Employment Brand – five bottom lines and a couple of growth enginesJohan Herholdt

Human Capital Consultant at Absa Bank (now Retired): joherholdt@gmail.com

[This article is based on a chapter in Building Human Capital – SouthAfrican Perspectives; edited by Italia Boninelli and Terry Meyer; KnowRes Publishing; 2003, rewritten and updated during July 2015]

Many people, when thinking and talking about employer of choice, may make the mistake of assuming that it is merely a matter of “being nice to people”. In my experience the processof becoming employer of choice also entails that, but it is much more.

In fact, to become employer of choice will mean (at the very least) that you take care of five bottom lines and a couple ofgrowth engines.

The Financial bottom lineEconomic performance is the first responsibility of a business. A business must show a profit at least equal to its cost of capital, otherwise it is irresponsible – and a drain on a country’s resources. Without economic performance a business cannot be a good employer, citizen or neighbour.

To exist a person one must have a physical presence, a body orbulk. It does not mean that bigger is better , but a living company (like a living person) occupies space ― it is something rather than nothing. To be financially viable means having physical assets and the ability to employ them at will and productively. The balance sheet explains how the firm is

doing at this ― and how most people evaluate the performance of one company against others.

But financial viability is not an organisation’s only responsibility. In a thoughtful article in the December 2002 Harvard Business Review, Charles Handy states: “In the wake ofrecent corporate scandals, it is again time to ask ourselves about the underlying culture and assumptions most fundamental to business.” In What’s a Business For? (Harvard Business Review, December 2002)1 he asks: “What and for whom is a business? And are traditional ownership and governance structures suited to the knowledge economy?” According to corporate law, a company’s financiers are its owners, and employees are treatedas property and recorded as costs. But whereas that might havebeen true in the early days of industry, it does not reflect today’s reality. Nowadays a company’s assets are increasingly found in the employees who contribute their time and talents rather than in the stockholders who temporarily contribute their money. The language and measures of business must be changed. In a knowledge economy, a good business is a community with a purpose, not a piece of property.

The People bottom lineTo assume that profit is the only goal is to mistake the meansfor the end. The idea that those who provide the financial backing are the company’s rightful owners is outdated. Today, the value of a company is determined largely by its intellectual property, brands, patents, and the skills of its workforce. A company should think of itself as a wealth-creating community, with members rather than employees. It seems only fair that the members of the community who contribute their intellectual assets should receive dividends as well as those who contributed their money.

Increasingly investors are realising that a viable company does not exist simply to make money. The term viability helps us to understand why savvy investors are not only interested in this year’s performance (as shown in the balance sheet), but more importantly, in the ability of the company to sustain

1 https://hbr.org/2002/12/whats-a-business-for (accessed 18/7/2015)

performance into the future ― to be able to survive in the long term.

To continue with our analogy, people are the heart and mind ofthe enterprise, its intelligence and emotions. In recognition of this, many organisations now routinely say that people are their greatest asset. Yet few believe it, let alone practice what they preach. Though perhaps not consciously, many employers (and their agents called managers) still believe, asdid 19th century employers, that people need the organisation more than it needs them. But, in fact, organisations have to market organisational membership as much as, and perhaps more than, its products and services. They have to attract people, retain people, recognise and reward people, motivate people, serve and satisfy people.

One consequence of this new relationship, which is another newtension in modern society, is that loyalty can no longer be obtained through the pay cheque. The organisation must earn loyalty by proving to its knowledge employees that it offers them exceptional opportunities for putting their knowledge to work. The term “labour” has increasingly been replaced by “human resources”. This change is a reminder that it is the individual, and especially the skilled and knowledgeable employee, who decides in large measure what s/he will contribute to the organisation and how great the yield from this knowledge will be.

This discussion about the value and worth of the skilled individual brings us to the importance of an employment brand.Like any product or company brand, the organisation offers itsconsumers (in this case, consumers of its employment opportunities) an explicit and/or (more often) implicit value proposition. It makes an implicit or explicit promise in orderto attract them to the company and, finally, it must deliver on this promise or lose the custom of that person — in the case of the employment, the person resigns.

