BENEFITS & COMPENSATION INTERNATIONAL hyland in benefits and... · TOTAL REMUNERATION AND ......

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BENEFITS & COMPENSATION INTERNATIONAL TOTAL REMUNERATION AND PENSION INVESTMENT

Transcript of BENEFITS & COMPENSATION INTERNATIONAL hyland in benefits and... · TOTAL REMUNERATION AND ......

BENEFITS &COMPENSATION

INTERNATIONALT O TA L R E M U N E R AT I O N A N D

P E N S I O N I N V E S T M E N T

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was forced to make redundancies for the first time in itsnear 200-year history and the manufacturer that had toask all its employees to choose between job cuts and‘short hours’ working (with related salary cuts), and thelist of similar examples goes on. All these activities chipaway at the trust that an employee places in his/heremployer and damages a relationship that might havetaken decades to build.

THE EROSION OF TRUST Countless research studies show trust is a key part of anyrelationship if there is to be a degree of genuinecommitment and engagement. When trust is broken,motivation and engagement levels begin to slide withconsequent impacts on personal and organizationperformance. This then forces the organization intoharder survival measures and a cycle of decline is well andtruly under way as illustrated in FIGURE 1 below. Breaking

Employer Branding is Backand It’s All about Value-added

Stuart Hyland

Stuart Hyland leads the Reward Solutions Consulting team in Hay Group UK. He beganconsulting in reward when he joined Hay Group in 1997. After nearly 10 years with the firm he left to work for Deloitte, where he led its Strategic Employee Reward team for London and the South of England. In 2009 he rejoined Hay Group as a member of the Key Clients team, which saw him working with a range of clients across Europe before rejoining the UK organizationthe following year to lead the Reward business. Since 2011, Mr Hyland has been a member of the WorldatWork international training faculty.

The re-emergence of the employer brandand employee value proposition (EVP) hasbeen a steady one. Starting in 2010 with afew quiet murmurings, the noise has

quickly built up over the last two or three years andtoday is now loud, placing employer branding and EVP onthe ‘to-do’ lists of organizations, HR professionals andforward thinking business leaders around the world(even when they are not exactly clear on what this meansor should involve), but its revival should not come asmuch of a surprise when recent history is considered.

The global economic recession, which started to impactin 2007/08, forced many organizations to react in waysthat deviated from their norms and that damaged therelationship they had built up over many years with theiremployees. There are plenty of examples of suchactivities, including the global family-run business that

FIGURE 1 Cycle of Decline

As organization resultsand profits fall, job

security declines andpeople feel vulnerableand concerned about

their future

As staff commitmentdecreases, they fail todeliver previous levelsof performance andthe company results

are impacted

Based on thisexperience, staff areless prepared to ‘gothe extra mile’ andfocus more on doing‘enough’ to get by

To survive,organizations areforced to take more

steps to manage cost,including cutting pay

awards

Frustration and

decline

Companyprofits fall

Furtherorganizationsurvival steps

Staff feel unfairlytreated and trust

declines

Staffcommitment

falls

Individualperformancedecreases

Companyperformance

suffers

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this downward spiral will require a concerted intervention.It is highly unlikely that it will just stop on its own – butwhere to begin? With so many constraints on financialcosts, the majority of organizations will not be able tosimply buy their way out of trouble with pay increases andbonus awards. Consequently, attention has shifted to lookat the breadth of the employee experience, includingmany of the non-financial components of the total rewardpackage,* to ensure they are being integrated andleveraged to maximum benefit. It is at this point thatorganizations find themselves looking at their employerbrand. In view of this, it is perhaps no revelation that 64%of organizations recently surveyed had reviewed or wereplanning to review their employer brand.1

THE EMPLOYER BRAND So employer branding is back on the agenda – but whatis it? Frankly, it appears to mean different things todifferent organizations. For some, it might be little morethan a logo, the way a job advert is written or the designof a website; for others, it is much more. It is perhapssomewhat surprising that organizations are so unclearon the definition of employer brand when the samesurvey revealed that over 60% of respondents describedit as being “very important to the business because weunderstand the positive impact it can have”. However, adefinition that seems to be widely agreed upon can besummed up as shown in BOX 1 above.

The Next Evolution of Total RewardHowever ‘brand’ is defined, one inescapable fact has tobe acknowledged. Brand only exists in the mind andconsequently shaping perceptions and opinions of anemployer brand can be challenging. As Sir Terry Leahy(former CEO of Tesco) said when talking about brandmore generally:

“Your brand is not what you say it is, it is whatothers tell you it is.”

