Understanding the links between employer branding and total reward

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1 8 September 2010 Understanding the links between employer branding and total reward An overview of our research findings and the implications for reward Limited is authorised and regulated by the Financial Services Authority Registered in England No Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU

2 Today s session Background to the research Overview of the research findings Examples of how employers are aligning employer branding and total reward Our recommendations Key success factors in aligning employer branding and total reward Questions and observations are welcome 1

3 Background to the research

4 Background to the research Developing the research topic Employer branding can be described as how an organisation markets what it has to offer to both existing and potential employees A strong employer brand should link an organisation s values, people strategy and HR policies and be linked to the company brand Organisations that have a strong and attractive employer brand can use it to: help them reduce the costs of employee turnover, producing in turn a more engaged workforce who live the brand are likely to perform better, have higher attendance levels and deliver a more positive customer experience The CIPD s 2008 reward management survey reported concern among those respondents with an employer brand on how well their reward and recognition policies and practices support it What are the links between employer branding and total reward within organisations? 3

5 Background to the research The research was conducted in two phases Phase 1: Online questionnaire May to June organisations participated in the research, key findings from the questionnaires were: Nearly 90% of organisations had an employer brand or planned to within six months 39% of respondents believed ownership sat with HR 57% of respondents developed their employer brand to support their EVP Reward strategy was least aligned to the employer brand 70% and 49% of senior leadership understand and value the employer brand respectively, compared to 10% and 20% of employees/potential employees 72% of respondents used their intranet to communicate their employer brand Almost half of respondents felt a positive or negative effect of the recession on their employer brand Phase 2: In-depth telephone interviews July to October 2009 Interviews and a panel discussion were held with nine participants to determine in more detail the actions currently taken to link reward with the employer brand 4

6 Overview of the research findings

7 Overview of the research findings Many employers desire to have reward aligned to the employer brand to ensure that they live up to the promise of what they are offering employees as a place to work and also to ensure a positive employee experience. The research has established that companies link their employer brand with reward to a varying degree: Some have a very strong and clear link between the two Others do not have a clear link, which is often because they do not yet have a clear view of what their employer brand is Where employers have an established employer brand, they are using total reward to influence the employee experience and ultimately support their employee value proposition 6

8 Overview of the research findings Many organisations recognise that the employer brand needs to be supported by total reward programmes to ensure that the employer brand does not become an empty marketing campaign For example where organisations draw clear links between reward and employer branding, the focus is often on rewarding desired behaviours which has the benefit of creating not only a positive employee experience, but also helps to ensure a positive customer experience and reinforce the company culture Effective communication of reward packages can help to reinforce the employer brand as it raises awareness to potential and existing employees of the benefits of working for the company Numerous mediums are used to communicate the links between reward and employer branding 7

9 Examples of how organisations are aligning employer branding and total reward

10 How are organisations aligning employer branding and total reward? s Total Reward model Compensation Base pay Short term incentives Long term incentives Benefits Retirement Medical Life insurance Short and long term disability Company Car Development & Career Performance management Learning and development Career opportunity and pathing Mobility and global development opportunities Work Lifestyle Time off Wellness programmes Dependent care Workplace flexibility Workplace facilities and perquisites Non-financial & status recognition 9

11 How are organisations aligning employer branding and total reward? Compensation Compensation Base pay Short term incentives Long term incentives Many organisations pay competitively Benefits to get people through the door Whilst pay typically does not overtly support the brand, it needs to be at the right level to attract and retain employees Pay is a hygiene factor? Development & Career Organisations use bonuses to be market competitive, provide incentives, manage risk, and encourage behaviours. It is the encouraging and rewarding of behaviours that is interesting Work Lifestyle in the context of employer branding At Malmaison and Hotel du Vin bonuses are used to encourage excellence and positive employee behaviours which are at the heart of the firm s values and improves the guest experience 10

12 How are organisations aligning employer branding and total reward? Benefits The Compensation benefits provision should echo the employer brand: We expect our employees to work flexibly therefore we offer a flexible benefits program Our brand says we are the best in the market therefore the benefits we offer our employee have to be the best Our benefits provision reflects the type of work our employees undertake and the lifestyles they lead Development & Career Benefits Retirement Medical Life insurance Short and long term disability Company Car Work Lifestyle Malmaison Group and Hotel du Vin offers benefits that make life easier for employees, for example shopping vouchers and feet treatments. This ultimately supports its employer brand as employees feel looked after and are in a position to perform when they get too work For one company, its brand is about longevity and partnerships and therefore the benefits package rewards financially over the longer term 11

13 How are organisations aligning employer branding and total reward? Non-financial benefits For Compensation many organisations non-financial benefits such as performance Benefits management, training and career development help to ensure employees have the knowledge and skills required to carry out their role but also to help build engagement and support employees to live the brand Recognition awards are often used to influence the employee experience At tw telecom, its recognition programs align with its internal employer branding and provide opportunities for employees to recognise fellow employees who demonstrate company values, which underpin the brand Development & Career Performance management Learning and development Career opportunity and pathing Mobility and global development opportunities Work Lifestyle Time off Wellness programmes Dependent care Workplace flexibility Workplace facilities and perquisites Non-financial & status recognition 12

