Engaging employees. Build brand equity with your people. Brand: What your customers think of you Culture: What your employees think of you

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1 SmartPapers At Staples Promotional Products, we re dedicated to helping you meet your marketing and promotional goals. That s why we ve developed our exclusive SmartPapers, expert guides that address real world issues facing businesses in every industry. This SmartPaper highlights ways to build brand equity with your employees. Brand: What your customers think of you Culture: What your employees think of you Executive summary It s not enough to market your brand to customers. All businesses depend on the performance and commitment of the people working for them. Keeping employees engaged and inspired is a key to success for the strongest brands. How do they do it? Staples Promotional Products helps our clients build brand equity and loyalty through customized promotions and people-based initiatives. Employee-directed incentive, recognition and loyalty programs are designed to deepen people s connections with your brand. This SmartPaper will examine why employee engagement is so important and how to drive it. Your culture is your brand Strong brands understand that employee perception is as important as customer perception of a company. Social media has helped blur the lines between the insides and outsides of companies. In other words, your brand and your company culture are intertwined. Your culture and the people who are part of it literally have the power to make or break your brand. Employees are in a position to influence your customer s brand experience and that of their colleagues through direct interaction, the quality of their performance and overall attitudes about who they work for. Engaged employees impact customer brand experience in the right ways and contribute to a positive company culture.

2 Engaged employees: Are willing to commit more discretionary time and effort in the workplace Become brand advocates, promoters and champions Have a stronger emotional connection and loyalty to the brand and the organization 84% of highly engaged employees believe they can positively impact the quality of their company s products, compared with 31% of the disengaged. Towers Watson Companies with engaged employees return approximately 14% per year on each dollar invested, while the overall market return is only 6% per year. Professor Alex Edmans, The Wharton School Although there are no fail safes, you can strengthen your brand by putting focus on and investing in employee engagement. Why engagement matters Engagement goes to the core of employees connection to a brand and involves their feelings of motivation and passion about what they do day in and day out. The importance of engagement goes beyond making people feel good. High engagement leads to the ultimate goal of business: a better bottom line. Brands with high employee engagement generate higher returns. In a 36-month study, Towers Watson found that companies with a highly engaged employee population turned in significantly better financial performance (a 5.75% difference in operating margins and a 3.44% difference in net profit margins) than did low-engagement workplaces. In another study, brands known for consistently showing higher engagement levels than average organizations produced shareholder returns 9.3% higher than the returns for the S&P 500 Index from 2002 through In a different one-year study by Towers Watson, operating income jumped by 19% for a group of companies with high levels of employee engagement. Operating income dropped by 33% for a group of companies with low levels of engagement. Clearly, engagement is a unique differentiator in the marketplace that drives greater strategic awareness and brand equity. The world s top brands have high employee engagement, and highly engaged companies outperform competitors even in volatile conditions. In a 2009 Hewitt study, shareholder return for engaged companies was 19% higher than average A 2006 Russell Investment Group study links employee engagement to an organization s bottom line Fortune magazine s 100 Best Companies to Work For achieved a 200% cumulative return on profits from compared to an average of 45% for the S&P 500

3 Drivers of engagement Engagement is cultivated and earned. While there are some natural ebbs and flows in any given employee s level of engagement, the following drivers of engagement should have focus in any organization. Trust I have confidence in leadership My input is sought and valued I trust and like my manager Culture I feel a sense of community in the workplace I have good friends at work There is a genuine interest in my well-being My company is charitable and socially responsible Career The work is challenging I am learning new things and my contributions matter My career and home life are in balance Recognition My contributions are noticed and valued in a meaningful way The categories for the above statements Trust, Culture, Career and Recognition represent different areas where Human Resources leaders can target engagement-driving initiatives. Recognition, in particular, is an area that can have a strong impact on engagement levels.

