Markkula Center of Applied Ethics

Employee Loyalty

An Interview with Cheryl Breetwor

In a hot job market, many employers find it difficult to keep workers, who are often lured away by the promise of stock options and their potential for wealth. Cheryl Breetwor gives her perspective on the virtue of loyalty:

There's a mentality in [the Silicon Valley] that I find interesting — almost like there's this entitlement. There are some people, no matter what you do for them, it's never going to be enough. If they're not making $1 million in a year, they leave.

I ran a company for 16 years that was very successful, but we had a hard time attracting people because we didn't have the promise of an IPO. Some of our employees who had been with us 14 or 16 years did very well when we were aquired. But people we had hired in the year before the acquisition were trying to figure out ways to get their options accelerated because they wanted to get rich quick. There was some behavior that I thought was pretty ugly — reprehensible really. The intent of an option is to motivate people and have them make an investment for the long term. It's not a get-rich-quick scheme. In some ways, the point of options has backfired; we see less employee loyalty.

We did a lot of thinks to try to create employee loyalty. Every time we met a goal, we would take employees and their families on these trips. We gave them expensive [gifts]. Then, as we began to do well, these prizes started to come a lot closer together than we had expected. For example, we went from $5 million to $10 million in revenues in one year.

Came Thanksgiving, and the question came up, "What should we do for the employees this year?" In the past we had given out $50 dinner gift certificates. I said, "This year let's give them See's candy." I had a guy come into my office and say I didn't care about my employees anymore because I only gave them See's candy. I said, "How can you look at it that way? What about the $50 sunglasses, the wine, the trip we're sponsoring in January that will us $1,500 plus per employee?" He couldn't see that. This was a guy in his early twenties that we had promoted three times. He was making about $100,000 a year. He ended up leaving ShareData for [another company], and you know what happened? He got laid off. I guess that was a lesson he needed to learn.

On the other hand, we had an employee who wanted to be a vice president, but we decided not to give him that position. I sent him off for some counseling because I knew it was a disappointment to him. He came out of that and realized he really didn't like managing people and there were other opportunities for him at ShareData. When we went through our acquisition,...he was working all night long to make the thing happen. He didn't stand to gain nearly as much as some other employees, but he was negotiating for the team. He was absolutely there for everybody to win.

I suppose there are two ways to look at it: Employees move around from one company to another, and they want to be responsible to their own careers. I come a little more from the old school that says you have to make an investment in the company and learn. It will eventually pay off, but not right away.