by Victoria Griffith
Workers at the magazine company Condé Nast watched in dismay last year as their Fiji water was replaced by Poland Spring, and then the Poland Spring disappeared in favor of tap water. Staff refrigerators stocked with expensive libations were considered just one of the workplace perks associated with the company, which publishes upscale magazines like Vanity Fair and Vogue.
After a McKinsey and Company audit recommended that Condé Nast reduce its spending by 25 percent, many wondered how far the cuts would go and what the impact would be. Would senior editors and publishers, who have long had company-paid private limousines at their disposal, be forced to take public transit? How might the sight of the elegant Vogue editor in chief, Anna Wintour, swiping her monthly commuter card affect the company’s image? Condé Nast has stumbled into a crisis of workplace branding. Workplace branding, or employer branding, is a simple idea; its core insight is that a company creates a reputation as a good or bad place to work and that its reputation may have far-reaching consequences. Employer branding gained importance at the end of the recession of the early 1990s and was largely
viewed as a recruitment tool. When the economy was going full throttle and attracting talent was a big focus, employers fell over themselves to see who could pamper their workers more. Offering everything from free workplace massages and Friday happy hours to paternity leave and flexible schedules, companies fought to be viewed as the employer of choice. Workplace branding emerged as a way for corporations to differentiate themselves. Under the model, employees are seen as valued customers; the job experience is the product they are buying. Now the notion is being advanced that certain workplace luxuries are worth keeping even in a recession and the concept of workplace branding, born in better times, maintains relevance. For the time being, Condé Nast is holding firm on preserving some semblance of glamour. Limousines are still availab-
le, although on a more limited basis. The company continues to throw lavish parties, and certain editors traveling on business are still granted nightly expense accounts of $1,000. Why, now that so many corporations are more focused on layoffs than recruiting, is workplace branding still considered of such strategic importance? For one thing, workplace branding and product branding do not always sit neatly in separate silos. “The two must be aligned,” said John A. Quelch, a professor of marketing at Harvard Business School. Because Condé Nast is selling glamour, its workplace must also exude a sense of luxury. Consumer products companies have long recognized the connection between employer and product branding. Because front-line workers interact with customers, it makes sense to keep employees smiling and motivated. And they will probably smile more often if they are happy with their work. Even workers who have little direct contact with customers can have a big impact as symbols of a corporation’s humanity — or lack thereof. Mass layoffs can stoke public anger, making it critical for corporations to avoid being viewed as mean or unethical. Take the case of the Boston-area housekeepers for Hyatt Corporation hotels who were fired earlier this year after unknowingly training their own replacements. The bad press generated by the incident provoked the Massachusetts state government to threaten a
boycott of the hotel chain. In the aftermath of a public outcry, the company was forced to offer the housekeepers new positions. Management belatedly realized that its workplace brand had negatively affected its consumer brand. Or consider the case of the American International Group, the insurance giant, vilified by some for its role in the current downturn. The public’s ire at one point became so intense that the company’s employees began to receive death threats. The incident made recruitment more challenging for A.I.G. It was a case of the company’s consumer brand working to the detriment of its workplace brand. In recent years, social networking Web sites have lent added prominence to workplace brands. Disgruntled workers and outside critics of employment policies are capable these days of affecting a company’s reputation. “Some corporations just wish their workers would shut up,” said Libby Sartain, workplace branding consultant and the former head of human relations for Yahoo and Southwest Airlines. “Others are learning to leverage the sites for their benefit.” Do a Google search of the biotechnology company Genentech, for instance, and a slew of worker testimonials pop up. Genentech researchers talk about how much fun it is to work at the company and describe scenes from its latest Halloween party. And at EMC Corporation, the data storage company, Polly Pearson was appointed head of employment brand, responsible
in large part for coordinating the company’s social networking. “One reality of branding is that when we have a good experience or a bad experience, we tend to tell our friends,” said Mark Schumann, formerly a principal focusing on talent branding for Towers Perrin, a consulting company that is now Towers Watson. “The social networks just make it a heck of a lot easier to tell a whole bunch of people at the same time.” While corporations may exert some control over what their workers say on networking sites, disgruntled former employees and tough-to-please bloggers are another matter. Starbucks, for instance, offers health care benefits and stock ownership plans for
baristas, cultivating an image of social responsibility. But the company has come under increasing pressure in the past year, including from a popular YouTube video, for not providing enough health insurance for workers. “It’s hard to hide anything these days,” Sartain said. “The best thing is just to be honest in your communications.” As the Great Recession winds down, corporations will be forced to face another reality: employees have long-term memories. When economic growth picks up again and corporations once more begin aggressive recruitment, they will want to present themselves as great places to work. Here are a few things for managers to consider.
