ffirs.indd 07/02/2014 Page idownload.e-bookshelf.de/download/0002/7192/60/L-G... ·  · 2014-07-28ffirs.indd 07/02/2014 Page i PRAISE FOR THE EMPLOYER BRAND® (2005) “This is not

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PRAISE FOR THE EMPLOYER BRAND® (2005)

“This is not just an eloquent brand management and marketing text, but one of the wisest management books in the past five years.”Independent on Sunday

“Building an effective employer brand is increasingly essential to attract scarce talent, provide a focal point during times of change, and support the kind of internal commit-ment required to genuinely ‘live the brand’. If you need to strengthen your employer brand, this book will help you”.Sir Martin Sorrell – CEO, WPP

“Many large companies recognize that internal marketing is as important as external marketing and that the same disciplines apply. This book is a wake-up call”Tim Ambler – Senior Fellow, London Business School

“The Employer Brand is a big idea which helps build a much needed bridge between the often divided communities of HR and marketing”Geoff Armstrong – President, World Federation of Personnel Management Associations

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Employer Brand Management

Practical Lessons From The World’s Leading Employers

Richard Mosley

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This edition first published 2014

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Library of Congress Cataloging-in-Publication Data

Mosley, Richard, 1964– Employer brand management : practical lessons from the world’s leading employers / Richard Mosley. pages cm Includes bibliographical references and index. ISBN 978-1-118-89852-9 (hardback) 1. Personnel management. 2. Employees—Recruiting. 3. Corporate culture. 4. Corporate image. 5. Branding (Marketing) I. Title. HF5549.M6675 2014 658.3'01—dc23 2014020560

A catalogue record for this book is available from the British Library.

ISBN 978-1-118-89852-9 (hardback) ISBN 978-1-118-89851-2 (ebk) ISBN 978-1-118-89850-5 (ebk)

Cover design: AIA Worldwide design team

Set in 10/12 and Garamond 3 LT Std by SPi Global India Pvt., Ltd.Printed in Great Britain by TJ International Ltd, Padstow, Cornwall, UK

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To my children Loveday and Tom.

Work at its best can be a great adventure. May you find what you love most and do best, live your lives to the full,

and leave the world a better place.

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CONTENTS

Preface by Simon Barrow ix

1 Introduction 1

2 Business Case 11

3 Brand Ideology 23

4 Brand Hierarchy and Adaptation 37

5 Strategy and Capability 47

6 The Perfect Employee 63

7 Diversity and Segmentation 73

8 Reputation and Attraction 81

9 Engagement and Retention 97

10 Employer Brand Positioning and Differentiation 109

11 EVP Development 123

12 Creative Development 143

13 Translation, Validation and Adaptation 157

14 Media Channels and Behaviours 167

15 Content Marketing 187

viii CONTENTS

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16 Communication and Content Planning 201

17 Internal Marketing and Engagement 213

18 Managing the Brand Experience 229

19 Candidate Management and On-boarding 243

20 Employer Brand Metrics 251

21 The Next 10 Years 271

Appendix 273References 281Acknowledgements 293About the Author 297Index 299

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Preface – Simon Barrow

I read this book with a mixture of pride and gratitude. Pride that an idea I introduced 25 years ago remains in such good shape. Then gratitude to Richard Mosley for his scholarship and experience over the past 14 years which makes this book a masterclass. Furthermore, there are insights into human behaviour here which make it inspiring and relevant for a much wider audience.

Richard has laid down the gauntlet for executives responsible for employer brand management, since sound words need strong leaders. A good business book like this must be read and implemented by high calibre people if the standards he describes are to result in an effective employer brand. Behind any great brand you’ll generally find a leader and team with the following qualities.

Confidence and self-belief. Richard describes Neil McElroy, the 26-year-old Harvard graduate in P&G who, in 1931, disobeying the ‘one page memo’ rule in the company, wrote five pages on the idea of brand management. At 44 he became P&G’s CEO and later President Eisenhower’s Defence Secretary at the height of the Cold War. He was a change agent and he started early.

Understanding people. I believe that an employer brand is much harder to develop and manage than the product brands I once looked after, like Colgate toothpaste and Knorr soup. People at work can be magic but they also represent mankind at its most complex and demanding. Understanding and shaping customer behaviour is a lot easier in comparison. Life at work is about life itself and no consumer product, even an expen-sive one like a car, comes close to that. After all, what you do, who you do it for and how you develop your skills and employability are the most important decisions you will ever take (except perhaps who you decide to share your life with).

Knowing when to take risks. Sometimes the desire for a compelling and distinc-tive point of difference leads to consumer brand managers taking a risk. Good brand managers demonstrate this kind of courage. Many fail at some point, but most live to tell the tale. A Unilever brand manager once become CEO despite launching a detergent earlier in his career so powerful that it destroyed the clothes it was designed to clean! In comparison, employer brand management is often too risk-adverse, which is why so much employer brand output is often bland and undifferentiated. The HR function seldom has a reputation for bravery, but you’re unlikely to establish a strong employer brand unless you’re bold enough to challenge the status quo. Likewise, great communi-cation needs emotion and real emotion is never risk-free.