Therefore, while defining the employer brand is clearlyimportant, its actual success or failure really hinges onhow it is brought to life both inside and outside theorganization: the perceptions, images and emotionalreactions it creates in the mind of employees and thewider market. This requires the careful alignment andutilization of a range of levers across the full breadth ofthe employee offering. This is where total reward comesinto play.

As we know, total reward looks at the breadth of theemployee package covering both financial and non-financial components and consequently it requires onlya small shift to move from this to thinking about thetotality of the employee experience. This shift requiresextending the thinking and definitions around non-financial aspects of the package to ensure they arerepresented appropriately. The totality of the offeringthen needs to be considered in terms of its impact onindividuals within the organization and, significantly,the messages it sends beyond the organization, i.e. theimpact it will have on people outside the business.

While total reward as a concept is one that some organizations and senior managers are stillstruggling to get to grips with, it can be seen that a number of leading edge organizations are alreadymoving beyond this, raising more concerns over

BOX 1 Definition of Employer Brand

Employer brand represents the physical and emotionalmanifestation of all the experiences and offeringsprovided by an organization in exchange for the skills,capabilities and experiences that an employee can offer.

Consideration needs to be given to this manifestationboth inside and outside the organization, as its reachextends beyond the employee population.

* For further information, please see ‘Report on TotalReward’, B&C International, January/February 2013.

how those who get left behind will continue tocompete. Considering this, a question emerges aroundwhere and how an organization should think aboutmoving forward. BOX 2 overleaf provides a guide forthose who are unsure of where to take their employerbrand next.

The Role of Reward in Shaping Employer BrandAlthough the concept of employer brand can bedescribed as an extension of the total reward approach, the significance of the financial aspects of the reward offering cannot be ignored. The way in which an organization rewards its people bothfinancially and non-financially is key to demonstratingits commitment to its values and culture and is thereforecentral to the creation and perception of its employerbrand.

The challenge in this regard is to ensure alignmentbetween the different elements outlined in FIGURE 2opposite to ensure that consistent messages are beingsent to the business and to any external audiences aswell. Failure to ensure this alignment can createconfusion through sending mixed messages which couldundermine all other activity and ultimately reduce anypotential advantage offered by an employer brand. Itsounds an obvious point to make but consider theorganization that communicates one of its core valuesas being teamwork. What message does it send toemployees if pay/bonus awards are then driven by theachievement of personally focused performanceobjectives? In such instances, what will employeesactually believe? Will they believe that what theorganization is saying is important or what it is actuallypaying for is important? In most cases, employees will disregard what an organization says and focus more on what it actually proves is important through theway it rewards people. This is one of the reasons why itmust be remembered that reward is one of the mostpowerful communication tools at an organization’sdisposal.

A Note of CautionEvidently, how an organization shapes its rewardpackage sends out powerful messages about its valuesand culture, messages that extend beyond theorganization. Several recent examples show how thepublic can react and reshape their perception of aparticular product, service or brand because of what

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they have heard about how an organization treats andrewards its people, influencing consumer buyingpatterns as a result.

Once again, the objective is to ensure alignment so that consistent messages are received by employees and the market. If an organization positions itself in the market around family values and asustainable/green message then the employer brand and consequently all the different elements of the total reward approach need to reinforce this message.

To contradict it may cast doubt on an organization’sintegrity which could send customers in the direction ofa competitor.

One modern day challenge to this consistency comes inthe form of social media. Ten years ago, if an employeehad a particular grievance or complaint about the wayhis/her line manager or organization was treatinghim/her or colleagues, he/she might have complained toa few friends and close family members on arrivinghome. Today, thanks to social media, any expression ofdiscontent is much more immediate and can be postedonline within seconds and communicated to possiblythousands globally.

As a consequence, it can be seen that an employer brandis potentially more volatile and at risk than at any otherpoint in history. In light of this, it is perhaps concerningthat 55% of organizations in the survey mentionedearlier never monitor what is being said about them byemployees on social media, with the most often quotedreason being a lack of resources.2

In the same line, another potential issue has been the emergence of workplace review websites whereemployees can write anonymous reviews of theircurrent and previous employers. This has a much widerimplication, far beyond the ad hoc issues that might getreported on the likes of Facebook. The employee reviewsites are becoming an increasing point of reference forthose looking for jobs or facing an interview and couldseriously affect an organization’s ability to attract highquality talent. Failure to monitor and take correctiveaction on how an organization is being described onthese sites could pose a significant threat to businessperformance moving forward.