Later on we will look more closely at employment brand. The most important point to remember, however, is that any employer already has an employment brand. Potential employees have a picture (often disappointingly wrong) about what it

would be like to work for the enterprise. People in the employof the organisation already experience its employment value proposition on a daily basis. What this value proposition entails will become clearer later in this article.

A company is a community made up of a group of people who jointogether to accomplish something collectively that they could not accomplish separately. They contribute to society to provide a purpose for their lives. The measure of success for an organisation should include outcomes for its members as well as outcomes for others (like customers and suppliers) andthe society within which it operates (Handy, 2002).

The Social bottom lineThe post-modern organisation consists of knowledge specialists, it has to be an organisation of equals, of colleagues and associates. No knowledge ranks higher than another; each is judged by its contribution to the common taskrather than by any inherent superiority or inferiority. Therefore, the modern organisation cannot be an organisation of boss and subordinate, but has to be organised as teams (Drucker, 1992).

The social bottom line for organisations is the same as the social bottom line for any person ― no-one is an island. People have to develop the ability to interact successfully inour global community and to live up to the expectations and demands of social roles. This means developing good communication skills leading to intimacy with others; creatinga support network with friends and family; showing respect forothers and yourself. All of us have to earn our membership of society by living up to the social responsibility of being useful to our social and physical environment.

Organisations have a similar challenge ― to find its place in the local and global communities, to develop intimate and productive relationships with its stakeholders, to communicateits needs and to be sensitive to the needs of other social entities and the physical environment. Social responsibility means experiencing yourself as accountable for your actions – and so an organisation is accountable for the effects of its

business practices, even without a legal opinion or a court case.

One way to honour this bottom line is in a firm’s approach to its investments. Sustainable investing, or socially responsible investing (SRI), is a catch-all category encompassing broad investment objectives, such as ethical investing, impact investing, negative screening, or a combination of these. At its most basic, sustainable investingincorporates an investment discipline that considers environmental, social, and governance (ESG) criteria in the investment process. ESG objectives can differ from investor to investor based upon their priorities, but ESG-oriented investors seek to integrate some elements of their own values in the investment portfolio's construction.

Socially Responsible InvestmentIn their 2014 Trends Report2 The Forum for Sustainable and Responsible Investment calculate that one out of every six investment dollars is in sustainable investment strategies.

Figure 1: SRI Investment in the US

Of course, you may ask if this is just a fad. Maybe the best way to answer this is to show how the SRI performs against other listed enterprises (in this case, the S&P 500 index).

2 http://www.ussif.org/trends (Accessed 18/7/2015)

Figure 2: SRI Returns consistently better than S+P 500 since 1995.3

Note: We have used US data because it is readily available. Globally the same trends appear.

Another area where the organisation is expected to be effective is in developing the abilities of organisational members to value and leverage diversity. In this respect the following obstacles need to be overcome:

Getting business leaders to understand how the work experience differs for individuals who are members of minority or under-represented groups — and how this blocks both individual and organisational performance

Making the business case for the organisation’s diversityefforts by creating a link to the organisation strategy

Developing a strategy for managing diversity Implementing an effective diversity strategy Measuring the shifts and implementing remedial actions

As mentioned, another social challenge faced by companies is to leverage off our social need to work in teams. This poses challenges for people management processes essentially developed around the mindsets of a previous century designed 3 http://www.coloradosustainablefinancial.com/investing-for-impact/ Accessed 25/5/2015

to honour the (strictly) individual relationship between employer and employee. All our practices ― from recruitment toremuneration and especially our techniques for motivation ― sees the individual in isolation and this trend is sanctioned and nurtured by the prevailing North American cult of the self-made man (and nowadays, presumably woman).