Leadership. Transformation must come from the behaviour of confident leaders who can be themselves – keeping their head when all about are losing theirs, owning up to mistakes, using the power of language at its best and being human. The deliverable of

x Preface – Simon Barrow

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employer brand management should be the creation of inspiration, engagement and preparedness to change.

This fine book will show you what you need to do but it is up to you to create the context in which you can do it. Get the board involved and win their approval by dem-onstrating the significant business benefits that can be gained from a strong employer brand. If your actions demonstrate the focus and coherence, depth of understanding and breadth of imagination at the heart of great brand management, you won’t need posi-tional power to get a seat at the table, it will be YOU they want in the room.

Simon [email protected]

Simon founded People in Business in 1989 after his time as a brand manager and advertising agency CEO. He retired from PIB in 2012 to focus on other business inter-ests, which include consulting on the people and cultural aspects of mergers and acquisi-tions and the role of senior management in employer brand development.

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Introduction

‘The war for talent is over, and the talent won.’Josh Bersin

You can judge a company by the people that it keeps. Great companies attract and keep great talent. Talented people choose to come and choose to stay because they feel their pay and opportunities are better than any other organization they might consider. But for the best companies, there is also an X factor. In the same way that leading companies strive to deliver uniquely valuable products and services, they also seek to shape a distinctive organizational culture and brand identity. The shared behaviours and beliefs that define this culture can deliver significant competitive advantages. A strongly shared sense of cul-ture and purpose can drive extraordinary levels of motivation, loyalty and performance. A crystal-clear focus on a handful of key qualities, like creativity or simplicity or agility, can likewise provide your organization with capabilities that others will find difficult to match. This powerful combination of differentiating capabilities and distinctive cultural identity helps to attract the ‘right’ kind of talent. It generates employee pride, advocacy and commitment. It also helps you deliver unique products and services. The question is: how do you define the qualities that make your organization special? And, once defined, how do you communicate, shape and measure these qualities? For many of the world’s leading employers, the answer to this question is employer brand management.

When Simon Barrow and I published The Employer Brand in 2005, there was only a handful of companies applying brand thinking to people management in the integrated way we suggested.1 The hypothesis was simple. We believed that applying the best of brand management to people at work would bring many of the same benefits that this discipline had brought to the attraction, engagement and retention of customers. There was not a hard and fast business case at the time, but the hypothesis clearly resonated with a great many people. If you’re clear and consistent in setting out the benefits of working for your organization, and if you deliver an employment experience in line with these promises, then you’re more likely to develop a positive employer brand reputation, and attract, engage and retain the right people. Whether organizations found their own proof for this argument or not, a significant number of leading companies have since adopted some form of employer brand management thinking.

Why the neW book?

I have a confession to make. When Simon and I wrote The Employer Brand, we didn’t know a great deal about how employer brand management worked in practice. We were

1

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experienced in consumer brand management, recruitment advertising, internal market-ing and communication, but the more integrated application of these disciplines to employer brand management was largely theoretical. At the time, we found the most advanced application of the thinking (though not necessarily the terminology) at Reu-ters, care of John Reid-Dodick and Anne Marie Bell, and Tesco, care of David Richardson and David Fairhurst. Since that time, I’ve had the privilege of working alongside a con-siderable number of organizations who have put this thinking into practice, and have learnt a great deal more than I knew, or foresaw, in 2005.

The environment in which employer brand management now takes place has also changed significantly since the spring of 2005. This was the year that the first video was uploaded to YouTube. Facebook, founded the year previously, was still called ‘The Facebook’ and had yet to expand beyond university students in the USA and Canada. LinkedIn, founded in 2003, had been around a number of years longer, but was still a long way from hitting its stride. There was no Twitter until March 2006. The growth in importance of these social media channels has had a major effect on the way organiza-tions communicate and it may well have an even greater ongoing influence on the way people work. As Deloitte concludes in its 2014 ‘Human Capital Trends Survey’: ‘Tools such as LinkedIn, Facebook, Twitter and others are changing recruiting into a strategic function focused on marketing, branding, new tools and technologies.’2 I have made an attempt to capture the most effective current practice in social media marketing, some of the changes this is beginning to bring about in the way people are managed at work, and what appear to be the most significant future trends.

Why should comPanIes Invest In emPloyer brand management?

Over the last few years, the Boston Consulting Group and World Federation of Peo-ple Management Associations (WFPMA) have conducted a number of research projects exploring the relationship between people practices and performance advantage. In their 2012 study they surveyed 4288 HR and non-HR managers in 102 countries on their current HR capabilities and strategies, and then compared these findings with the finan-cial performance of each company.3 Their overall findings confirmed that good people practices confer a performance advantage, but the correlation between specific practices and key measures of business growth were particularly relevant to the contents of this book. As Table 1.1 illustrates, the four most impactful people management practices were either directly (in the case of employer branding) or indirectly (in the case of many organizations’ approaches to recruitment, on-boarding, retention and talent manage-ment) linked to some form of employer brand management.

The other factors in this study that demonstrated a lower correlation with perfor-mance were: Managing diversity and inclusion; Managing change and cultural trans-formation; Actively using web 2.0 for HR and managing associated risks; Strategic workforce; Delivering critical learning programmes; Managing corporate social respon-sibility; Transforming HR into a strategic partner; Health and security management; Managing flexibility and labour costs; Restructuring the organization; Managing work–life balance; and Managing an ageing workforce.

