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Op-Ed: Creating loyal employees isn't rocket science. Just ask George Eastman

This article originally ran on LinkedIn.

In 1911, George Eastman, founder of Eastman Kodak, instituted the Kodak Welfare Fund. The Fund assisted employees who were no longer able to work because of accident, illness, or retirement. “We have got to be prepared to do something for men who have grown old in our service, and now while we are making so much money is the time to provide such a fund,” Eastman said.

In 1912, Eastman would introduce a program known as the “wage dividend,” which was one of the most progressive and widespread profit-sharing programs in the history of corporate America. Seven years later, in 1919, Eastman would offer employees nearly one third of his personal stock at a price below the market rate. Eastman used the proceeds to strengthen the Welfare Fund. Eastman later implemented paid sick leave, life insurance, disability coverage, a retirement annuity, paid college tuition, access to company funded healthcare centers, and company housing.

George Eastman was loyal to his employees, and in turn, they were loyal to him. Kodak never unionized, and their employees were known for lifetime tenures—and for their tendency to remain involved in the Kodak community long after they stopped punching their time cards.

Kodak is one of four companies featured in Rick Watzman’s new book The End of Loyalty: The Rise and Fall of Good Jobs in America. The other three are Coca-Cola, General Electric (GE), and General Motors (GM). Each of these companies—including Kodak—saw the relationship with their employees change over time, particularly as shareholder value became the only measure of company success after the 1970s.

Watzman’s book is well researched and illustrates a simple fact: There is no secret to creating loyal employees. George Eastman created one of the world’s most loyal workforces because he was loyal. You don’t have to create a sophisticated internal branding campaign to convince employees to be loyal when you define leader the way George Eastman did.

George Eastman’s workers knew he had their back. He believed a hard day’s work should be rewarded with a good life, and he put his money where his mouth was. He knew that there was only one way to create loyalty, and that was to be loyal.

What happened, then? If it worked well, why is so hard to find—particularly in a large corporation—a company like Eastman Kodak today?

One reason can be found in the parts of The End of Loyalty focused on GE. Unlike Kodak, GE was unionized, and in the 1950s the company took a confrontational stance toward organized labor. That effort was led by Lemuel Boulware, GE’s Vice President of Community and Labor Relations. Boulware’s hardline stance toward labor became known as “Boulwareism.”

Boulware wasn’t just known for his combative stance toward his unions. During his tenure, the company undertook a program designed to educate employees on the principles of Economics 101, from a decidedly corporate viewpoint. That program including mandated reading, most notably journalist Henry Hazlitt’s Economics in One Lesson. GE’s efforts also included hiring Ronald Reagan to tour the company’s plants and give speeches touting management’s perspective.

Reagan excelled in his role, and earned the label “The Great Communicator” on merit.

If you’ve ever opened an Economics 101 textbook, you learn that there is literally no difference between a human being and a wrench. Both are forms of capital. Granted, I am not a tool guy—my wife is the man around our house—but it would not cause me a great deal of pain to get rid of a wrench.

But human beings and wrenches are very different. There is no way to make a loyal wrench. And there is no way to make a loyal employee if you think of him or her the same way you would a wrench.

The End of Loyalty: The Rise and Fall of Good Jobs in America illustrates a simple fact:

When it comes to loyalty, there is no secret sauce. Loyalty is gained when it is given.

Loyalty is also highly influenced by power. In the United States, companies often have the power to terminate employees for any reason (or no reason) and the ability to restrict them from earning outside income. Most companies make that clear with a stack of documents employees sign on day 1. The fact that the vast, vast majority of employers do not follow George Eastman’s example and have so tilted the balance of power in favor of the company means that the type of loyalty Watzman writes about might be gone, replaced by corporate feudalism rebranded as “loyalty.”

How do we change that? We can change the way we teach business and economics, and recognize that a human being is different from a wrench.

And though Kodak has had well-known struggles in the digital age, the near century-long dominance of their industry shows that when it comes to creating loyal employees—and understanding the relationship between loyalty and results—following George Eastman’s example would be a good place to start.

Commentary by Dustin McKissen, the founder and CEO of McKissen + Company, a strategy, marketing, and public relations firm based in St. Charles, Missouri. The firm does consulting work analyzing how politics effects the business climate for clients in the U.S., Europe, and Latin America. McKissen was named one of LinkedIn’s “Top Voices” in 2015 and 2016. He holds a Bachelors degree in Public Policy, and a Masters degree in Public Administration and is currently pursuing a PhD in Organizational and Industrial Psychology. Follow him on Twitter @DMcKissen.

For more insight from CNBC contributors, follow @CNBCOpinion on Twitter.

Source: Tech CNBC
Op-Ed: Creating loyal employees isn't rocket science. Just ask George Eastman

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