Employer branding is not about tinkering with terms and conditions or corporate colours in the workplace, but about the total employment experience.

 

A firm's first customers are its own employees. If the staff understand and wholeheartedly endorse the firm's marketing goals, they will take care of the external customers and ultimately the end users. Research suggests a close link between the happiness of customers and that of employees. For this reason companies have become increasingly interested in creating success in the external marketplace by first doing so internally. And success is made more probable by finding and then tracking at Exec level, the key metrics.

 

To some extent, the concepts of employee and customer are interchangeable. A well-ordered firm wants its external customers to consider themselves part of the family and its staff to feel that they are respected and their needs are met. Brand equity is the same but carried around in different heads.

 

Internal marketing is not more important that external but the differences arise more from the separation of the human resources (HR) and marketing silos than from what needs to be measured. The similarities and market driving potential of employee-based brand equity should encourage HR and marketing to swap notes, but such synergy is rare.

 

First we need to note an important difference: for the external market, the unit of analysis is the brand market segment, but for the employer brand, the business unit applies. In a complex organisation with a portfolio of brands and a variety of trading names, the ‘brand' so far as individual employees are concerned, may vary across the organisation. Simplicity requires a single employing entity, even where there are multiple consumer brands, e.g. as for Unilever.

 

The process of employer branding is by nature holistic. It is not about tinkering with terms and conditions or corporate colours in the workplace, but about the total employment experience. Brand equity is synergistic, greater than the sum of its parts, and based on core values. If an organisation increases its employer brand equity it increases its high performing employees' barriers to exit. Employer brand commitment can be seen as a ladder:

 

1. Employees will change brands, expecially for reward reasons. No brand loyalty.

2. Employees are satisfied. No reason to change the brand but no reason to excel.

3. Employees are satisfied and would incur costs by changing the brand. Co-dependent on the brand.

4. Employees value the brand and see it as a partner to achieving their goals.

5. Employees are devoted to the brand. Need to manage brand erosion and keep performance standards (brand equity is highly related to the number of employees who are in the 4 or 5 areas).

 

Watson Wyatt believe that a strong employer brand can also create competitive advantage:

 

1. Reducing recruitment costs because of higher levels of awareness, loyalty, and commitment.

2. Increasing bargaining leverage with unions and individuals since employees expect them to deliver on the brand.

3. Demanding a higher level of performance than competitors because the brand promise has higher perceived quality.

 

Providing excellent and consistent performance from leaders and custodians of the brand may be the single most important characteristic in building a strong employer brand. And within brand management the most critical measure may be loyalty and commitment that comes from meeting and shaping expectations through the employee experience. Although speculative, Watson Wyatt has sought to attribute the improvements in shareholder value to specific attributes of good HR practice.

 

Contributions to shareholder value

 

The employee effect on overall company performance is especially marked in service businesses that depend on the relationship between external customers and the staff they meet. Even in dot.com companies where customers interact solely with their computer screens, the understanding and motivation of employees is still important.

 

The starting point is for each Exec to review the impact of staff attitudes and behaviour on company performance. Of course, correlation is not causality: working with profitable customers may improve the morale of employees rather than the other way about, at least it is a start If the data are available, the firm can compare staff attitudes at time t-1 with customer attitudes at time t, to get a better fix on causality but that is not essential. Correlating firm and customer performance with customer and employee attitudes and behavioural measures (e.g. staff turnover) is enough.

 

This is the starting point because the Exec needs to decide whether internal market metrics should be presented alongside external market metrics or whether they can be left within the HR function. We know that external metrics monitor future inward cash flow so they are vital. And maybe do so earlier because if the internal really do cause the external, then fixing internal problems cures any sickness sooner.

 

Many and perhaps most large companies formalise their internal market metrics, e.g. through regular employee surveys. The missing link, however, is to see customers and employees as two sides of a similar coin or, more accurately, as two components of the same brand equity. The separate sets of data are not presented as parts of a single business model, marketing techniques are not adopted internally nor HR methodologies externally. The reporting of external and internal market metrics is not integrated.

 

Just as the provision of metrics for the Exec presents an opportunity to rethink the relationship between marketing and finance functions, so employer brand equity provides a challenge bridging marketing and HR skills and information. The first relationship should lead to linking the eternal market metrics with shareholder value. The second relationship should link employee and customer satisfaction. To do that HR need marketing skills and marketers need to understand and work with HR. Too often, internal communications are seen as simply passing down information, and too little concern is given to how these messages are received and what effects they have. Periodic surveys of staff morale are unrelated to marketing goals, communications or employer brand equity. Furthermore, excessive surveying produces fatigue and a reluctance to participate thereby reducing the quality of the data. For many large companies, finance, HR and marketing operate as separate functions, perhaps even silos, communicating internally but rarely with each other. Marketing metrics at Exec level can unite the three.

 

‘Marketing and the Bottom Line' by Tim Ambler is published by FT Prentice Hall and can be ordered from www.business-minds.com.

 

More articles