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defInIng ‘emPloyer brand’

This is a useful place to start, but in many respects it is frustratingly imprecise. ‘Employer branding’ represents the most tangible form of employer brand management, represent-ing the consistent application of the brand logo and other elements of visual design to identify and differentiate the brand. However, this represents only one aspect of brand management. Of greater importance is the systemic management of the broader range of elements that shape brand experience and reputation. In other words, while employer branding can be described as a discrete activity, employer brand management describes a higher level approach to coordinating people management activities, with important implications for how recruitment, on-boarding, talent management, performance man-agement and leadership development takes place.

The term employer brand has been defined in a number of different ways. Most defi-nitions fall into three categories:

1. Defining the employer brand as a promise. For example, The UK’s Chartered Insti-tute of Personnel and Development (CIPD) defines employer brand as ‘a set of

Table 1.1 the impact of hr capabilities on financial performance

topic in Which most capable and least capable companies were compared

the Impact that the most capable companies achieve over the least capable companies in...

Revenue Growth

Profit Margin

1 delivering on recruiting 3.5× 2.0×

2 on-boarding of new hires and retention 2.5× 1.9×

3 managing talent 2.2× 2.1×

4 Improving employer branding 2.4× 1.8×

5 Performance management and rewards 2.1× 2.0×

6 developing leadership 2.1× 1.8×

7 mastering hr processes 1.8× 1.8×

8 global people management and international expansion

1.8× 1.7×

9 enhancing employee engagement 1.8× 1.6×

10 Providing shared services and outsourcing hr 1.6× 1.7×

Source: 2012 bcg/WfPma proprietary web survey and analysis

Note: revenue growth and profit margin are defined as categories in the survey. for analysis, categories are transformed into category means; extreme categories are trans-formed into -20% or +20%. for each topic, we compared average revenue growth and average profit margin of respondents who chose “5” (high capability) against those who chose “1” (low capability).

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attributes and qualities – often intangible - that makes an organisation distinctive, promises a particular kind of employment experience, and appeals to those people who will thrive and perform best in its culture’.4

2. Defining the employer brand in terms of your desired image and reputation. For exam-ple, Brett Minchington, who has published a number of books on the subject, defines an employer brand as ‘the image of your organisation as a “great place to work”’.5

From my perspective, both of these definitions describe strong employer brands, but unfortunately there are many employer brands that could not be described in these terms. The final category of definition is more inclusive, and from my perspective more realistic and more useful.

3. Defining the employer brand in terms of the full spectrum of thoughts and feelings that people associate with an employer, both positive and negative, both true and untrue, both clear and impressionistic, whether based on direct experience, inten-tional communication, unintentional communication or hearsay. From this perspec-tive, every employer has an employer brand, whether they’ve defined the attributes and image they’d like to be associated with, or not. In other words, brands, like reputations, are ultimately defined by people’s perceptions. In this respect, I defer to the very first definition of the term employer brand, as described by Simon Barrow, founder and former chairman of People in Business, and Tim Ambler, Senior Fellow of London Business School, in the Journal of Brand Management in December 1996 as: ‘the package of functional, economic and psychological benefits provided by employment, and identified with the employing company’.6

Defining an employer brand in terms of perception and associations is more useful because it provides you with a more realistic measure of your employer brand’s true status and value. It helps you to recognize that your brand is ultimately shaped by what people hear about you, and how they experience you, and not simply by your intended brand messages, however powerfully they may be conceived and executed. It keeps you honest.

Defining your employer brand in this way leads you to a necessary additional con-cept for employer brand management to work effectively, the employer brand proposi-tion, or as it is now more conventionally described by the majority of companies, the Employee Value Proposition (EVP). This is sometimes referred to as the ‘Employer’ or ‘Employment’ Value Proposition. I prefer ‘Employee Proposition’ as it describes who the proposition is for and provides a neater parallel with ‘Customer Value Proposition’. If the ‘employer brand’ defines your reputation in terms of the qualities (and related benefits) you are most currently associated with as an employer, the EVP describes the defining qualities you most want to be associated with in the future. This oper-ates in a very similar way to a consumer value proposition (in product marketing) or customer value proposition in the service and business-to-business sectors. It should be noted that the EVP is not generally designed to be a comprehensive description of everything you offer employees, but a more distilled description of the most defining and/or differentiating pillars of the brand. For an illustration of this see the McDon-ald’s case study 1.1.

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Case Study 1.1: McDonald’sI’ve been using mcdonald’s as an introductory case study for many years as it provides a beautifully simple example of a clear, distinctive and effective evP. the global employee value Proposition introduced by mcdonald’s restaurants in 2009, reads as follows:

FAMILY/FRIENDS: I work in an enjoyable, energizing atmosphere where everyone feels part of a team.FLEXIBILITY: I have a challenging, varied job that has the flexibility to fit into my lifestyle.FuTuRE: I have the opportunity to grow and progress by learning personal and work skills that will last me a lifetime, whatever I choose to do.

there are a number of key features that make this a great example.