The challenge for leaders across the world is therefore: recognise that the societal context for business has changed. Leaders and organisations are expected to play by new rules, customers and consumers have different expectations from what they used to, employees are not what they used to be and theirexpectations have changed drastically — in short, organisations are required to transform because the world is transforming.

The Spiritual bottom lineUntil recently, the human soul and man’s existential questionshave been ignored in the workplaces of the Western world. Workbehaviour theories historically concentrated mainly on our rational and unconscious nature, bypassing man’s existential questions. In contrast, spirituality centres on people as far as they question their existence ― spiritual beings who need tofeel that their existence has some meaning and significance. This “will-to-meaning” is especially relevant in the modern age where people are searching to see order in the world and to have a sense of optimism about the future despite the obvious chaos that exists at times. Viktor Frankl (1984) even postulates that the primary motivational force in mankind is astriving to find meaning.

Spiritual wellness can be defined as the desire to find ultimate purpose in life and to live accordingly in order to find a deep sense of wholeness or connectedness to the universe. It does not equate to religion, but often has religious undertones as an awareness of a being or force that transcends the material aspects of life. It involves possessing a set of guiding beliefs, principles or values thathelp give direction to your life. People can derive meaning

and purpose through a combination of nature, art, music, religion, meditation, etc.

Recently more and more people are becoming disillusioned with the basic philosophy and values of materialism and capitalism.People from many diverse cultures are redefining what they expect from their personal and working lives. Increasingly they see the purpose of a business as not just making a profit, but instead to make a profit in order to grow to do something more useful or better. Manipulating remuneration packages will not change the image of business as a cult of selfishness. Businesses should take the lead in placing more emphasis on the spiritual needs of their members.

This aspect of an enterprise is usually driven by organisational values. Absa’s values include the Growth Charter (declaring six growth and learning rights and responsibilities of individuals that support the principles ofa learning organisation). A word of caution on values ― it is much more than a weekend away for senior management to come upwith a concoction consisting of their own “top 5” personal values which is then foisted upon the business. Nor is it a chance for marketing and PR to show the world that “we also follow the latest business fashion”. A true values exercise must involve all organisational stakeholders. After the mergerwith Barclays, the Absa the values exercise was facilitated byPeople Management and it can be summarised as follows:

Purpose: to co-create with all stakeholders and redefine the Absa values that would support the newly coined purpose and mission .

Process: this consisted of individual interviews to identify the real and living values in Absa; critical reflection on present practices; inputs from all stakeholders; identification, defining and communication of critical values; development of behavioural guidelinesfor values with employee inputs; and context creation to make values alive in the hearts and minds of all employees.

Outcome: this resulted in the “Absa Spirit” booklet that discusses the Absa values as well as the behaviours

required to “live” these values – behaviours that stakeholders felt displayed each value.

Environmental bottom lineThere is growing emphasis on our impact on the physical environment and no organisation will be tolerated for much longer if they are hurtful to it, no matter how financially successful they might be. Until recently investment in ecologically sustainable and sound opportunities was seen as part of the spiritual bottom line. With our environment under increasing pressure and the very real chance that our activities might make it less hospitable to life, this is no longer a part of something, but a bottom line in itself.

Companies must stop or change all activities, actions and programmes that are harmful to the environment. This is no longer PR, but essential for the survival of the human race – and many other forms of planetary life. More than that, all ofus must participate in activities that will reverse the damagealready done – and government, business and organised labour should take the lead. A first step would be to stop talking about whether there is indeed a crisis and we should certainlystop bickering about the precise nature and size of the problem.

It is a planetary problem in need of a planetary solution.

Green technologies and solutions should not be treated like designer goods for the well-off few, but as essential. Adopting a greener lifestyle should also be a necessity and not a ‘lifestyle choice’ for some of the more eccentric among us. We cannot hand this problem over to the next generation, because there might not be one.

Sustainability ReportingSince the early 2000’s firms in South Africa have been reporting in the format of integrated sustainability. Absa’s first Sustainability Review was published in 2007.

