W

EXTRAS

Workplace Branding

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 refrigera-

tors 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.

by Victoria Griffith

After a McKinsey and Company audit recommen-ded that Condé Nast reduce its spending by 25 per-cent, 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 work-place 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 pam-per their workers more. Offering everything from free workplace massages and Friday happy hours to pater-nity leave and flexible schedules, companies fought to be viewed as the employer of choice.

Workplace branding emerged as a way for corpo-rations to differentiate themselves. Under the model, employees are seen as valued customers; the job expe-rience is the product they are buying.

Now the notion is being advanced that certain workplace luxuries are worth keeping even in a re-cession 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 fo-cused 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 recog-nized the connection between employer and product branding. Because front-line workers interact with cus-tomers, 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 unethi-cal. Take the case of the Boston-area housekeepers for Hyatt Corporation hotels who were fired earlier this year after unknowingly training their own replace-ments.

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 house-keepers 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 be-gan to receive death threats. The incident made recru-itment 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 employ-ment 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 testimo-nials 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 prin-cipal 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, dis-gruntled former employees and tough-to-please blog-gers 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,” Sar-tain 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.

Managers who conducted staff reductions in a sensitive and organized manner will want to pat them-selves on the back. Former employees will probably speak well of the corporation and may even be enticed back when times improve. Corporate morale is probab-ly still intact. Some companies do rise to the challenge.

In 2004, for instance, the low-cost carrier Southwest Airlines received kudos when it offered em-ployees early retirement packages instead of involun-tary 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—so-metimes against their better judgment—to a slash-and-burn 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 corpora-tions 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 compa-nies 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, Hewlett-Packard, Wynn Resorts and EMC met with some cyni-cism by observers who pointed out that the executives remain fabulously wealthy. But the sacrifices were, in general, applauded by employees.

Make sure to have a viable termination strategy in place for workers.

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 New-man 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 corpo-rate 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 the-re 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, empha-sizes 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 rechar-ging 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 differentia-tor,” Schumann predicted.

Identify the perks that matter most to workers and those that are key to your corporate brand.

Providing great health insurance, generous mater-nity 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 compa-ny, 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-to-measure, impact on employee morale.

Find inexpensive ways to improve the workplace.

If a company has a great employer brand, flaunt it. Getting on a “Top Places to Work” list is an excellent way to spread the word. Human resources departments that want to seek this form of recognition, though, should be aware of the criteria for these rankings. Many lists put a heavy emphasis on flextime and on-site services like day care or dry cleaning, for example. If a small adjustment can give a corporation a good shot at heading a best-workplace list, it should try for it, Newman said.

But human resource departments should be careful not to focus exclusively on such lists. If there is not a true commitment to the workplace brand, such efforts are likely to be short-lived and therefore ineffective. “They might even make the list,” Newman said. “But they probably won’t stay at that spot for long. It’s

likely to be a short-lived success.”Making the best-workplace list is not the only way

to get word out. Pearson of EMC, for instance, seeks to maximize the company’s exposure by ensuring that its name pops up on good-places-to-work Google searches. “If you’re searching for great technology companies to work for, I want EMC’s name to come up,” she said.

Traditional advertising can also enhance an emplo-yer brand. FedEx and United Parcel Service of Ame-rica, for instance, aim television commercials as much at their workers as at individual consumers. “Only 5 percent of their business comes from consumers, so it seems clear that their advertisements in general ma-gazines and on TV is at least partly to improve morale and improve recruiting,” Quelch said.

Market the brand.

If a company has laid off a large number of younger workers, for instance, it should be aware that its graying offices will impact the environment and skew any internal survey results. Work forces are pro-bably becoming dominated by older people in many companies. Young people have lost jobs disproporti-onately in the latest recession. According to the Pew Research Center, the United States work force is older than it has been in decades. More than 40 percent of workers are now 55 or older, the highest percentage since 1961.

It is important to tailor benefits not just to the existing work force but also to the demographic group that the corporation would like to attract. If women are a focus, flexible time and on-site day care should probably be offered. If young people are a target, con-tinuing education opportunities may be an important recruitment tool. “When you look at surveys, you have

to figure out not just how many people favor a specific benefit, but why,” Newman said. “The in-house day care that’s so important to 30-somethings, for instance, may mean little to 20-somethings.”

Employer branding has slipped to the back of some managers’ minds as they focus on cuts and survi-val. But as economic growth returns, the winners and losers on this front will soon become clear. Recruit-ment will be just one challenge. Companies also need to shore up their reputation with the people they alrea-dy have. “The employer brand is not about numbers,” Schumann said. “It’s about getting the right people for the right jobs at the right time. And that need doesn’t depend on the economy; it’s constant.”

A longtime correspondent for The Financial Times,

Victoria Griffith covers business from Boston.

Look around the office. Who is missing?

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one who can strike alliances.The question with Yahoo is, Do they

have a board that is on target with this, does the new CEO have the freedom to deal with the complete executive team? Or is this just an external hire and the direction isn’t clear and the choice of the person is superfi cial?

One of the issues that is always a factor is how knowledgeable the board members are about the talent available in the business and the talent that is available outside. Board members are often not that knowledgeable about succession. CEOs pick their buddies to serve on the board, and people with H.R. background are often not well represented.

This also plays out with the issue of ex-ecutive pay. There’s nobody that knowledge-able about H.R. on boards, with the result that they do things about compensation that an individual knowledgeable about comp practice wouldn’t advise.