1. Clarity: the best evPs are concise and easy to understand. most contain somewhere between three and five key themes or pillars. While some evPs are written in the form of management guides, the most confident take the form of explicit employee promises, as clear and relevant to the front-line as the hr leadership team. It should also be noted that evP statements do not always need to be capped with a single headline proposition or tagline. the evP provides a number of key ingredients that can, if necessary, be played out differently over time and from place to place depending on the specific needs of different audiences and circumstances. (see chapter 13 for more examples of how this works in practice).

2. Credibility: In my first book on employer brand management I wrote: ‘there appears to be a huge gulf between the happy, smiley, family orientation of the external brand personality and the tired, mcJob drudgery of its front-line employees’. I was wrong. I bought the prevailing employer brand prejudice of the time, without checking the facts. I’d read douglas coupland’s novel Generation X (1991), which had served to popularize the term ‘mcJob’, with the damning definition: ‘a low pay, low prestige, low dignity, low ben-efit, no-future job in the service sector’.7 I was also aware that, in 2003, merriam-Webster had added the word to their dictionary defining ‘mcJob’ in similar terms as ‘a low paying job that requires little skill and provides little opportunity for advancement’. What I hadn’t seen were mcdonald’s employee survey results. In early 2006, I met with david fairhurst, who had just taken up the role of hr director at mcdonald’s in the uk. I’d writ-ten favourably about the employer brand work he’d carried out in his previ-ous role at tesco, and he was keen to correct my error in misrepresenting the positive picture he’d found at his new employer. the employee survey results he shared with me couldn’t be clearer. based on a high response rate among all full-time and part-time employees, 71% had agreed they were fairly paid (significantly higher than the global benchmark for this question),

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87% agreed that their work schedule fitted their needs, 91% agreed they were treated with respect and 93% claimed they had learnt skills useful for the future. this positive internal perception of mcdonald’s was not limited to the uk. Prior to defining the global evP, mcdonald’s collected responses from nearly 5000 restaurants in 13 countries about what they love most and least about working at mcdonald’s. again, I had the opportunity to look through the open responses to these questions, and the three predomi-nant positive themes were ‘friendship/family feel’, ‘flexible working con-ditions’ and good opportunities for learning and professional development (‘future’). What makes the mcdonald’s evP an excellent example is that it credibly reflects the primary benefits that employees recognize in their work experience.

3. Commitment: the third reason the mcdonald’s evP represents such an effective best practice illustration is that it has served to drive focused action within the organization to reinforce and build on these employer brand prom-ises. examples from the uk include mcdonald’s highly innovative ‘friends and family contract’, and the apprenticeship in hospitality programme. the friends and family contract allowed employees from the same family or friends working in the same restaurant to share and cover each other’s shifts, with no prior notice required, to best suit their personal arrangements. the flexibility of this scheme was especially beneficial to women and students. the apprenticeship in hospitality programme offered employees access to a full range of nationally recognized qualifications, including important foun-dation qualifications in english and maths that a number of employees had failed to achieve at school. four years on from launching this apprenticeship scheme, mcdonald’s in the uk has around 5000 people studying for this qualification at any given time and remains clearly committed to promoting the future careers of its employees, either within the company or elsewhere, through providing them with transferable skills and qualifications.8 In my most recent discussions with david fairhurst – now chief People officer for mcdonald’s europe – he informed me that 31 of mcdonald’s 38 european markets now offer nationally recognized qualifications. ‘the investment we make in delivering value to our People through these qualifications,’ he told me, ‘is returned many times over through enhanced commitment, perfor-mance and retention.’

4. Courage: In addition to demonstrating a tangible commitment to fulfil its employer brand promises, mcdonald’s also demonstrated courage in com-municating its employer brand externally. following the launch of it’s new evP, mcdonald’s in the uk decided to confront the ‘mcJob’ perception head-on, with a new recruitment campaign carrying the tagline ‘not bad for a mcJob’. When I interviewed robert Peasnell, the managing director at barkers, their recruitment agency of the time, he told me that when they first pitched the idea ‘It was like someone had let off a stink bomb in the room. mcJob was not a term that the leadership team liked to hear. the idea

Case Study 1.1: McDonald’s (continued)

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Once defined, the EVP provides a key point of reference for employer branding and other forms of employer brand management, the aim of which is to establish the desired brand associations in the minds of your target audience through consistent communica-tion and experience.

the dIfference betWeen brandIng and brand management

The confusion between employer branding and employer brand management remains a significant barrier to progress within many organizations. Within the HR community, there has been a tendency for employer brand thinking to default to branding in the form of recruitment advertising campaigns. Within this limited definition and applica-tion of the employer brand, its primary function is seen as a means of grabbing attention, and presenting the organization in the most attractive way possible. There is no doubt that consistent ‘branding’ can play a highly effective role in realizing these objectives. However, limiting brand management to advertising involves both significant risks and missed opportunities. In striving for attention and appeal, the most obvious risk is that brand presentation loses touch with brand reality. In other words, what the company puts in the shop window does not truly represent what people find in the shop. Jokes