Anything But Soft and Fluffy!One of the criticisms of employer brand that persistsfrom its previous popularity is about its intangiblenature which creates an impression of something that isa little nebulous with questionable value-added to anorganization. It is therefore perhaps no surprise thatmany senior managers have had difficulty understandingthe importance or impact of the concept and it explainswhy it has largely fallen out of popular use in recentyears. However, the employer brand concept that isemerging today can clearly be seen to have been shapedby the global recession. Rather than being soft andfluffy, organizations are realizing that it can:

– help to resolve critical business issues;– attract and retain talent; – help to deliver performance improvements;– deliver real and quantifiable impacts; and– provide a genuine source of competitive advantage.

At a time when many organizations are struggling forperformance in a competitive and challenging marketplace, the benefits listed above are hugely significantand it is easy to see why so many are returning to thetable to look again at their own employer brand.

To illustrate the points above, one large, global, heavy-industry organization has recently undertaken anexercise to look at the potential business case for thereview and enhancement of its own employer brand. Asa very traditional and well established organization, this

BOX 2 What Stage is Your Organization at in the Employer Branding Journey?

1. The organization is not currently doing enough.Start with a clear plan. Is the current employer brandreally understood? Have employee views been gatheredrecently and will it support the performance and goals ofthe business? What does the ideal employer brand forthe future look like? How does it differ from the currentscenario and what does the transition journey look like?This will help to identify the changes that might berequired and begin the process.

2. Something is being done – but is it the right thing?Gaining a clear sense of the right priorities in work of thisnature can be challenging but it is possible. Financialmetrics have a role to play here to help identify andquantify the potential financial benefit to the business ofan improved employer brand. This data can also be usedto help identify the development priorities (i.e. thoseactivities that will deliver the most benefit to thebusiness). Of course, this is only one side of theconversation and it needs to be placed in the context ofemployee expectations and perceptions and thisinformation should also be used to inform the selection ofactivity. It would be a risk to focus on only one of thesetwo dimensions but taken together they can help toensure an informed decision is made over where to focuseffort.

3. There is too much going on!Go back to basics and revisit the desired employerbrand. This should act as the blueprint against whichindividual activities can be tested by understanding theirsignificance and impact on the journey. Are there somethat are more significant and impactful than others?Focus on these first; do not try to do everything at once.It is far better to focus on a few things and do these well(in a fully integrated manner) and to take employees onthe journey as opposed to trying to do too much at onceand delivering change fatigue to employees which cancause them to disengage from the process and,ultimately, from their employer.

4. Don’t try to live the impossible dream!Finally, whatever employment brand is required it needsto be realistic and deliver on its promise to employees.Even if it has to be positioned as a journey, a credibledestination still needs to be defined. Failure to live up tothe promise will only undermine a brand in the minds ofemployees and potentially in the wider market, as it canlead to a flurry of potentially negative statements onsocial media and we all know how damaging these canbe.

was not something that it had really consideredpreviously. However, increasing business performancechallenges led to its consideration of a wide range ofdifferent types of business change and one of thoselooked at how it manages and treats its people, which iswhere the issue of employer brand was raised by the HRteam. As a result, and in the face of a slightly scepticalmanagement team, the organization conducted a pieceof research in 2013 (with external consultant support) tounderstand whether developing its approach in this areawould offer any notable advantages, i.e. would thepotential benefits justify the associated efforts andcosts. After an initial piece of research lasting just a fewweeks the board was presented with a business casewhich offered an annual saving of several millionpounds. This was a business case that had beenvalidated by the organization’s own finance team andwhich was so clear in its potential upside that thedecision to move forward to a more detailed piece ofactivity planning was an easy one to take.

The work undertaken by the organization outlinedabove might sound fairly exceptional in terms ofdelivering multi-million pound benefits but many others are looking to build cost-benefit driven businesscases and are surprised by the potential upsides beingoffered.

AN OPPORTUNITY WORTH PURSUINGWhat is clear from all the evidence available today is thatemployer brand is back on the agenda. Ignoring this factis a risk; it has returned as a much harder, more businessdriven approach than before. Now it offers a very real

References1 1 ‘People talk... but are you listening? Hay Group IMPACT employer brand pulse survey 2013’.1 2 Ibid.

FIGURE 2 Employer Branding –Aligning the Different Elements

Employee

Reward Culture

Values

Alignm

ent Alignm

ent

Alignment

source of competitive differentiation, at a time whenmost organizations are looking for any potentialadvantage they can find. It can be a challenging issue toaddress but a simple evolution of the total rewardconcept to incorporate the external perspective may bea good place to start, as the rewards are there to be hadfor those with the desire to really understand andinfluence what other people think of them. Ω

Copyright © Pension Publications Limited 2014.

Reproduced from Benefits & Compensation International, Volume 43, Number 7, March 2014.Published by Pension Publications Limited, London, England.

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