The Price of Loyalty

Key Takeaways

• Loyalty is an overrated quality in subordinates.
• Prizing loyalty may cost you competence.
• A loyal, but incompetent organization is a hollow shell.

Do you allow subordinates to question your ideas? Challenge your agenda? Do you demand that subordinates show loyalty and get angry if they ask you to match a competing job offer? In other words, how much do you demand loyalty in your employees?

If you want to build an organization in which no one questions your leadership, that is achievable. But in building your little kingdom, you will be making trade-offs with the quality of your employees.

An authoritarian leadership can diminish an organization’s ability to function. Governments and businesses that prize loyalty may drive away talented workers. Indeed, in an authoritarian regime, party leaders often pick and promote subordinates based on loyalty rather than competence. Zhakarov (2016) presents a formal model that shows some of the dynamics behind these decisions. The math is complicated, but the intuition is straightforward: Incompetent subordinates are replaceable and not likely to survive a regime change and are, therefore, fanatically loyal.

They have to be. Their position is dependent entirely on the survival of the leader.

Competent subordinates, on the other hand, may be less likely to be loyal because they do not need to be. They can maintain their positions regardless of who the leader is because they are useful regardless of who the leader is.

They may, therefore, also be less willing to use their power and authority to benefit the leader (or increase his/her power) at the expense of good policy. For an authoritarian leader, this means that competent people may pose a threat to their own power and reducing that threat may be more valuable to the leader than improving government capacity.

This phenomenon is particularly associated with cult of personality regimes, which focus on one authoritarian leader as opposed to a party or ideology (Russia’s Vladimir Putin, for example). In a cult of personality, the leader may push more and more fantastical propaganda as a way of weeding out disloyal subordinates. Of course, this may also have the effect of driving out more scrupulous and competent subordinates.

This strategy is sustainable because an authoritarian does not have to run for re-election so he may be less interested in a functioning state. A democracy, on the other hand, needs to function so that elected leaders can satisfy voters. U.S. presidents also face the loyalty-competence tradeoff in picking subordinates. In high-profile, high-priority appointments, presidents may favor loyalists if they believe an institution needs substantial reforming or major policy change is required. In most appointments, though, competence tends to be more important. 

This dichotomy illustrates the value of loyalty. An authoritarian leader values loyalty because he does not need his government to function beyond the bare minimum to maintain order. His chief need is subordinates who will never contradict or undermine him in private or public.

But loyalty by itself isn’t worth much if you need your organization to accomplish things. An organization where the leader cannot be questioned will manage just fine as long as the leader is never wrong about anything, never makes mistakes and never has to delegate authority or decision making to any subordinate. If you want subordinates who can manage tasks and solve problems, you must value competence.

To pull back a bit, one lesson to take from authoritarian regimes is that competent people have options. This is true in the business world and the political world. People who are good at their jobs can find work at other firms or organizations. As a leader, you need them more than they need you.

Competent people may also be loyal, of course, but only to a leader who is worth being loyal to Therefore, in order to gain the loyalty of competent people you have to treat them like people with options. This may mean offering better salaries, more flexible hours, more autonomy, etc. Encourage them to voice their ideas and respect them when they question yours.

You can have all the loyal sycophants you want. The price is an organization filled with incompetence.