At the end of a conversation with a potential client last week, the business leader asked me this question: “If I spoke with companies for whom you have designed compensation plans, would they say their employees are happier as a result of the work you did?” It’s a variation on a theme we are often asked about with regard to the impact of our pay design efforts. I responded, “I hope and believe our clients will tell you we did excellent work and that we exceeded their expectations . I also hope they will say the compensation strategies we helped them implement have created a solid and clear financial partnership with their employees. I believe they would also affirm that they have a more unified financial vision for growing their businesses as a result of our work. But no, I don’t think they will tell you their employees are happier because of the pay programs we helped them implement. That is not a standard any compensation strategy could meet.”
So, why was that my response? If a solid rewards approach isn’t the answer, what does lead to employees being happy?
Employee happiness is the product of the comprehensive experience individuals have within an organization. And there was a time when companies didn’t worry about whether or not their employees were happy. Not so long ago, most business leaders’ philosophy was that their people were lucky to have a job and a paycheck (remember the Great Recession triggered in 2008?). That should make them happy.
Needless to say we live in a different era. Today businesses must focus on becoming “irresistible,” so their people will become fully engaged. They study why people join their organizations and why they leave. They spend time honing their value proposition and fine tuning their talent strategy. And beyond that, the smart ones are developing an employer brand strategy that celebrates and reinforces the culture they have developed—which ultimately forms the basis of their employees’ happiness.
What is an Employer Brand ?
So how do you define such a thing as your employer brand, no less develop a strategy for it?
In an online SHRM Q&A, the human resources organization answered the question this way:
An employer brand is an important part of the employee value proposition and is essentially what the organization communicates as its identity to both potential and current employees. It encompasses an organization’s mission, values, culture and personality. A positive employer brand communicates that the organization is a good employer and a great place to work. Employer brand affects recruitment of new employees, retention and engagement of current employees, and the overall perception of the organization in the market.
Historically, building a brand strategy of this type was the focus and work of human resource departments. However, in recent years, CEOs are taking a more active role in leading the development of their companies’ employer brands and involving professional marketing resources to help them develop a way to package and communicate it. "Really? They are actually marketing their employer brand?" Yes, it’s true. But why? Why are business leaders taking this issue seriously enough to place themselves at the center of employer brand strategy development?
There are multiple issues driving the focus on employer brands by company leaders around the world. However, we could group them all under three core reasons chief executives are spending time and energy on this.
1. The Purpose of Business has Expanded and Employee Expectations Have Risen
A few years ago, millennials became the largest generation in the workforce—surpassing baby boomers. Right behind them is Gen Z. As a general rule, this employee age group views their relationship with their employer differently than their predecessors did. There are two issues that drive their attitudes towards their employer experience.
- They believe that businesses exist to serve a purpose beyond driving profits. Although there are exceptions, this does not mean today’s younger employee thinks those two things are mutually exclusive. In fact, they believe just the opposite. They realize that some of the most successful businesses are those pursuing a mission that improves the human experience that would not be achieved without their involvement. That kind of purpose-driven approach becomes a magnet for those whose values and ambitions align with it.
- They have watched how the exponential change in technology has transformed businesses’ ability to leverage growth. As a result, they are in tune with where their employer falls on the technology continuum and whether or not it is going to be able to maintain a competitive pace. If they perceive the company’s resources are sub-par, the most highly skilled ones will jump ship in favor of opportunities with organizations that are ahead of the game.
Successful organizations are focused on these issues and do not take for granted that their people understand the leadership they are providing in both these areas. They package it, communicate it, market it and reinforce it just as strategically as they do the product or service value proposition they offer their customers.
2. Skilled Labor is in Short Supply
We are on the cusp of a shrinking talent pool that has been diminishing for a number of years and is now peaking in its scarcity. This is not something anyone can legitimately dispute nor is it a matter that a business can pretend doesn’t exist without serious consequences. There is a war for talent and only the prepared will win.
In that kind of environment, businesses don’t get to define what their employer brand is. Others are defining it—employees, potential employees, the community in which the organization resides, customers, the press and so on. Your employer brand is being defined right now by what one of your employees is saying over lunch to a co-worker or when he or she engages with their friends on social media. And you communicate what your current brand is in everything you do—and every interaction you have—from the moment you recruit a new person to join your company to the time they leave.
Because the ingredients that make up your employer brand can be endless, and because the image of your brand is critical to your recruiting success, you must take control of which ones will be used and what flavor you want to bring to the cultural experience your people are having. Smart organizations don’t allow the wrong brand ingredients to become dominant. They take control of the mix so the perception others have of their employer brand is aligned with what they want it to be. All of this contributes to your ability to compete for the talent you need.
3. Our Digital World Makes Every Business Transparent (whether they want to be or not)
Our digital existence makes it impossible to hide who we are as a business. Between social media, online employer rating sites like Glassdoor and Great Place to Work, and other other electronic "word of mouth' means, it is not hard for potential employees (or customers) to form an opinion about your company before they ever go to work for you. Companies that do not make a proactive effort at defining their brand run the risk of having their reputations bludgeoned in the online environment.
Conversely, an effective strategy will turn all of these digital sources into an opportunity for the company to advance the level of transparency it wants to have—sharing enough to project a willingness to be open without displaying the organization’s flaws. People want to work for great companies and your ability to promote yourself as one has never been more accessible. You simply have to involve people who have the marketing acumen to develop an approach that projects the picture you want your employees and others to hold about your company.
A Final Note
Employer branding is not a replacement for actually being a great place to work, where employees thrive and the best talent wants to come. It is simply the means you use to amplify what is great about your culture. As a result, building a great brand requires a deep commitment to examining all aspects of your employee experience and systematically working on improving those things that need to be fixed. And in today’s environment of accelerated change and intense competition, you must have a sense of urgency about it.
Employer branding is not a subject that is going away anytime soon. And it is also not something the chief executive can simply delegate to human resources. It is a strategic issue that requires foresight and leadership.