When Loyalty Becomes a Liability

I watched a CEO destroy his company’s engineering culture in eighteen months. Not through malice or incompetence, but through loyalty to the wrong people at the wrong time.

The warning signs were subtle at first. During quarterly reviews, he’d consistently rate his longtime VP of Engineering higher than the data suggested. When other executives raised concerns about missed deadlines and technical debt, he’d deflect: “Dave’s been with us since the beginning. He gets our vision.” When our best senior engineers started asking pointed questions about architecture decisions, the CEO framed it as a culture problem, not a leadership one.

By month twelve, we’d lost three of our strongest technical leads. By month eighteen, the entire platform needed rebuilding.

This isn’t a story about friendship in the workplace - that’s actually valuable when done right. This is about what happens when personal loyalty overrides professional judgment, and why it’s one of the most dangerous traps executives face.

The Loyalty Trap: When History Trumps Results

Loyalty gets complicated at the executive level because the people you’re loyal to often helped you get there. Maybe they took a risk on you early in your career. Maybe they followed you from your company. Maybe they’ve been grinding alongside you through multiple pivots and near-death experiences.

That emotional investment creates blind spots that show up in predictable ways:

Performance reviews become exercises in creative interpretation. You find yourself explaining away consistent misses instead of addressing them directly. “The marketd” becomes a catch-all excuse. “They’re learning the new role” stretches from quarters into years.

Feedback gets filtered through relationship preservation. Instead of direct conversations about performance gaps, you have increasingly elaborate discussions about “growth opportunities” and “stretch assignments.” The person never gets the clarity they need to improve, and you never get the performance you need to succeed.

Team dynamics shift around the protected relationship. High performers start questioning the meritocracy they thought they joined. They watch mediocre work get praised while their contributions feel invisible. The message becomes clear: relationship matters more than results.

I’ve seen this pattern play out across different functions. The sales leader who can’t hit numbers but “really understands our.” The marketing executive whose campaigns consistently underperform but “gets our brand.” The operations manager whose processes create more problems than they solve but “knows how we like to work.”

The A-Player Exodus: When Your Best People Stop Believing

Here’s what I learned from exit interviews during that engineering disaster: A-players don’t leave because of one bad quarter or a single missed promotion. They leave when they stop believing the system rewards what they care about most - doing excellent work.

The pattern is remarkably consistent. First, they start questioning decisions privately. They’ll ask careful questions in meetings: “Can you help me understand the rat?” or “What success metrics are we using for this initiative?” They’re giving you chances to demonstrate that merit still matters.

When those questions don’t get satisfying answers, they start looking for evidence that contradicts their growing suspicion. They’ll volunteer for high-visibility projects, hoping to prove that great work still gets recognized. They’ll offer to mentor struggling team members, thinking maybe they can fix the problem from within.

But if the protected relationships continue getting rewarded while their contributions get treated as “just doing their job,” they start planning their exit. The best ones do it quietly and professionally. They finish their projects, document their work, and give proper notice. They don’t burn bridges because they’re not angry - they’re just done believing.

The dangerous part is that these departures often feel manageable in the moment. You tell yourself you can replace them. You might even feel some relief that the “attitude problems” are resolving themselves. But what you’ve actually done is signal to everyone watching that loyalty trumps performance, and that signal spreads faster than you think.

The Execution Tax: How Bias Compounds Into Failure

Poor judgment about people doesn’t just hurt morale - it creates a tax on everything you’re trying to accomplish. Every initiative gets filtered through the capabilities and limitations of the people you’ve chosen to protect.

I watched this happen with a product launch that should have been straightforward. The marketing leader - a longtime company veteran - had never successfully launched a technical product. But instead of bringing in additional expertise or reassigning responsibilities, the CEO kept giving him “support” and “resources” while the launch timeline slipped and the messaging stayed confused.

The engineering team built exactly what was specified. The sales team had strong early interest. But the marketing execution was so poor that we missed our window entirely. A competitor launched something similar six months later and owned the category.

The real cost wasn’t just the failed launch - it was the compounding effect on team confidence. Engineers started building features they knew wouldn’t be marketed well. Sales started making promises they knew marketing couldn’t support. Everyone began working around the protected relationship instead of through it.

This is the execution tax in action. When you can’t address performance problems directly, every project becomes more complex, every timeline becomes longer, and every outcome becomes less predictable.

Breaking the Pattern: Making the Hard Calls

The solution isn’t to eliminate loyalty from leadership - that would be throwing away something valuable. The solution is to separate personal loyalty from professional accountability.

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