Why Loyalty Might Be Killing Your Company

Have you ever seen loyalty go wrong? In business, employees are often rewarded for continued loyalty to the company with bonuses, gifts, promotions, and privileges. But if you’re not careful, loyalty might kill your company. We often talk about loyalty as if it were always a virtue. However, when loyalty is misapplied or used as a means of avoiding difficult conversations, it can quietly drain your momentum, hinder innovation, and keep the wrong people in the wrong seats for far too long. In today’s episode, we’re going to break down why misplaced loyalty happens, what risks it creates, how to prevent it, and what it looks like to practice healthy loyalty that actually strengthensyour team.

Loyalty is a gift — but when it turns into blind allegiance, it can sabotage your leadership. As a leader, your first loyalty is to the mission, the vision, and the team as a whole. The most loving thing you can do — is tell the truth.

Why Does Misplaced Loyalty Happen?

1. Fear of Disruption

You know they’re not a great fit anymore, but the thought of replacing them feels like pulling a thread that unravels everything.

2. Emotional Attachment

Maybe they’ve been with you since the early days. They were loyal to you when you were just getting started.

3. Guilt

You’ve mentored and invested in them, and you worry you’ll look like the bad guy if you part ways.

4. Cultural Confusion

You’ve built a family-like environment, but now it’s blurring the line between professional accountability and personal loyalty.

5. Avoidance of Tough Conversations

It is easier to rationalize than to confront the truth.

The Risks of Misplaced Loyalty

1. Culture Erosion

Your best people see that mediocrity is tolerated and become resentful.

2. Stunted Growth

You can’t scale if you’re dragging the wrong people with you. Clinging to comfort over capability will limit innovation.

3. Bottlenecked Leadership

You end up doing work others should be doing or covering for their weaknesses. Instead of focusing on long-term vision, you are forced to focus on damage control.

4. Talent Drain

High performers don’t stay in environments where low performers are protected. You think you’re being loyal, but you’re losing the very people who could take you to the next level.

Q: Who on my team am I protecting because of who they were, not who they are today? Have you ever seen a well-tenured person stay in a role for too long? What were some of the symptoms? How did the rest of the team perceive them and their relationship with the boss/company?

How do you Prevent Loyalty from Becoming a Liability?

1. Separate Gratitude from Role Fit

You can be deeply thankful for someone’s contribution and also know the role has outgrown them.

2. Use a Tool Like “Right Person, Right Seat”

Ask yourself: Is this person aligned with our core values (right person)? Do they possess the necessary skills, want the role, and have the capacity for it (right seat)? If either answer is no, it’s time for a change.

3. Practice “Truth & Grace” Conversations

Adopt the mindset that feedback is a form of honor. Don’t ghost people with silence; honor them with clarity.

4. Create Pathways, Not Prisons

Loyalty doesn’t mean locking someone in a role that’s hurting them or the company. Help them pivot, level up, or exit with dignity.

The Benefits of Healthy Loyalty

1. Your Culture Gets Stronger

People understand that excellence is the standard, not tenure.

2. Your Leadership Matures

You become known as a leader who leads with both heart and courage.

3. Your Team Grows in Trust

Trust doesn’t come from comfort; it comes from clarity.

4. Your Organization Thrives

When the right people are in the right seats, everything accelerates.

Q: How have you seen a leader express healthy loyalty? What did they do? How did it come off to other people? What standard or expectations did it set?

Application Activities

1. Make a list of 1–2 team members who might be out of alignment. What has been causing you to feel loyalty to them? How has their capacity or capability changed since they first joined the team? What would have to change for them to remain a part of the team? Commit to having the necessary conversations with them over the coming week and design a plan to help them improve, pivot, or, if necessary, exit.

2. Frequent and honest feedback is the best way to ensure that your team members are meeting your expectations. Beyond just job expectations, make a list of 3-5 qualities or skills your team members should all have to remain part of the team. Check in on these qualities frequently and give clear feedback during your weekly one-on-one meetings to discuss where they are thriving and where they can improve.