The format of these reports has been influenced by the Global Reporting Initiative. The GRI is an international independent organisation that helps businesses, governments and other organisations understand and communicate the impact of business on critical sustainability issues such as climate change, human rights, corruption and many others. The GRI was founded in Boston in 1997 and its roots lie in the non-profit sector.

Barclays’ annual report, inter alia, clearly bears the imprint of these bottom lines. The headings of their 2014 annual report is instructive:

Customer and Client: We are the bank of choice for our customers and clients.

Colleague: Our colleagues are fully engaged. We create a diverse and inclusive environment where they can fulfil their potential.

Citizenship: We have a positive impact on the communitiesin which we operate.

Conduct: Our products and services are designed and distributed to meet our clients' needs. We act with integrity in everything we do.

Company: We create sustainable returns above the cost of equity. We understand and effectively manage risk, and continuously improve control.

Reports, drawn up by managers and used as PR and marketing, isclearly not sufficient and can cause harm if not sustained by actions. As Dr Graham Dietz, senior lecturer at Durham Business School and co-author of the report Building and Restoring Organisational Trust, advises:

When people find themselves – quite suddenly – working for a discredited, even vilified, organisation, the guiltand shame by association can be a distressing, even devastating experience. The depth and rigour of the response is critical at each stage, from the immediate official statements through the investigation into the

failure's causes to the systemic reforms designed to ensure it cannot happen again.4

Bottom line of the bottom linesYour organisation finds itself in this world, not only the world of work, but that place where the different forces that create and sustain the organisation intersect. These forces are, at least:

ecological (because we only have one earth) political (because of the power dimension) social (because it involves people) societal (because it occurs in a particular culture and

social environment) technical (nobody can ignore machines, our legacy from

the industrial age) individual (because people and their psychology are

always involved).

There are many technical dilemmas to solve when leading and transforming organisations, but maybe more fundamental than these, organisations are faced with philosophical dilemmas. Philosophy, as the “science” that fills the spaces between thesciences, and the “technology” that operates at the edge of each science, is your ally when navigating complexity. Rather than reducing the world to a recipe, true philosophy ponders the world with profound respect, always ready to, at least, suspend judgement in order to frame questions around the mysterious heart of things.

So, the historical journey of people at work and the transformational challenges it poses for the post-modern organisation brings one back to the old, and never resolved philosophical problem of the pluralistic society: who takes care of the Common Good? Who defines it? Who balances the separate and often competing goals and values of society’s

4 http://www.theguardian.com/sustainable-business/rebuild-restore-recover-trust-business (Accessed 18/7/2015)

institutions? Who makes the trade-off decisions and on what basis should they be made? (Drucker, 1992).

Medieval feudalism was replaced by the unitary sovereign stateprecisely because it could not answer these questions. But theunitary sovereign state has itself been replaced by a new pluralism, one of function rather than one of political power,because the unitary state could neither satisfy the needs of society nor perform the necessary tasks of community (Drucker,1992). The collapse of communism was also the collapse of the belief in the all-embracing and all-powerful state.

It is, however, not only communism and socialism that are coming under attack as philosophical and socio-economic systems, but increasingly also capitalism — and this should frame our thinking and conversations around employment branding.

Employment Brand A successful brand is much more than a catchy name or a creative advertising campaign created by the marketing department.

Successful brands have strong leaders — professionals who engage the entire team and positively challenge each employee in every department to “be the brand”. False claims mostly result in intolerable losses — such as a loss of reputation, investments without the planned return or a loss of future profits.

Frontline employees are responsible for ensuring that customercontacts are positive experiences. Increasingly, companies arerealising that delivering their brand promise to customers depends on how well they understand and manage the relationship between internal and external stakeholders. This realisation requires people management, marketing and other staff departments to work together with line leaders, connecting employees’ efforts with the needs of the marketplace. These support departments achieve this by fittingthe right systems, rewards and integrated marketing communications to attract and retain those employees who will

help them succeed. Ultimately, if a company is to create a competitive advantage in the marketplace, it must emphasise employees’ satisfaction with their work life as a driver of external customer satisfaction and business results.