There are three general rules of thumb about how we pick successors. If the board is happy with the direction of the business, and we have one or more qualifi ed candi-dates internally, then the usual advice is to promote from within, to get more of the same and continuity.

If they’re not happy, but don’t want to make too radical a change, they source a CEO with a track record in their industry, who will be comfortable making the sort of changes they want. The third rule is if the board is not happy with direction and would like a radical change, they should select a CEO from outside the business and outside the industry. That leads to a CEO who does not buy into industry wisdom, but comes in with a lot of questions that might otherwise be taken for granted.

One of the reasons CEOs don’t build successors from within is the board doesn’t insist they do so. There are really just three things to pay attention to: goals, roles and ac-countabilities. What do we want out of this? Who is doing what? What is the CEO’s role, the board’s role, H.R.’s role, the role of oper-ating managers? Then accountabilities: how are we holding people accountable for achieving the goals and acting the roles?

This is Management 101. But for some reason when we get into succession issues,

everyone forgets Management 101 and goes off half-cocked. About 70 percent of succes-sions fail, and it usually goes back to one of those three things.

Another key issue is sustainability, keeping it going. A lot of companies experi-ence a succession crisis, and then since it personally aff ects the leadership, everyone is highly motivated to do something for a short time. But the program eventually fails for lack of sustained support.

A bigger group of companies suff er from what I call the like-us syndrome. They look at outside candidates and say, they won’t fi t in here. The real problem is taking that at face value and not digging deeper. Maybe we don’t want someone who fi ts in here, maybe we want someone who thinks quite diff erently, to take us to the next level.

Many of these problems start at the board level. We see too little discussion about how to get boards more accountable, more active, more knowledgeable, and more willing to hold CEOs accountable for things that go beyond the quarterly result or even the daily stock market. Everything in our cul-ture rewards that short-term thinking.

It takes time, even with the right per-son, to get results. If we’d judged Lee Iacocca on just his fi rst year at Chrysler, we’d have fi red him. But he brought them around.

The question is, Where do we need to drive the business, and who’s best equipped to do that, and then will we give them the free hand they need to pick the people they need to best accomplish that? Or are we going to play the politics of the senior group?

Lawrence M. Fisher has written for The New York Times, Strategy + Business and many other publica-tions. He is based in San Francisco.

It takes time, even with the right person, to get results. If we’d judged Lee Iacocca on just his fi rst year at Chrysler, we’d have fi red him. — William J. Rothwell

� � . � � � �� � � � � � � � � � � � � � � � � � � � � � � � � � � � ��

one who can strike alliances.The question with Yahoo is, Do they

have a board that is on target with this, does the new CEO have the freedom to deal with the complete executive team? Or is this just an external hire and the direction isn’t clear and the choice of the person is superfi cial?

One of the issues that is always a factor is how knowledgeable the board members are about the talent available in the business and the talent that is available outside. Board members are often not that knowledgeable about succession. CEOs pick their buddies to serve on the board, and people with H.R. background are often not well represented.

This also plays out with the issue of ex-ecutive pay. There’s nobody that knowledge-able about H.R. on boards, with the result that they do things about compensation that an individual knowledgeable about comp practice wouldn’t advise.

There are three general rules of thumb about how we pick successors. If the board is happy with the direction of the business, and we have one or more qualifi ed candi-dates internally, then the usual advice is to promote from within, to get more of the same and continuity.

If they’re not happy, but don’t want to make too radical a change, they source a CEO with a track record in their industry, who will be comfortable making the sort of changes they want. The third rule is if the board is not happy with direction and would like a radical change, they should select a CEO from outside the business and outside the industry. That leads to a CEO who does not buy into industry wisdom, but comes in with a lot of questions that might otherwise be taken for granted.

One of the reasons CEOs don’t build successors from within is the board doesn’t insist they do so. There are really just three things to pay attention to: goals, roles and ac-countabilities. What do we want out of this? Who is doing what? What is the CEO’s role, the board’s role, H.R.’s role, the role of oper-ating managers? Then accountabilities: how are we holding people accountable for achieving the goals and acting the roles?

This is Management 101. But for some reason when we get into succession issues,

everyone forgets Management 101 and goes off half-cocked. About 70 percent of succes-sions fail, and it usually goes back to one of those three things.

Another key issue is sustainability, keeping it going. A lot of companies experi-ence a succession crisis, and then since it personally aff ects the leadership, everyone is highly motivated to do something for a short time. But the program eventually fails for lack of sustained support.

A bigger group of companies suff er from what I call the like-us syndrome. They look at outside candidates and say, they won’t fi t in here. The real problem is taking that at face value and not digging deeper. Maybe we don’t want someone who fi ts in here, maybe we want someone who thinks quite diff erently, to take us to the next level.

Many of these problems start at the board level. We see too little discussion about how to get boards more accountable, more active, more knowledgeable, and more willing to hold CEOs accountable for things that go beyond the quarterly result or even the daily stock market. Everything in our cul-ture rewards that short-term thinking.

It takes time, even with the right per-son, to get results. If we’d judged Lee Iacocca on just his fi rst year at Chrysler, we’d have fi red him. But he brought them around.

The question is, Where do we need to drive the business, and who’s best equipped to do that, and then will we give them the free hand they need to pick the people they need to best accomplish that? Or are we going to play the politics of the senior group?

Lawrence M. Fisher has written for The New York Times, Strategy + Business and many other publica-tions. He is based in San Francisco.

It takes time, even with the right person, to get results. If we’d judged Lee Iacocca on just his fi rst year at Chrysler, we’d have fi red him. — William J. Rothwell