that we might legitimize this term in our own advertising first struck the team as ridiculous.’ however, as the barkers’ team pointed out, disruptive creative ideas often appear dangerous at first. It may backfire, but it may, and should, grab people’s attention and help to address the evident gap between reality and misrepresentation. the leadership team had the cour-age to take the gamble and it worked. the campaign resulted in a significant improvement in the company’s application : vacancy ratio (improving from 4:1 to 14:1). furthermore, the campaign generated significant press, radio and television coverage (with around 50 million ‘opportunities to see’), high-lighting the many positives mcdonald’s offers as an employer. as the Finan-cial Times concluded as a result of its own investigations: ‘mcdonald’s is a “heavy lifter” in the service sector, recruiting young people for their qualities rather than their qualifications, and providing them with valuable skills to boost their position in the labour market.’9

mcdonalds’ commitment to building their employer brand with a clear evP, consistent communication and activities designed to add greater value to their employment experience, have paid off handsomely in terms of recognition. In the european 2013 great Place to Work study they ranked 14th overall among multinational companies, and achieved a top 10 positioning in no fewer than 9 individual country league tables (for their respective company size), including a top 5 positioning in 6 (the uk, Ireland, belgium, the netherlands, denmark and finland).

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only remain funny if they reflect reality, and jokes relating to the mismatch between recruitment promises and the true nature of the recruiting company still tend to elicit a good deal of laughter. False recruitment claims lead to disengagement among new joiners, high levels of attrition, negative word of mouth and, ultimately, a poor brand reputation.

In addition to the risks involved are the opportunities missed by those organizations failing to take a more fully integrated approach to employer brand management. Devel-oping an Employee Value Proposition can bring greater focus and coherence to the entire spectrum of people management activities that make up HR, talent and line manage-ment, in the same way that a company’s activities are also (ideally) aligned to deliver clear and consistent brand value to its customers and consumers. If there appears to be a contradiction in these statements in terms of aligning with two different aims, there shouldn’t be. That is because an effective EVP should help to build a bridge between the qualities that talent expects from an employer, and the qualities the organization needs to deliver in relation to its performance objectives (including customer value).

It would not be fair to argue that a more ad hoc approach to recruitment messaging is entirely ineffective. You could argue that complete freedom of expression enables greater tailoring of your recruitment communication to different audiences. Likewise, there is a body of evidence which suggests that effective HR management simply depends on keeping up to date with the constantly evolving body of best practice, since these approaches bring value to every organization, whatever their particular brand or business strategy.10 I suggest that both of these arguments hold true, but only up to a point. In isolation, a well-targeted and executed piece of communication may well deliver imme-diate results, but if it lacks consistency with other messages from the same company it will not help to build a clear and consistent brand reputation over time. Likewise, fol-lowing general HR best practice will no doubt lead to reliably good people management results. However, it will not help the organization develop the distinctive competitive edge and passionate sense of pride and identity that truly great companies possess in abundance. These organizations may build their HR foundations on best practice, but their performance edge lies in how they tailor certain elements within the people man-agement system to leverage and supercharge competitive advantages. As the renowned authority on strategy, Michael Porter, puts it, best practice led ‘operational effectiveness’ is necessary, but not sufficient, for sustainable competitive success.11

summary and key conclusIons

1. The practice of employer brand management has evolved significantly over the last decade, and is increasingly recognized as a key tool in promoting competitive advantage.

2. The key components of employer brand management (employer branding, recruit-ment, on-boarding and talent management) deliver a greater impact on revenue growth and profit margin than any other HR discipline.

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3. Your employer brand is defined by how people see you as an employer. Whether you manage it or not, whether positive or negative, accurate or misguided, you cannot escape the fact that you have an employer brand.

4. An Employee Value Proposition (EVP) defines how you’d like to be seen. It describes the focused list of key qualities you’d most like to be associated with as an employer.

5. Employer brand management describes the tools and techniques you apply to ensur-ing people recognize, experience and believe in the key qualities defined by your EVP.

6. Effective EVPs are clear, focused and easy to understand. 7. Delivering a consistent and distinctive employer brand experience demands com-

mitment and courage. 8. ‘Branding’ is important and necessary to building a strong employer brand reputa-

tion, but the ultimate test of your employer brand’s long term vitality is your ability to deliver and progressively build on your brand promises.

9. Delivering on your employer brand promises requires an aligned and integrated approach to communication and people management.

10. Delivering a reliably good employer brand experience is seldom sufficient to win the war for talent. To become an employer brand leader you need to progress from being reliably good to distinctively great.

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Business Case

‘If opportunity doesn’t knock, build a door.’ Milton Berle

They call it La Grande Boucle. The Big Show. The most challenging endurance spec-tacle in the world. 200 riders, 2000 miles, 23 days. No one from Britain had won the Tour de France in over 100 years. Then two different British cyclists won it in succes-sion. How did this happen? Dave Brailsford set up Team Sky in 2009, and brought with him an approach that had proved to be extremely successful in his management of the highly successful British cycling team at the Beijing Olympics. He called this approach the ‘aggregation of marginal gains’, where every aspect of performance is exam-ined in minute detail for possible improvement and the cumulative effect of many small gains delivers a significant competitive advantage. Many of these small innovations were derided to begin with, but not when Team Sky started to win. It took three years. Now the approach has been so clearly successful that it’s been widely adopted across the sport.