Perhaps the most famous example in the area of employee satisfaction and its impact on business results is that of theSears, Roebuck and Company’s late-1990s turnaround. By gathering data on employee satisfaction, Sears learned that employee attitudes toward their job and the company had a greater effect on both employee loyalty and behaviour toward customers than any other factor.

Sears demonstrated this through a rigorous measurement processwhich identified a concrete link between employee satisfaction, customer satisfaction and, ultimately, bottom-line financial results. They called this “The Employee-Customer Profit Chain.” To drive results, Sears teamed with its managers to change employee attitudes and behaviours, creating a new sense of urgency and purpose centred on the company’s new “Softer Side of Sears” service strategy. A clearobjective behind this strategy was communicated to all employees and tied to the measurement model: making Sears a compelling place to work makes it a compelling place to shop and to invest in (Kirn, et al, 1999).

There is a direct link between the efforts and attitude of staff and the attitude of customers toward the enterprise. As a consequence, it has become essential for organisations to attract and retain talent. This happens when you have a strongemployment brand.

As the global economy shifts from an industrial to a knowledgebase, South African companies, too, are recognising the need to pay more attention to human capital. The reason? Drivers ofsuccess are no longer limited to technology, size, consolidation or physical asset base ― there is no guaranteed correlation between these things and corporate success. The real correlation is with the human factor. (Van Dyk and Herholdt; 2003)

When prospective and current employees describe a company, they illustrate the employment brand. Associations such as innovative, shrewd, ruthless, technologically advanced, and hierarchical are descriptors of a company’s employment brand. Strong employment brands create a unique and differentiating employee experience. Companies must consistently measure and improve their employment brand in order to attract and retain top talent as well as enable talent to achieve peak performance.

Similar to a solid product/service brand, an effective employment brand is based on needs — the needs of employees and the extent to which the organisation fulfils them. The point of overlap between an organisation’s internal strengths and employees’ needs is what constitutes a differentiating value for employees. A firm’s ultimate goal is not only to craft and communicate a clear employment brand value proposition, but also to construct a total package consistent with it. This total package is the mechanism to transform the employment brand into action.

In order to underscore the importance of employment branding, it is necessary to understand human capital.

Understanding Human CapitalMaybe we should start this section by saying that people have known for a considerable time that any organisation is worth more than its tangible, physical assets. This is why buyers ofbusinesses often pay “goodwill”. Goodwill is defined in most dictionaries as: An intangible asset, which provides a competitive advantage, such as a strong brand, reputation, or high employee morale. In an acquisition, goodwill appears on the balance sheet of the acquirer in the amount by which the purchase price exceeds thenet tangible assets of the acquired company.

The intangible assets of an organisation define the domain in which the employment brand finds its home — human capital, structural capital, relational capital, leadership, employee sentiment, labour turnover and knowledge management, to name afew. At Absa, we define intellectual capital as the interrelationship between human capital (HC), structural

capital (SC), relational capital (RC) and customer capital (CC) — all the intangible assets of a company, together with unique processes that create and build the intellectual capital of a company.

Systemically the interrelationships between these concepts andhow they interact to contribute to the bottom line (or financial capital) can be represented as follows:

Figure 3: How the elements of intellectual capital cause financial capital

Reading the system: human capital (HC) causes relational capital (RC) and structural capital (SC). RC and SC cause customer capital (CC), which, in turn, causes financial capital (FC). Part of this financial capital is then used to acquire the required quality of human capital.

Human Capital (HC) is the profit lever of the knowledge economy. An organisation’s members possess individual competencies. In order to understand the value of these competencies, think of the organisation as an open system — a “productive process that receives tangible and informational inputs from the environment, (that) produces tangible and informational outputs that enter the environment, and is characterised internally by a series of flows among a network of nodes and ties or feedback links.” (Bontis, 1999).