Make sure to have a viable termination strategy in place for workers. Managers who conducted staff reductions in a sensitive and organized manner will want to pat themselves on the back. Former employees will probably speak well of the corporation and may even be enticed back when times improve. Corporate morale is probably still intact. Some companies do rise to the challenge. In 2004, for instance, the low-cost carrier Southwest Airlines received kudos when it offered employees early retirement packages instead of involuntary severance. “All companies should aim to manage exits and severance in the most humane way possible,” Quelch said. “It doesn’t cost any more money and is always well-received.” It is important not to rush things. RadioShack Corporation executives said they were acting in the interest of speed when in 2006 the company sent more than 400 employees pink slips by e-mail. But the company was widely criticized for what was viewed as insensitivity, and its brand suffered as a result. In the last year, many corporations resorted—sometimes against their better judgment—to a slash-andburn approach, firing workers without making an effort to ease their pain. “They were in crisis mode,” said
Robert H. McNabb, chief executive officer of Korn/ Ferry International Futurestep. “It just happened.” Managers may want to use this post-crisis moment to take stock. Through internal research, companies can discover just how far morale has fallen and come up with a plan to improve their employer brand. While it is important for a company to recognize it has made mistakes, the benefits of publicly admitting them are not clear. Sartain recommends that corporations openly own up to their errors. But Quelch warns that issuing mea culpas may have legal implications. If employees believe that the corporation made a sincere effort to avoid mass layoffs, it may go a long way toward assuaging resentment. Sacrifices at the top can help to create a sense of solidarity. Many companies last year resorted to pay cuts in the top echelons in well-publicized bids to reduce layoffs. Hefty salary cuts for chief executives at Microsoft, HewlettPackard, Wynn Resorts and EMC met with some cynicism by observers who pointed out that the executives remain fabulously wealthy. But the sacrifices were, in general, applauded by employees.
Identify the perks that matter most to workers and those that are key to your corporate brand. If what employees really want is more vacation time, for instance, free dry cleaning may not be much of a selling point. Ed Newman, president of The Newman Group, a talent management firm owned by Korn/ Ferry International Futurestep, said decisions about what perks to trim should not be made in a vacuum. Information ought to be gathered in an organized manner. Human resources departments should use both focus groups and extensive internal questionnaires to find out what really matters to workers, he said. Sometimes human resources departments need to make a call on how integral certain perks are to corporate culture. As the head of human resources at Yahoo, Sartain oversaw cost cuts in 2006. But she made sure that certain benefits remained. Every floor at Yahoo’s headquarters retained a coffee bar, which had been there since the beginning and was judged too integral to corporate culture to shed. “The coffee bars were vital to our workplace brand,” said Sartain. “Some things
are important to hang on to, even in tough times.” It helps to know who the customer — that is, the target employee base — is. Certain perks appeal more to certain groups. NetApp, a data storage company that has won accolades as a great place to work, emphasizes its commitment to sustainability. The stance plays particularly well with its young, well-educated, urban work force. To discourage car dependence, the corporation’s headquarters is located opposite a light rail station in Sunnyvale, Calif. The company also provides lockers for bikes and an electric car recharging station. As a younger generation enters the work force, social responsibility concerns are expected to gain importance. “Projecting an image of social concern will eventually become so common that it will be a ‘need-to-play’ item and not so much of a differentiator,” Schumann predicted.
Find inexpensive ways to improve the workplace. Providing great health insurance, generous maternity leave and an architecturally sophisticated work space is a great way to improve morale. It also costs a lot of money. But not all employer branding efforts are expensive. Social networking is one inexpensive way to enhance the corporate environment. Providing corporate space for social interaction or simply a little cheerleading by corporate leaders can also go a long way toward building a good employer brand. Simply asking people to be nice to each other may also yield an outsized benefit. “The most common re-
ason people leave their job is that they don’t get along with their boss,” Newman said. Johnson & Johnson, the pharmaceuticals and health care products company, puts great store by its credo, which has occupied a prominent space on office walls since 1943. The credo mandates that employees be treated well: “We must respect their dignity and recognize their merit,” says one line of the credo. Newman believes that such statements, if sincere, can have a big, if difficult-tomeasure, impact on employee morale.