Employer brand management is similar in many ways. It’s an endurance sport, not a sprint. Gains are cumulative, seldom immediate. Progress is made by paying attention to all the moving parts, not just one or two high profile elements. Because of this it can be difficult to point to one aspect of employer brand management, and say: ‘if we do this, we will win’. You need to look at the bigger picture. If you can improve awareness levels by a few per cent, and your ability to get across the right messages to the right people by a few per cent. If you cut the number of mis-hires by a few per cent, and increase the number of high performers who choose to join you by a few per cent. If you can improve engagement levels by a few per cent, and keep your best performers for longer. If you can invest a little more up front, and save a little more over the long run as a result. If you apply yourself to all of these different elements in a consistent and coherent way, will it add up to higher performance? The answer is most definitely ‘yes’.

While an argument generally has to be made for investing in employer brand devel-opment over and above regular current recruitment activities, it’s still relatively rare for companies to define a formal business case. In a survey conducted at the beginning of 2013 by People in Business and Top Employers among a global sample of 250 organi-zations, the vast majority of investments in this area were being made on the basis of general aspirations (in relation to reputation and attractiveness) rather than more formal calculations relating to costs saved or improvements in performance. Nevertheless, it is possible to make a more formal and potentially quantifiable case for employer brand management. While the value drivers will vary from company to company, I suggest the following avenues of investigation.

2

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1. The CosT BenefiTs of a sTrong emPloyer Brand

In 2011, LinkedIn surveyed 2250 corporate recruiters in the USA to learn more about the impact of a strong employer brand on time to hire, cost per hire and employee turno-ver.1 Their research revealed that the average cost per hire in organizations with a strong employer brand was two times lower than those with employer brands ranked moderate to poor. In addition, they discovered that the employee turnover rate among companies with a strong employer brand was 28% lower than companies with weaker employer brands. Given the average cost of turnover replacement, including training and the loss of productivity, can range from 90 to 200% of an employee’s annual salary, the cost sav-ings involved in this lower rate of attrition are clearly significant.2

Cost savings derive from a number of factors.

(a) Targeting the right potential candidates

The first step in effective employer brand management is to identify the kind of talent the company needs to succeed. This should include the more general cultural and attitudinal traits considered desirable among all employees (Google refers to this combination of culture-fit qualities as ‘Googliness’). The next step is to invest in the research required to understand the key motivational factors, behaviours and media preferences of this overall target group, as well as the more specific skill-groups or segments the company needs to attract. When you’re clear about who you’re targeting you’re less likely to waste time and money on misplaced research, media and activities that build awareness and consideration among the wrong kind of candidates. It also helps to reduce the administrative burden and cost of sifting through and rejecting large numbers of unsatisfactory (and potentially unsatisfied) applicants. Companies like P&G have made a clear effort to define the kinds of qualities they are looking for in order to reduce the total number of applications they receive.3

(b) rationalizing your creative spend

Effective employer brand management requires a more consistent approach to crea-tive presentation. By focusing investment on a single creative framework with a shared selection of high quality creative assets, rather than taking a more localized and ad hoc approach, companies can make significant savings. This logic extends beyond global advertising campaigns. It also extends to the rationalization of career sites and other online domains where coordinated investment in website develop-ment and recruitment marketing content generally benefits from similar cost advan-tages. When Shell first made the switch to a global employer brand framework, they claim it helped to reduce their overall spend on creative collateral by 75%.4 When Dave Lee introduced a more strategically focused and integrated approach to man-aging the US Army employer brand in 2008–2009, the Army was able to reduce its overall budget by several million dollars, despite recruiting significantly more people, and simultaneously improving its quality of hire.5

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(c) Building brand awareness and equity

Decades of brand research have demonstrated that clear, consistent and distinctive brand messaging builds greater awareness and a stronger, more credible and differentiated reputation over time than more fragmented approaches. Once familiarity and a posi-tive brand image have been established, the impact of subsequent activities can benefit significantly from what is called the ‘brand halo effect’.6 The brand ‘halo’ relates to the beneficial effects (and cost savings) that a positive brand reputation brings to every aspect of marketing activity. For example, for the same level of marketing investment, communication carrying a familiar brand name is far more likely to attract attention than an unknown brand. Likewise, a generally favourable brand image is far more likely to generate a positive response. Investing in your employer brand reputation pays back over time through more efficient and effective recruitment marketing. In simple terms this means you get ‘more bang for your buck’ with a strong brand than a weak one.

(d) enhancing your pulling power

In addition to more cost efficient and effective ‘push’ marketing, a strong employer brand reputation will attract/‘pull’ a much higher proportion of unsolicited applica-tions (at minimal cost in terms of sourcing, though this may incur greater admin-istration and selection costs). Likewise, a positive employer brand experience will encourage a higher level of advocacy and referral activity (a source of hire known for its low cost and high quality). It will also enable you to access a much wider pool of potential talent. Conference Executive Board (CEB) research suggests that a strong employer brand reputation will enable you to attract consideration from at least 20% more of the labour market than weaker ones (Figure 2.1).7

In Towers Watson’s 2012 Talent Management and Rewards Study (involving 1605 participants from 30 global markets), they discovered that companies who

Figure 2.1 The pulling power of strong employer brands. source: Corporate leadership Council. attracting and retaining Critical Talent segments study

More active

Weak employer brandsattract considerationfrom < 40% of thelabour market.