Hudson (1993) defines human capital on an individual level as the combination of four factors:

your genetic inheritance your education

your experience your attitudes towards life and work.

Human capital is important because it is the source of innovation and strategic renewal, no matter where it originates — from brainstorming during a strategy session, problem solving in a research laboratory, day-dreaming at the office, re-engineering new processes, improving personal skills, rearranging your desk or developing new leads. The useful (and used) intelligence of the individual is the basis of human capital. Viewed like this, the statement: “people areour most important resource” becomes the truth rather than theright thing to say in the annual report.

This happens because human capital adds value, which is uniqueor rare, not imitable (even by someone with the same qualifications) and not substitutable by competing firms. In short, it is the organisational wisdom acquired through years of learning from mistakes, struggling to update and change mental models and to figure out how to circumvent red tape andother obstacles to produce customer-satisfying outputs (to name but a few). This is the bedrock of human capital. It embodies the knowledge, talent and experience of employees, and structural capital (SC) represents the infrastructure required to enable human capital, codified knowledge repositories existing external to the minds of employees (e.g.databases, filing cabinets, routines and procedures, etc.). These remain even when people exit the firm.

Relational capital represents the knowledge inherent in the relationships that the firm has with suppliers, customers and entities outside the boundaries of the firm. An important market asset is the number and depth of customer relationships. Strategic consultancy Bain and Co’s research shows that a 5 per cent increase in customer retention can boost profits by 25 to 95 per cent5 and American Express reports that they treble profits from a customer if they can retain him/her for an extra five years.6

5 http://hbswk.hbs.edu/archive/1590.html (Accessed 19/7/2015)6 http://mm-research.com/Relationship%20Marketing (Accessed 19/7/2015)

But internal relationships are also important — teams are unique carriers of relational capital, leveraging individual human capital. This is why the behaviours exhibited by management constitute an important variable for leveraging human capital. Managerial leadership acts as a catalyst to fuel learning in firms and the learning organisation requires champions and followers. It is generally recognised that leadership creates the context for superior performance — called “company culture”.

Company culture (or general employee sentiment) is an important lever for human capital. Culture can broadly be defined as the quality of the relationship between employees and the organisation. It consists of the interrelationship between employee satisfaction, commitment and motivation. Organisations that have a culture that supports and encouragesco-operative innovation have a competitive advantage. Culture constitutes the beliefs, values and attitudes pervasive in theorganisation and results in a language, symbols and habits of behaviour and thought. It is increasingly recognised as the conscious or unconscious product of the senior management’s belief (Hall, 1992).

Human capital development, especially relating to culture, canbe managed — if the organisational membership is relatively stable. This task becomes much more difficult when there is mobility in the employee base. High labour turnover is a significant challenge when attempting to leverage human capital because the average employee profile of the enterprisekeeps changing.

Generally we recognise two types of turnover, voluntary and involuntary. Involuntary turnover refers to the dismissal of employees, whereas voluntary turnover occurs when employees resign. Since management cannot control voluntary turnover, they should focus on understanding and managing it. Voluntary turnover often results in employees migrating to competing firms, creating an even more critical situation, since this knowledge can now be used against the organisation. Senior management should consider the repercussions of voluntary turnover and create contingency plans.

The interaction between these capitals produces customer capital (CC). “Customer capital” is the emotional and financial value of your customer relationships. It is the key indicator of your company’s current and potential profitability. In an increasingly complex and fragmented marketplace, customer capital is the most robust way of establishing a sustainable advantage over your competitors.

I need to make the point that there is a strong link between human performance and financial outcomes. At Absa we think about it as follows:

Figure 4: The link between human performance and financial outcome

Reading the loop: The loop starts with business strategy. Strategy is the collective, emerging pattern of behaviour an organisation consciously exhibits over time to ensure its survival by differentiating itself in unique ways (Ungerer, Pretorius and Herholdt, 2002).

In a competitive market, strategy implies:

The creation of a unique and valuable position, involvinga differentiating set of activities.