one who can strike alliances. everyone forgets Management 101 and everyone forgets Management 101goes and goes one who can strike alliances. The question with with Yahoo is, Dois,they off half-cocked. About 70 percent of succesoff half-cocked. About 70 percent of succesThe question Yahoo Do they have have a board that is onis target with with this, this, does does sionssions fail, and usually goes goes back back to one fail,itand it usually toof one of a board that on target the new CEO have the freedom to deal with those three things. those three things. the new CEO have the freedom to deal with the complete executive Or isOr this key issue isa sustainability, keybeissue is sustainability, complete executive team? isjust this just flauntAnother Ifthe a company has ateam? great employer brand, it. Another likely to short-lived success.” an external hire and the direction isn’t clear keeping it going. A lot of companies experikeeping it going. A lot of companies experian external hire and the direction isn’t clear Getting on a “Top Places to Work” list is an excellent Making the best-workplace list is not the only way and the of theofperson is superﬁ cial? cial? ence ence a succession crisis,crisis, and then sincesince it it a succession and then andchoice the choice the person is superﬁ way to spread the word. Human resources departments to get word out. Pearson of EMC, for instance, seeks One of theofissues that is always a factor affects everyone is is personally affthe ectsleadership, the leadership, everyone One the issues that is always a factor personally that want toknowledgeable seek this form of recognition, though, to maximize thesomething company’s exposure is how knowledgeable the board members highly motivated to doto something for a for short highly motivated do a short by ensuring is how the board members should aware the criteria for these rankings. that itsprogram name pops upfails on good-places-to-work Google are about the talent available in the time.time. But the program eventually for But the eventually fails for arebe about theof talent available inbusiness the business and the talent that is available outside. Board lack of sustained support. lack of sustained support. and the talent that is available outside. Board Many lists put a heavy emphasis on flextime and onsearches. “If you’re searching for great technology members are often not that A bigger group of companies suffersuffer bigger group companies members are often not knowledgeable site services like day care orthat dryknowledgeable cleaning, for example. A companies toofwork for, I want EMC’s name to come aboutabout succession. CEOsCEOs pick their buddies to to fromfrom whatwhat I call Ithe syndrome. TheyThey calllike-us the like-us syndrome. succession. pick their buddies Ifserve a small adjustment can givewith a corporation a good up,”candidates she candidates said. and say, on the and people H.R. H.R. look look at outside at outside andthey say, they serve onboard, the board, and people with shot at heading aare best-workplace it should won’t try for advertising also enhance an emplobackground are often not well ﬁt inﬁhere. The real is taking won’t t inTraditional here. Theproblem real problem iscan taking background often not represented. welllist, represented. This also plays out with the issue of exthat at face value and not digging deeper. that at face value and not digging deeper. This also plays out with the issue of exit, Newman said. yer brand. FedEx and United Parcel Service of Ameecutive pay. There’s nobody that knowledgewe don’t want someone whotelevision ﬁts inﬁts incommercials as much Maybe we don’t want someone who ecutive pay.resource There’s nobody that knowledgeBut human departments should beMaybe careful rica, for instance, aim able about H.R. H.R. on boards, with with the result here,here, maybe we want someone who who thinks maybe we want someone thinks able about on boards, the result not to focus exclusively on such lists. If there is not a at their workers as at individual consumers. “Only 5 that they do things aboutabout compensation that that quitequite differently, to take tous thetonext level.level. differently, to us take the next that they do things compensation true commitment to the workplace brand, such efforts percent of their business comes an individual knowledgeable aboutabout comp ManyMany of these problems start start at the of these problems at the from consumers, so it an individual knowledgeable comp are likely to be short-lived and therefore ineffective. seems clear that theirdiscussion advertisements in general mapractice wouldn’t advise. boardboard level.level. We see too discussion We seelittle too little practice wouldn’t advise. There areeven three general of Newman thumb how how to gettoboards more accountable, about get boards more There are make three general rules of thumb “They might therules list,” said.about “But gazines and on TV is ataccountable, least partly to improve morale aboutabout how how we pick successors. If theIfboard is is moremore active, moremore knowledgeable, and more active, knowledgeable, and more we pick successors. the board they probably won’t stay at that spot for long. It’s and improve recruiting,” Quelch said. happy with with the direction of theofbusiness, willing to hold CEOsCEOs accountable for things willing to hold accountable for things happy the direction the business, and we one or more qualiﬁ ed candithat go beyond the quarterly resultresult or even that go beyond the quarterly or even andhave we have one or