It is little wonder that Pat Buchanan's tirade against corporate America has found a wide audience among primary voters. Millions of Americans have watched real incomes decline and job security vanish but we seen no sign that anyone at the top was concerned.

In fact, corporate executives are deeply concerned, because they know that behind these trends is our failure to maintain productivity growth at the pace we became accustomed to in the first few decades after World War II. They also recognize that in the global economy this failure will constrain profits and curtail growth.

And they know that the standard solutions no longer seem to work. Since the 1960s, American business has invested trillions of dollars in technology, yet productivity is barely inching upward by the government's most recent measures, current productivity gains don't much exceed 1% a year. Of course, we can quibble over the accuracy of government statistics, but whether productivity is crawling gr merely creeping upward is an academic question.

The answer is that is a service economy, technology and layoffs go together like drinking and driving. Unfortunately, most of corporate America can't see this because its vision is blurred by another bad mix: an economy based primarily on services coupled with business systems (and a mind-set) based entirely on manufacturing.

In manufacturing. experience and learning were captured in the architecture of the machine and the process design of the factory. Individual employees and customers were less important. Today, in services, learning and productivity grow from the cumulative decision-making experiences of employees in long-term relationships with customers, vendors and fellow employees. When employees-or customers-leave the company. they take this learning with them, and productivity suffers. In fact, this customer and employee churn is productivity's principle enemy. It is this human turnover that has overwhelmed the learning and efficiency advantages that technology investments offer.

Although experienced customers and employees am the most critical assets in service firms and in the service functions within manufacturing, American companies are losing 10% to 20% of this knowledge and experience every year. This means that a typical company eliminates most of the critical assets from its business system every five to 10 years!

Layoffs not only waste human assets but lower the productivity of survivors, who focus anxiously inward on their own careers instead of outward on customer needs. Since many of today's layoffs are the unavoidable result of yesterday's management errors, the challenge for executives today is to avoid future errors and layoffs by earning the loyalty of customers and employees so they will stay put and make good use of the learning and technology that underpin productivity growth.

Executives must recognize the shortcomings in their present, antiquated measurement systems, incentives, career paths, cultures and strategies, then redesign them to prevent undesirable customer and employee turnover. The very best companies will reach beyond the manufacturing target of zero defects and build customer and employee retention systems aimed at zero defections.

Some have already begun. A few began years ago and their track records show what handsome returns technology investments can produce when they're harnessed to the power of customer and employee loyalty. For example, USAA, the San Antonio financial service giant. has pursued the reduction of employee and customer turnover for more than 30 years. Its 1960 employee churn of 43% is down to 60% today, and its customer turnover is under 2%! The firm invests heavily in technology-7% of revenues-and its productivity has gone into orbit. Over the past 30 years, the company's financial assets have grown 100-fold while employment has grown by a factor of only five.

The best companies inspire loyalty by sharing productivity gains with employees. Chick-Fil-A, an Atlanta-based fast food chain that has grown to 600 Stores without ever tapping the stock market is a prime example. The company shares store profits with their operators on a. 50-50 basis. As a result, Chick-Fil-A operators earn 50% more than the competition (the top 10% average more than $100,000 a year) - and, not surprisingly, employee turnover runs at, 5% a year vs. 35%, for competitors.

The loyalty paradigm works in other industries as well. Leo Burnett has the lowest defection rates in the advertising business and leads its competitors in productivity by more than 15%. In the grocery business, employee turnover explains more than 90% of the variation in Productivity among large supermarket chains. In life insurance, Northwestern Mutual has the highest retention rates and the best productivity.

The U.S. has always been a technology leader. We were once a nation that also set great store by virtues like fidelity and trust, but today's layoffs obliterate employee loyalty. Demotivated employees deliver poor value to customers. Dwindling value destroys customer loyalty. People move or get moved from one supplier or employer to another for very little cause. and this whole accelerating riptide of displacement is sucking the growth and productivity from our economy.

We can invest all the money on Wall Street in new technologies, but we won't realize the. benefits of improved productivity until companies rediscover the value of human loyalty. Loyalty will not result from protectionism or legislated "corporate responsibility." It will flourish when business leaders shake off their manufacturing mind-set, and measure and nurture their human assets as carefully as their financial assets.

Mr. Reciheld is a director of Bain & Co., a Boston-based strategic consulting firm. He is the author of "The Loyalty Effect- the Hidden Force Behind Growth, Profits, and Lasting Value." Just published by the Harvard Business School Press.