Strong employer brandsattact consideration

from > 60% of thelabour market

Seeking new employment Less active

12%

6%

0%0 10 20

Weak employerbrand reputation

Strong employerbrand reputation

30 40 50 60 70 80 90 100

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claimed to have differentiated their EVP and tailored it to critical workforce seg-ments were 11% less likely to report problems attracting critical skill employees in fast growing economies, and 6% less likely to do so in developed economies.8

(e) Hiring good people for less

Convincing mid-career candidates to leave one organization and join another typi-cally requires a salary increase or ‘conversion premium’. CEB research indicates that that the average conversion premium required to attract a mid-career candidate to an organization with a strong employer brand reputation was close to half that demanded from an organization considered to have a weak employer brand reputation.7

(f) Reducing unwanted attrition (and re-hire)

If you’re clear about the kind of people who will fit in and get on within your organi-zation, you’re clear about the kind of employment deal you’re offering them, and you deliver on your employer brand promises, you’re likely to enjoy a significantly lower level of unwanted employee turnover. As indicated in the opening paragraph, the cost savings can be significant, particularly with regard to ‘mis-fit’ attrition within the first few months, before an employee has been able to make a meaningful contribution to performance.

Towers Watson’s 2012 Talent Management and Rewards Study, revealed that com-panies who claimed to have differentiated their EVP and tailored it to critical workforce segments were 18% less likely to report problems retaining critical skill employees in fast growing economies, and 9% less likely to do so in developed economies.8

After McDonald’s in the UK introduced its first formally defined EVP and employer brand management in 2005, its overall employee turnover rate fell from 80% in 2004 to under 38% in 2010, and its 90-day crew turnover rate declined even more impressively, from 25% in 2004 to below 5% in 2010, resulting in

Table 2.1 Annual voluntary turnover by industry

Annual Voluntary

Turnover (2013)

Industry

Average

%

100 Best

%

Difference

%

Manufacturing & Production 10.5 5.8 −4.7

Financial Services & Insurance 12.6 10.3 −2.3

Information Technology 16.2 8.0 −8.2

Healthcare 17.1 6.0 −11.1

Construction & Real Estate 19.4 8.7 −10.7

Professional Services & Consulting 25.9 10.4 −15.5

Hospitality 38.0 24.5 −13.5

Source: Great Place to Work® Institute (2013)

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significant cost savings.9 A comparison made of the turnover rates in companies listed in the top 100 Fortune Best Places to Work compared with general industry averages also demonstrates highly significant differences (Table 2.1).10

Another example is provided by the Dutch supermarket chain Albert Heijn (oth-erwise abbreviated to Ahold). When they applied an employer brand led approach to improve employee engagement among the 60 000 15–22-year-olds within the company, they reduced their annual turnover within this segment by 15%.11 They calculated that this saved them 14 million Euros, and their Net Promoter (employee advocacy) score rose by 6% points, to become the highest in the supermarket sector.12 As Rene Herremans, the Director of Employer Branding & Employee Engagement for Ahold Europe, commented: ‘By focusing on employee engagement via our employer brand, we realized better customer satisfaction, better quality or work and better busi-ness performance.’ This work also led to Ahold winning the Dutch Labour Market Communication Award for Employer Brand Strategy and Effectiveness in 2013.

2. The PerformanCe BenefiTs of a sTrong emPloyer Brand

As the findings quoted earlier from the BCG/WFPMA study (‘From Capability to Prof-itability’) indicated, employer branding, alongside effective recruitment, on-boarding and retention, appear to be highly correlated with strong business results. In the same study, they calculated that companies that had made the Fortune ‘100 Best Companies to Work For’ list at least three times between 2001 and 2011 significantly outperformed the S&P market average during this same period, finishing 99 percentage points higher (Figure 2.2).13

Figure 2.2 strong employer brands outperform the s&P market average. sources: 2012 BCg/WfPma proprietary web survey and analysis1Based on end-of-year closing prices2average growth rate of companies’ share price in percent (weighted by 2001 share prices), dependent on sample composition for each particular year

100

0

–50

+109

+10

S&P 500

50

People companiesoutperform the

market average ineight out of ten years

Companies that madeFortune’s “100 BestCompanies to Work for”list at least three timesin the past ten years2

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

150Cumulative growth rate of share price (%)1

+99percentage

points

Year

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The potential factors driving these differences in performance are likely to be as follows.

(a) hiring more high performers

The business value of getting the right people on the bus can be significant. Over the last few years there has been a growing shift in attention from ‘cost per hire’ as a stand-alone indicator of recruitment efficiency, to the more value-oriented ‘quality of hire’. Research from McKinsey suggests that in comparison to average performers, top quartile performers deliver 67% more revenue in sales, 49% more profit in general man-agement roles and 40% greater productivity in operational roles.14 (Netflix calculated that the best performers are two times better than average, and in creative/inventive work they are ten times better than average.)15 A strong employer brand enables you to attract more candidates, through building greater awareness, consideration and prefer-ence among key target groups, providing the organization with a wider range of talent to select from. Universum’s many studies of business and engineering student prefer-ences clearly demonstrate an obvious correlation between strong brand image ratings and overall preference.