4 Recognizing the right stuff The concept of recognition may seem simple, but it is not. As defined in our list of engagement drivers, recognition consists of meaningful acknowledgement of an employee s contributions. However, what constitutes meaningful is decided on a personal level. There is no middle ground or neutral territory with employee recognition. Your recognition initiatives will either advance your cause or they will detract from it. That s why good design is so important. For decades, organizations have put tremendous focus on recognizing years of service with retention as the ultimate goal. Today, particularly with generational influences, service awards are still important as a means of recognizing loyalty but should not be viewed as a means of driving retention. Equal to service awards in importance are recognition programs structured around: Fifty-six percent of organizations do not consider generational differences when designing an awards program assuming everyone would like the same award. World at Work Innovation and ideas Wellness reinforcement Learning and career development Execution of an organization s strategic plan Actively acknowledging contributions and achievements in these areas can have a direct influence on the company culture and drive engagement along with overall brand equity. Organizations that will win understand that they can no longer make people stay with a gold watch. Instead, they should aim to get the best thinking and execution from their people while they happen to be with the company. This is a paradigm shift. Another opportunity for HR leaders to break the recognition mold involves fair but not necessarily equal recognition. Much like sales and marketing leaders have done for years with incentives and recognition for A vs. B vs. C players, recognition programs provide HR and management teams the means to reward the impact that high-potential employees (hi-pos) have on the company. Because compensation is tight and too permanent, it is likely not a viable option when it comes to retaining hi-pos, a segment predicted to have a high percentage of defection as the economy recovers. In addition to giving hi-pos challenging assignments, trusting them with the mission critical work and engaging them in the strategic planning process, recognition is a tool that should be leveraged. Approaches to recognition can include a managed program of logoed products or a comprehensive incentives and recognition program that rewards hi-pos and other standout employees with valuable items at designated performance-based benchmarks. We are at a crossroads in business and HR has the opportunity to establish a new vision that will make a direct impact on the company. Recognition is no longer soft. HR leaders who think like marketers and design programs that drive employee actions and behaviors toward building brand equity will position their company for better financial success.

5 Case Studies Staples Promotional Products partners with our clients to develop recognition solutions relevant to the specific needs of their brand, their strategic plan and their workforce. The following case studies are examples of actual recognition programs that delivered results for our clients. Creative Synergy An industry-leading US Freight Transportation and Logistics company needed help boosting business by increasing employee performance. To achieve the company s objectives, Staples Promotional Products created a single program capable of driving performance in four areas: sales, customer service, safety and operations. The program included an incentive program to reward drivers for steering additional revenue in small increments, as well as a safety recognition program to reward accident-free intervals. The online platform allowed employees to combine points earned in individual programs, provided an opportunity to survey employees for program feedback, tested their program knowledge and shared success stories throughout the company. After the first six months, the freight company s president cited this program as being the single-most important and successful initiative in the organization s 25-year history. The program yielded a 150 percent return on investment, and the company experienced its best safety performance levels in more than two decades and reduced costs while increasing revenue in the face of a weak economy and a saturated market. Motivation A leading consumer products company wanted to differentiate its product from competitive imitators through an incentive program that could help motivate sales teams to get the products out fast and drive market share penetration. Partnering with the client on its mission critical product rollout, Staples Promotional Products developed a sales incentive web platform that awarded sales representatives points for such activities as securing pre-sales, confirming early product shipment dates and gaining strategic in-store shelf space. The program was designed to keep sales goals visible among the representatives, with online program updates and additional point-earning opportunities. The program motivated the sales force and fostered a successful product launch that set the client apart from the competition and met the very aggressive sales goals.

6 Concluding Summary For businesses today, culture is brand. Employee brand experience directly affects customer brand experience, and an engaged workforce makes this experience positive. Employee recognition programs that integrate promotion and people-based initiatives yield stronger brands with better brand equity and stability. As your brand partner, Staples Promotional Products can help you sustain the rhythm of your brand with employee recognition. Sources 1. Employee Engagement in Practice: JTI Case Study. Towers Watson Turbocharging Employee Engagement. Towers Watson. WP_ pdf