It implies making trade-offs in competing and choosing what not to do

The central goal of strategy in a free market environmentshould be to achieve sustainable, superior long-term returns on investment by leveraging the four bottom linesdiscussed earlier in this article in a balanced way.

At Absa, we recognise that strategy sets the context for our people management processes, to be understood broadly as how wedeal with people and therefore how people experience Absa. The people context gives you the “touch-and-feel” of the place, or the “vibe” you feel when you do business with us. The context determines whether we experience ourselves as active or passive and creates the capacity to influence the behaviour ofstaff. Creating this context is the prime responsibility of all leaders in Absa and they often define it in their strategymaps as “creating a climate for action”.

The people context produces certain “outcomes” that are seen and measured in the behaviour and attitudes of employees. Employee behaviour and attitudes are the prime factors in the “quality of strategy delivery” in (almost) countless day-to-day actions and activities. Obviously, the quality of our strategy delivery determines our “financial performance”.

If we perform well financially, we can afford to set the kind of business strategy that will rapidly impact on the Absa business context.

The people management function has to provide processes to achieve at least the following to assist in creating the desired people context:

rigorous selection internal career opportunities formal training systems performance consequences profit sharing and pay for merit employee involvement and mechanisms allowing employees to

be heard role definitions and determining outputs to be achieved.

As a People Management function, we find ourselves facing three challenges:

the challenge to find talent (or human capital) the challenge to secure hearts and minds (or emotional

capital) the challenge to develop and maintain the relationships

between people (or social capital).

In the challenge to find talent we are by no means as geared as Microsoft, who is reputedly maintaining recruitment expertsaround the world, whose full-time jobs entail scouting for talent.

Pinning all your hopes on finding so-called ‘A-players’ outside the company is not only short-sighted, but wrong. Better to develop them over time. General Electric’s rank-and-yank forced ranking practices put the subject of performance appraisal on the table, although it is not a recipe to follow blindly.7 Treating people like wage-slaves are off-putting – even to A-players! – and General Electric no longer practice it. Annual performance appraisal processes with competitive forced ranking as its centrepiece are increasingly being replaced by regular feedback and continuous coaching and development.

Engines of Growth create Human Capital (or deplete it)Tight labour markets and better information on job opportunities are making it much more difficult to retain goodemployees and recruit talented ones. Employers in this environment are coming to view their employment offer (or employment value proposition) like a product in a market — in this case the labour market. With this “product” perspective in mind, enterprises have shown an ever-increasing interest inthe concept of employment branding and the steps necessary to create and maintain a robust employment brand in the labour market.

The principles of product marketing are used to build and manage an employment brand. A company therefore manages at least two brands — a product or company brand in the product market and an employment brand in the labour market. Both brands are related and mutually supportive — a strong product brand can be an important (but not the only) element of a successful and robust employment brand, which will secure the

7 It’s Official: Forced Ranking Is Dead – http://deloitte.wsj.com/cio/2014/06/10/its-official-forced-ranking-is-dead/ (Accessed 20/7/2015)

talent required to support the aspirations of the firm’s product brand.

Figure 5: Relationship between company brand and employment brand

This reinforcing loop is also called an engine of growth. An increase in company brand causes an increase in employment brand, which causes an increase in talent over time. Talented people causes a better (increased) company brand. As organisational energy spirals around this loop, it causes exponential growth of each of the variables.

Of course, this virtuous loop can turn vicious. If you become complacent about the talent you have and stop thinking carefully about investing (mainly time and money) in human capital, the result will be loss of human capital (or Talent depletion, as shown in Figure 6).

Figure 6: Balancing loop turns virtuous reinforcing loop into a vicious reinforcing loop.Note: S= causality in the Same direction; O= causality in Opposite direction

Robust product or company brand

Robust employment brand

Amount and

quality of Talent

Talent Depleti

on

Level and quality of human capital

Investment

Level of Complacen

cy

SS

SO

O

OS

Trace the effect of the balancing loop through the reinforcingloop — talent down, product/company brand down, employment brand down, talent down — a vicious downward spiral, difficultto redress and growing exponentially!