(b) on-boarding employees more effectively

While it may not necessarily be restricted to the kind of integrated brand management described in this book, a strategic and systematic approach to on-boarding is a necessary feature of most effective employer brand management programmes. In a study of nearly 200 organizations conducted by Aberdeen Group in 2012, it found that the 20% best in class on-boarding companies retained 86% of their first year employees (compared to 56% among the bottom 30%). It also found that these leading companies reported 77% of their employees met their first performance milestones on time, compared with only 41% of employees in the laggard group of companies.16

(c) improving employee engagement

After more than two decades of rigourous and persuasive research, there can be few doubts that higher levels of employee engagement are associated with a wide range of positive business effects.

Towers Watson

In Towers Watson’s 2012 Talent Management and Rewards Study they discovered that companies who had adopted an overarching Employee Value Proposition were five times more likely to report that their employees were highly engaged, and twice as likely to report achieving financial performance significantly above their peers. In a study of 50 global companies conducted in the same year, Towers Watson also found that companies with low engagement had average operating margins of just under 10%, compared with

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14% among those with high engagement levels. In those companies where employees were both highly engaged, enabled and energized (a state Towers Watson describes as ‘sustainable engagement’) average one-year operating margins were close to three times higher at just over 27%.18

Gallup

Comparing the median differences between top and bottom teams, Gallup recently demonstrated that high levels of employee engagement were associated with 10% higher customer satisfaction, 21% higher levels of productivity and 22% higher levels of profitability. Gallup has also demonstrated that companies with high levels of engage-ment enjoy higher earnings per share (EPS). After examining the engagement data of 49 publicly traded companies, Gallup found that organizations with an average of 9.3 engaged employees for every actively disengaged employee in 2010–2011 experienced 147% higher EPS compared with their competition in 2011–2012. In contrast, those with an average of 2.6 engaged employees for every actively disengaged employee expe-rienced 2% lower EPS compared with their competition during that same time period.1

Kenexa

In 2008, the Kenexa Research Institute conducted two studies exploring the relation-ship between employee engagement and business performance metrics. The first study, involving 64 multinational organizations from a cross-section of different industries, revealed that organizations with highly engaged employees achieve twice the annual net income of organizations whose employees lag behind on engagement. The second study conducted across a similar sample of 39 organizations indicated that organizations with highly engaged employees achieve a seven times greater 5-year total shareholder return (TSR) than organizations whose employees are less engaged.19

AON Hewitt

In an analysis of its US engagement database representing four million employees, Hewitt Associates discovered that average levels of employee engagement among com-panies that had delivered double-digit growth over the last five years were 20% higher than less fast growing companies.20

From higher levels of engagement to ‘Cultural Competitive Advantage’

The coordinated approach to engagement action planning recommended by most lead-ing employee research providers could be described as a form of employer brand man-agement. Anything that improves the overall employment experience should ultimately translate into a stronger employer brand reputation (if sufficiently amplified through recruitment marketing and employee advocacy). However, in most cases, engagement action planning is more typically aligned to general improvements in operational effec-tiveness than strategic differentiation. The factors that drive employee engagement within an industry sector tend to be fairly similar. If your actions plans are built in response to employees’ engagement needs alone, you will no doubt improve employee

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satisfaction, but you will be improving in the same general direction as everyone else. The difference an employer brand proposition makes is to not only focus attention on these general improvement areas, but on a smaller number of priority areas. These are the more ‘strategic’ factors that add up to cultural competitive advantage, which can be defined as:

a powerful combination of differentiating organizational capabilities and dis-tinctive cultural identity.

(d) enhancing communication and change management effectiveness

In 2013 Towers Watson included an EVP measure in their Change and Communication ROI Report for the first time, and this produced some highly compelling results. This survey drew on a global sample 651 organizations, representing a broad range of indus-try sectors and headcounts. They found that the top third of organizations in terms of communication and change management effectiveness were significantly more likely to have defined a formal EVP than the bottom third.21

(e) Building brand engagement

While the focus of employee engagement activities tends to be reactive and generic, effective brand engagement is more proactive and specific. In the latter approach the organization chooses the brand pillars it wants employees to be engaged by, and prior-itizes its activities and communication accordingly. In theory, the resultant brand mix should incorporate a more balanced selection of factors driving employee engagement and factors that are more directly related to performance. Given this mix, our hypothesis was that any correlations drawn between the perceived strength of these factors and busi-ness performance should be stronger than for employee engagement alone.

Case Study 2.1: RBS GrouprBs group has been widely recognized for its leading human capital practices. it has a dedicated human Capital strategy team which focuses on ensuring people management decisions are underpinned by advanced talent analytics and insights. over recent years the group has won several awards and been the subject of a harvard Business school Case study (royal Bank of scotland group: The human Capital strategy). one area where rBs group has truly been a leader is in analysing the linkages between key hr metrics and busi-ness performance data.