more qualiﬁ ed candidatesdates internally, then then the usual advice is to is to the daily stockstock market. Everything in our the daily market. Everything inculour culinternally, the usual advice promote fromfrom within, to gettomore of theof the ture rewards that short-term thinking. ture rewards that short-term thinking. promote within, get more samesame and continuity. and continuity. If they’re not happy, but don’t wantwant to to If they’re not happy, but don’t makemake too radical a change, they they source a CEO too radical a change, source a CEO with with a track record in their industry, who who a track record in their industry, Itnot takes eveneven withwith right person, Itjusttakes time, the right person, If a company has laid off a large number of to figure out howtime, many people favor athe specific will be comfortable making the sort will be comfortable making the of sort of younger workers, forthey instance, it should be aware why,” Newman in-house get Ifsaid. we’d judged Leeday Iacocca on just to results. get results. If“The we’d judged Lee Iacocca on just changes want.want. The third rule is if the changes they The third rule isthat if the benefit, butto its graying offices the environment boardboard iswill notisimpact happy with direction andand would not happy with direction and wouldcare that’s so important to 30-somethings, for instance, his ﬁhis rstﬁyear at Chrysler, we’dwe’d havehave ﬁredﬁhim. rst year at Chrysler, red him. like alike radical change, they should select apro-a may mean little to 20-somethings.” a radical change, they should skew any internal survey results. Work forces areselect — William J. Rothwell — William J. Rothwell CEO CEO fromfrom outside business and outside outside the business outside bably becoming dominated bythe older people in and many Employer branding has slipped to the back of the industry. That That leadsleads to a CEO who who does does the industry. to a CEO companies. not Young people have lost jobs disproportisome managers’ minds as they focus on cuts and survibuy wisdom, but comes in in notinto buy industry into industry wisdom, but comes onately in the latest According the Pew asIteconomic returns, the perwinners and with a lotrecession. of questions that might otherwise It takes time,time, evengrowth with with the right pertakes even the right with a lot of questions thatto might otherwise val. But be taken for granted. son, to getthis Ifwill we’d judged Lee Iacocca son, toresults. get results. Ifsoon we’d judged Lee Iacocca bethe taken for granted. Research Center, United States work force is older losers on front become clear. RecruitOne of the reasons CEOs don’t build on just his ﬁ rst year at Chrysler, we’d have on just his ﬁ rst year at Chrysler, we’d have One of the reasons CEOs don’t build than it has been in decades. More than 40 percent of ment will be just one challenge. Companies also need successors fromfrom within is theisboard doesn’t But he brought themthem around. red him. But he brought around. successors within the board doesn’t ﬁredﬁhim. workers are now 55 or older, the highest percentage to shore up their reputation with the people they alreainsistinsist they they do so.do There are really just three The question is, Where do wedoneed to to The question is, Where we need so. There are really just three since 1961. things have. “The employer brand not equipped about numbers,” to pay to: goals, rolesroles and acdrive the business, and who’s bestisequipped drive the business, and who’s best things toattention pay attention to: goals, and ac-dy It is important to tailorWhat benefits not justwant to the said. “It’s about getting people for countabilities. do we out ofout this? to doto that, and then will we theright free do that, and then willgive we them give the them the free countabilities. What dowant we of this? Schumann Who is doing what? What is theisCEO’s role, hand they need to people they need hand they to the pick the people they need Who is doing What the CEO’s role, the existing work force but also towhat? the demographic group right jobs atneed thepick right time. And that need doesn’t the board’s role, H.R.’s role, the role of operto best accomplish that? Or are we going to to best accomplish that? Or are we going to the board’s role, H.R.’s role, the role of operthat the corporation would like to attract. If women depend on the economy; it’s constant.” atingating managers? ThenThen accountabilities: how how play the of theofsenior group? playpolitics the politics the senior group? managers? accountabilities: are a focus, flexible time and on-site day care should are we people accountable for for areholding we holding people accountable probably beachieving offered. Ifthe young people are a target, congoals and acting the roles? achieving the goals and acting the roles? Lawrence M. Fisher has written for TheforNew Lawrence M. Fisher has written TheYork New York tinuing educationThis opportunities may101. be an important A longtime correspondent formany Theother Financial is Management But for This is Management 101. Butsome for some Times, Strategy + Business and many other publicaTimes, Strategy + Business and publica-Times, reason when we get into succession issues, tions. He is based in San Francisco. reason when we get into succession issues, tions. He is based in San Francisco. recruitment tool. “When you look at surveys, you have Victoria Griffith covers business from Boston.
Market the brand.
Look around the office. Who is missing?
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