation, where do employees find opportunities for career progression? In many companies, it would make sense to retire some of the older workers in order to attract fresh talent who could bring in new ideas and new energy to the organisation.

A number of our clients are increasingly struggling to find a balance between loyalty and performance in the organisation. How do leaders manage the very different behaviours between older workers and millenials? What is the right time for an employee to move on from a company? If employees are stuck in their roles, where are the opportunities for advancement amongst the younger workforce?

There is clearly no simple answer to the above questions, however it pays for leaders to think through the choices that they are making and understand the costs and benefits of each choice they make.