As a result of these systemic loops, the job offer (or a company’s employment value proposition) must:

meet consumer (employee and prospective employee) preferences

be differentiated from competing offers have a strong reputation or employment brand image.

Building a strong employment brand is accomplished in much thesame way that companies build strong product brands. Starting with the company’s corporate strategy and goals and the workforce strategy they drive, companies need to develop an understanding of the labour market and the segments of the workforce they hope to retain or attract. This understanding can be generated through focused “market research” into employee preferences and values of the employee groups the firm will be targeting. Armed with this information, employersneed to develop a compelling employment offer — or value proposition — for employees, especially one that provides competitive advantage in the labour market. Once established, employment brand equity is built through effective marketing and delivery of the offer and the brand — over time.

Remember never to think of the employment offer as something for prospective employees only — employees already on board with you have to keep deciding to accept their current employment offer because your firm is continually competing against the employment offers of other firms.

In essence, then, organisations manage at least two brands: a product brand and an employment brand.

Table 2: Elements of a product/customer brand and an employment brand

Product/Customer Brand components, e.g.

Employment Brand components, e.g.

Product features Product/Company brand strength

Innovation and designValue and priceQuality and performanceImage

Work environmentCompensation and benefitsCulture and working environmentWork-life balance

The importance of Leadership BrandRecent ground-breaking research, conducted by Nick Bontis and Jac Fitz-enz (2002), measured the antecedents and consequents of effective human capital management and showed that: Managerial leadership is the foremost antecedent (or causing) construct in human capital management. It has a substantive and significant causal relationship with both the retention of key people and value alignment. Value alignment in turn causes the reduction of human capital depletion via knowledge sharing. The implication of this is that the development of senior management’s leadership capabilities is the key starting pointfor the reduction of turnover rates and the retention of key employees. Effective leadership acts as a spark for organizational knowledge sharing, which in turn allows senior management to align values throughout the organization.

Our experience in Absa would bear this out ― the organisation’s employment brand is caused by its leadership brand. This may be the most difficult lesson for leaders to learn ― their behaviour must live up to the expectations created by the organisation’s employment value proposition. Ingeneral it means that leaders no longer have a choice but to adopt more democratic work practices. In order to enable them to become more democratic in their behaviour, they have to accept and develop the kinds of mindsets (or assumptions or thinking patterns) that are in line with the empowered world of work of the knowledge worker. Unlearning outdated management patterns become the key starting point for any transformation of an organisation’s employment brand.

ConclusionI have tried to capture the major insights arrived at during the development of this article in the following graphic (Figure 7). Together they represent the employment brand engines of growth.

Essentially you can start interpreting these loops anywhere, but I have labelled them Loops A to D to show one logic for understanding them. These are essentially reinforcing loops, which means that each attracts its own balancing loops (that turn virtuous R-loops to vicious R-loops), but I leave it to the reader to develop the B-loops at work in their own firm.

Figure 7: Essential loops for creating an Employment Brand. (Source: Van Dyk, L. and Herholdt, J. (2003) Transforming your Employment Brand

These interconnected reinforcing loops show the essential variables that need to be managed in order to create the employment brand you would like to have. In essence the aim isto create a positive loop A. To do that, an organisation has to create an effective leadership brand (loop B) which will cause an increase in the organisation’s ability to deliver a suitable employment brand (loop C). This will cause an

increase in human capital which will cause an increase in enterprise results (loop D).

This then is our experience in a nutshell. In essence it meansthat there are no quick wins, no magic bullet, and no easy solutions if you want to transform your employment brand to one you choose rather than being stuck with the one you’ve got. In short, many changes are required to current people management and leadership practices, but companies probably nolonger have the choice not to do this ― unless its leadership is satisfied with less than optimal performance.

In conclusion, I offer this article not as a recipe, but as landmarks on a journey, as signs from one slightly unsure but determined traveller to another.

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