Compensation and Your Brand Promise

Companies that attain a competitive advantage in their market niche are very clear about who they are and how they create value for their customer or clients. The way that value is communicated is through a brand promise. Essentially, a brand promise is what the company says it will do for its customers. At its core, the promise implies that a customer's "world" will somehow be better because of the product or service that is being offered.

For a brand promise to be realized there needs to be continuity and integrity between what is offered by a company, what is delivered or executed by that business and what is ultimately experienced by the customer or client. As a result, there are at least four stages to the fulfillment of the brand promise.

  • Communication – a promise is conveyed to consumers
  • Scrutiny – the consumer analyzes and considers the promise
  • Acceptance – the consumer chooses to accept the promise
  • Maintenance – the consumer continues to compare the promise with the experience
Because of what's at stake, it is critical that a business build a promise that is realistic, manageable, competitive and adds value. Maintaining that promise is equally essential. Companies that provide a recurring experience consistent with their brand promise will cultivate strong customer loyalty. That loyalty creates a returning customer and a bond that will protect against the forces of competition in the long term.
The delivery of the promise is subject to a wide range of environmental disruptions that can be generated by operational conditions, competition, customer perceptions, employee understanding (of the promise) and execution. As a result, it becomes the responsibility of a company's workforce to ensure that the delivery of the product or service is consistent with the brand promise in the context of its fluid and dynamic market environment.
In this framework, compensation becomes a strategic tool a company uses to get and keep employees focused on the behaviors required for the brand promise to be fulfilled. In support of this claim, consider the following insight offered by Larry Bossidy and Ram Charan in their book, Execution:

"A business' culture defines what gets appreciated, respected, and, ultimately, rewarded; those rewards and their linkage to performance are the foundation of changing behavior. If a company rewards and promotes people for execution, its culture will change. However your organization determines rewards, the goal should be the same – your compensation and rewards system must have the right yields. You must reward not simply on strong achievements on numbers, but also on the desirable behaviors that people adopt. Over time, your people will get stronger, as will your financial results."

Understanding this, a company needs to determine the right philosophy and structure for its rewards systems and how it can most effectively channel its compensation investment towards the achievement of the desired outcomes. With that in mind, among the questions a business really needs to ask and answer are:
  • What form should the compensation take?
  • How and at what interval should the compensation be paid out?
  • Who should participate in each rewards program and why?
Most companies that perform this kind of internal analysis arrive at the conclusion that their rewards strategies must extend beyond just salary and benefits. In fact, they need an internal value proposition that is compatible with their external value proposition – one that creates the harmony described in this article. At a minimum, this will usually require that a company institute both a short and long-term incentive plan of some type.
In short, the impact of compensation is more far reaching than most companies realize or acknowledge. Ultimately, a company's brand promise relies, in part, on how effectively that business's rewards strategies communicate what's important both internally and externally.
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