Company Loyalty and Financial Independence

Quote of the Week:

You can never, ever forget — people may be loyal to companies but companies are loyal only to the bottom line.

This quote is from a response on Quora to a question posed about the cutthroat company culture of Cisco Systems. The response is by Jay and is linked here.

Loyalty means a strong feeling of support or allegiance to an organization, cause, government, etc. Loyalty is a mutual matter and should be reciprocated. When a person is loyal to another entity, be it another person or organization, it is generally accepted that the recipient of the loyalty will show loyalty back. This is how most bonds of trust are born and why society in the world works. Most people will show loyalty to their respective governments and show nationalistic pride because they feel that the loyalty will be reciprocated. The government has their best interests in mind and works to provide value to the loyal citizens for their taxes. This may not always be true, as can be seen from the news with the uproar that happens after any new decision for or against change. There will always be an unhappy party, but by and large, the majority will be content with the knowledge that the government is working in their best interests and is being loyal to the citizens its governs.

Now, a public company on the other hand, is beholden to the shareholders. I have worked only for publicly traded companies, so can only speak to them. Every move a company makes is towards the benefit of the shareholders. We, the employees, work for them tirelessly, or tiredly, and put in lots of prime time hours for the benefit of the company. The company, in return, pays us a salary and some number of benefits. However, as time progresses, this benefit package seems to get chipped away at, so the company can make larger and larger profits. The “bottom line” is the end goal of the company. Make the largest profit possible without losing too many of their valuable employees. When a company becomes publicly traded, their loyalty moves from inside to outside. Their loyalty now lies primarily to the shareholders and the shareholders show their loyalty back to the company in the form of buying and owning stock in the company. In a private company, the company can be more loyal to their employees, as their employees are the ones that generate the revenue and drive the profits for the company to be successful, but once a company becomes publicly traded, loyalties change.

So why do we have employees that are loyal to publicly traded companies? The company is not in return loyal to us. I believe the answer lies in bygone times. In the past, many companies showed loyalty to their employees even as a publicly traded company. Companies offered and supplied a very good pension and a secure retirement future to retain valuable employees. My company had one, however, as the division I worked for was spun off and became publicly traded themselves, that was the first thing to get cut. When a company showed loyalty to the employees through their actions, offering secure retirement pensions, affordable health care, competitive salaries, the employees in return showed their loyalty to the company. Companies no longer care for the longevity of the employees, only to maximize the employees value to the company for as long as possible before they lose them to burnout or to the competition.

Since we are on the path to financial independence, we have no loyalty to the company. Our loyalty lies to ourselves and our pursuit of freedom from the working life. We strive for the atypical life that allows us to live free of worries from money and be able to decide for ourselves where our loyalties lie. Many employees are loyal to the company because they are not confident in their ability to support themselves without the “guaranteed” pay of a steady salary. Leading the atypical life gives you the ability to not worry so much if the job were to end, as your savings rate is so high, you know everything will be okay while you look for a new job until reaching the pinnacle of atypical life, financial independence.

Striving for financial independence is all about your savings rate. The higher your savings rate the sooner freedom arrives. This is the same idea that drives companies to look only at the bottom line. They are also trying to maximize their savings rate (profit/bottom line), which seemingly makes the FIRE community and companies similar. Our striving towards higher savings rate does not affect the company, besides fringe benefits like allowing lower medical costs, since we are also a healthy community. However, the company striving for the bottom line affects us, because easy savings come from cutting benefits.

Think back to your working career if you are already free, or on your current working career if you are still a slave to the man, and see if you can think of when the company announced: we are now lowering your health insurance premium, we are raising your retirement benefits, we are giving everybody an extra week of vacation, etc. I can’t think of a single time in my short career this has happened. I still hold out hope that one day, all of the companies promises to be about the employees comes true, but I am prepared to pursue my freedom as is. Freedom is paramount and that is what we all should seek!

Do you agree? Let me know in the comments.

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