The human resource management field is changing fast, becoming a major strategic player for organisations and leading the way in which companies are perceived – not only by their employees – but by customers and clients as well, writes Pam Moore[hidepost=9][/hidepost]
Human resource management or HR is quickly developing into a cutting-edge sector within companies, responsible for spearheading crucial strategies that are imperative to the survival and success of businesses.
Long gone are the days when HR was just the place where employees went to check on pay slips or fetch leave forms. According to Dave Ulrich, Professor of Business at the Ross School of Business, University of Michigan, core HR strategic concerns are changing and becoming more about linking the inside of organisations to the outside.
This means HR practices can have a direct positive impact not only on a company’s employees – but also on their customers and clients. Putting people and brand at the core of a company’s strategy follows the wisdom of some very successful leaders. Warren Buffet, for example believes that assessing the intangibles – company brand and competent leadership – prior to assessing the balance sheet yields the best indicator of future financial performance.
His view is confirmed by research at Stern School of Business, NYU. Between 1960 and 1990, 75% to 90% of the market value of a firm could be predicted by financial performance. Since 1990 this percentage has dropped to 50% in both up and down markets. The other 50% is tied to value not directly linked to physical assets, in other words the intangibles.
At Apple everything is geared towards these intangibles and adds value to the brand. The results speak for themselves. The brand tells customers what they can expect from the product or service. The employees deliver to those expectations. If a company does not deliver on its promises, it will not be successful. It seems a logical fit then to align brand and people together under one executive, but surprisingly few companies do this.
One company that saw the value in this approach was South African insurance firm Santam, back in 2007. Margaret Nienaber was appointed as executive head of the combined portfolio and she says: “As a people and brand team we work towards getting employees to buy into our brand, encouraging us all to become proud brand ambassadors for our company.”
The outcome was overwhelmingly positive for Santam. The company in 2009 was named as the Best Company to Work For (in the large category) and in 2008 rose from 4th position up to 18th in the Ask Africa Orange Index Service Excellence: Personal and Commercial Insurer of the Year Best Insurance Company.
Nienaber moved on to Standard Bank Private Clients (SBPC) as chief executive of the South African business, taking her passion for people and brand with her and personally spearheading the integration of the two. Private Clients takes care of the wealth portfolios of 3,000-odd high net worth clients as part of a global business. It does not advertise, there is no PR, there is no public positioning of the offering. This is a business that relies solely on referrals, which means on its service and performance record. For SBPC the focus on people and brand has translated into significant profits. The worldwide Assets Under Management exceeds US$10 billion, which is 90% growth since 2008. Profitability is estimated to have grown by 270%.
It becomes even more important to align employees with the brand in the digital world. A negative review on a complaints site such as www.gripevine.com, Twitter or YouTube that goes viral puts paid to sophisticated advertising. People pay attention. The video, “United breaks guitars” resulted in 12 million plus viewings of negative publicity for the American airline. Employees are on display more than ever and have to be “on brand” all the time.
Getting employees to buy into a company’s brand involves them understanding inside out, exactly what the customer value proposition is, who the target audience is and what customers are promised. Then the focus is on matching the employee experience with the customer experience.
This is trickier. For instance, a company that stands for delivering “uncompromising service” to customers has to set about translating the specifics of this service ethic into recognition schemes, stories and presentations and differentiated pay and incentives for performance for employees.
Moving deeper into the employee experience, there are some things that people want from work that are constant: to work for a company and colleagues with a good reputation, to do interesting and meaningful work, to have opportunities to grow personally and the money to pay the bills and grow one’s personal net worth. Recognising what people value individually and grouping the elements into tailored and targeted packages will enhance employee experience.
Events and communication are key elements in marketing to customers but are also important to rounding out the employee experience. HR should plan in-house events and procedures to reflect the values of the brand – and ask if customers are being treated in the same way as employees.
Aligning people and brand can be challenging. The strongest lever in creating corporate culture is executive behaviour. This has been established in many research studies. Executives set direction, they communicate their ideas, they invest in technology and shape how people think, act and feel. They need to personify the company values.
Companies will know they have been successful when the results become evident in the business – in the client feedback, attraction and retention of the right people and strong valuation of the firm by the market.
Pam Moore is an HR specialist and executive coach who helps companies achieve competitive edge through people strategies.