14 How are organisations aligning employer branding and total reward? Non-financial benefits (cont.) Non-financial Compensation benefits are also often offered with the knowledge that Benefits they will build engagement with employees and that this will contribute to producing brand champions At McDonalds, workplace flexibility is promoted through the introduction of an innovative family contract whereby members of the same family working in the same location can swap shifts without needing to seek a manager's permission. These family contracts were designed to cut absenteeism and improve retention Development & Career Performance management Learning and development Career opportunity and pathing Mobility and global development opportunities Work Lifestyle Time off Wellness programmes Dependent care Workplace flexibility Workplace facilities and perquisites Non-financial & status recognition 13

15 How are organisations aligning employer branding and total reward? Overall Compensation is driven in part by external factors and therefore there is a balance to be realised between alignment to external factors and alignment to the internal drivers, which includes the employer brand Whilst benefits provision should echo the employer brand, non-financial benefits tend to be easier to directly align to the employer brand and can often have the greatest impact This is because they are less influenced by market levels and consequently organisations can develop a competitive advantage Therefore, among the employers we interviewed we found little attempt to ensure pay structures aligned to the employer brand, however more effort was made to align progression and variable with the brand 14

16 Our recommendations

17 Our recommendations HR needs to identify and spell out the employer brand to the whole organisation, since if it is not universally defined or understood then this inhibits a link to the overall business strategy Ensure both junior and senior employees buy-in to the employer brand. HR needs to contribute to the wider business issues and communicate the entire package to all employees Use clear and honest communication and offer the chance for employees to provide feedback along any change process. This can help involve them in the process and maintain levels of employee engagement If it isn t broke, don t fix it! Leveraging existing reward policies that are likely to be well established among employees helps to create stability and enhances understanding whilst implementing change. Often it is the small and cheaper elements of total reward, such as recognition programmes, that can have the highest impact on the brand. When considering the measurement of employer brand alignment, HR and business metrics need to be based on the rationale behind the employer brand. For example, how many employees have moved and how many have stayed. Measurement should also consider customer, as well as employee, satisfaction to ensure alignment between the internal and the external brand 16

18 Key success factors

19 Key success factors In order to be able to successfully align employer branding and reward, organisations need to be able to articulate where they are on the employer branding journey and where it is they want to get to Gain senior leadership buy-in to the concept. It is HR s role to ensure that senior leaders understand the concept and why it is important to the organisation HR should work with the senior leadership to define what the employer brand is for the organisation. Once buy-in was achieved, organisations felt employees responded more positively to the employer brand as a valid concept Involve line managers. Early on this might involve obtaining employee feedback and later it might mean communicating the brand and becoming brand champions. It is agreed among our interviewees that employer branding cannot exist solely in HR but rather needs to be owned by the line Communicate what you want to be known for as an employer and what you are offering employees in terms of reward and experience For example at McDonalds, all the work behind the McJob was unrecognised until the McJob campaign, which changed external and internal perceptions dramatically 18

20 Key success factors Keep the promises you make to both existing and potential employees to prevent employer branding becoming an empty marketing campaign Measurement was the one area where it was difficult to determine success factors since so few companies directly measure the alignment between their employer brand and reward strategy. This is an area we hope to develop through future research So far, companies are simply measuring if each is successful in isolation of the other, but such methods as employee surveys could be tailored to assess alignment In the long-term, branding and reward should become mutually supportive, emphasising the need to get the initial alignment between them correct and ensuring authenticity within the organisation. 19

21 Biographies Christopher Johnson Chris is a principal at. He joined the firm in 2008 and is now the UK human capital leader. His consulting work is mainly in the area of reward; his clients are in the public, retail and pharmaceutical sectors. Recent projects and client relationships include: Jennifer Hall Jennifer joined s human capital business in 2006 and consults in the areas of broad based performance and rewards, executive compensation and workforce strategies. Recent projects and client relationships include: Review of senior civil service reward arrangements for a government department and in coordination with the Cabinet Office Development of a benefits strategy for the Department of Health, that could be applicable in Social Enterprises undertaking patient care services Review and development of a total reward proposition for senior and middle managers at major retailer Development of a global compensation management technology solution for a leading pharmaceuticals company. Before joining, Chris was at the Cabinet Office for three years responsible for employee relations and reward across the civil service. He has over twenty years consulting experience in the UK and US with leading human resource consulting firms Contact details: Telephone: Assisting in post merger workforce integration of two packaging companies Conducting an international resourcing strategy looking at talent sourcing and training for a transport company Design and development of short term incentive and long term incentive plans for a number of international companies Reviewing the performance management system in a UK regulatory body Analysing the effectiveness of a banding structure for an international financial services organisation Developing job analysis frameworks for a research institute Contact details: Telephone:

22 Limited is authorised and regulated by the Financial Services Authority Registered in England No Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU

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