Reputation and Employer Brand

Reputation is in the news as we watch once-proud firms like AIG being brought down by bad judgment and out-of-control greed, forever sullying the names of executives associated with them. Financial services firms are at the center of the meltdown. In early 2009 Congressman Barney Frank, chairman of the House Financial Services Committee, summed up popular sentiment when he told a group of Wall Street executives, “People really hate you.” Such is the pariah status of the financial sector that one retired executive confessed, “I’d almost rather say I work in pornography.”

If ever there was a time when we need to understand the importance of reputation—and brand—this is it.

A strong employer brand that recognizes the value of top talent and creates the conditions that allow talent to flourish is a huge differentiator. Not only does a strong brand spur renewal and growth, but also it sets your company up to be a talent magnet—an employer of choice in what will become an increasingly competitive labor market.

Demographic Drivers

Make no mistake about it: although the underlying mismatch between the demand and supply of top-notch people is currently obscured by global recession, demographic trends are on course to produce a talent crunch in the not-so-distant future.

In mature economies there are serious concerns about the size of Gen X (now aged thirty-one through forty-four), which turns out to be a very small generation. In the United States, for example, it’s only fortysix million strong, a little more than half the size of the baby boom generation. If this is the bench strength for leadership—and of course it is—companies have reason to be worried that soon there won’t be enough leaders to go around.

In emerging markets the presenting problem is the size of Gen Y (ages fifteen to thirty). In the BRIC economies (Brazil, Russia, India, and China), because of baby busts and plummeting birthrates, Gen Y has 40 percent fewer people than the preceding generation. This shortage is particularly worrisome for global companies, because many see the BRIC economies as providing the best prospects for growth and expansion in the near term.

The bottom line: an employer brand that lures young talent by dint of delivering an extraordinary value proposition is essential for competitive strength going forward.

If any company knows how to do this, it’s Google; in 2008 the company ranked first on the Fortune (U.S.) list of best companies to work for, and first on the Financial Times (U.K.) list of best workplaces.

Google Points the Way

Google has won global renown for cutting-edge innovation and for its leadership role in the democratization of information. Yet a large part of its brand strength rests upon the hugely attractive—and distinctive—value proposition it offers to employees.

TGIF (Thank God It’s Friday) is a weekly, companywide get-together started by Google cofounders Larry Page and Sergey Brin. Once a week, a senior executive leads a global TGIF in front of a group of employees, usually at Google’s Mountain View, California, headquarters. The meeting is posted online and archived for those who can’t log on in real time. Although TGIF includes standard corporate communication—the presiding senior executive welcomes new employees and shares Google-related happenings—the highlight by far is the Q&A session. Employees submit questions through e-mail or take the microphone in person. According to the Great Places to Work Institute which has named Google #1 on the list of 100 Best Companies to Work For, the session reflects a belief that employees should feel comfortable asking even the most senior members of the management team tough questions, and that executives should talk with employees as openly as possible. No question is offlimits. Questions range from “What are Google’s growth rate projections” to why Google wasn’t the default search engine in Opera Mini. The events are so valued that some of Google field offices have taken to hosting their own TGIFs.

It’s a philosophy, not a policy. If a company has a culture where open dialogue and information sharing is encouraged and respected, then there will be no need for formal programs—like focus groups that mine opinion, or blogs that tell employees what the CEO is thinking, or expensive brochures that tell employees what they may need to hear—because everyone’s thoughts and feelings come out during the course of daily interaction and the weekly Q&A. The dialogue itself is the program. Employees may not like all the answers, but hopefully they will appreciate the fact that they are able to raise the questions.

An open approach to talent management has been a hallmark of the Google brand since its founding, as have amazing employee perks, ranging from on-site massage and gourmet food to creative work arrangements that allow employees to spend 20 percent of their time on noncore activities—thinking and working outside the box, driving the next generation of innovation. All this has helped Google gain access to an exceptionally rich talent pool—it receives a thousand applications for each job opening—and has catapulted the company to the top of best-company-to-work-for lists around the world.

Unpacking the complex alchemy that creates a knock-your-socks-off brand is a difficult task, but one thing is clear: many of the action steps highlighted in this book are at the center of the Google strategy. TGIF is all about creating a no-spin zone (intervention 1), and allowing employees to spend time on their own ideas is all about providing meaningful nonmonetary rewards (intervention 3).

Low-Hanging Fruit and the Bottom Line

Google and other standout employer brands are unusual. In most companies talent is distressingly disengaged; across a broad swath of the economy, rather few employees are committed to their work. The data is startling. In 2008 consulting firm Towers Perrin looked at engagement rates across eighteen geographies and found that a mere 21 percent of respondents worldwide were fully engaged with their jobs—willing to go the extra mile to help their organizations succeed. A new study by Modern Survey shows that although 27 percent of employees are moderately engaged, only 12 percent are fully engaged.

Particularly troubling is that the current global economic crisis seems to be triggering a further drop in engagement—and performance. As we have seen, Hidden Brain Drain research shows a sharp decline in engagement among high-echelon workers between June 2007 and December 2008, with engagement levels falling 12 percent on Main Street and 26 percent on Wall Street, underscoring urgency of the challenge.

The only silver lining here is that if the current low rates of employee engagement can be turned around, there’s a huge upside in productivity gains that go straight to the bottom line.

A slew of research demonstrates a strong positive link between employee engagement and productivity. A recent study (again by Towers Perrin) across fifty global companies shows that raising employee engagement creates a 14 percent increase in net income. The Corporate Leadership Council has undertaken similar research; it looked at engagement levels for fifty thousand employees around the world and found that employees who are engaged outperform those who are not by 20 percent. In short, there’s a significant payoff when companies are able not only to lure top talent but also to support and inspire these high-octane individuals (women and men) so that they fire on all cylinders.

There are few guarantees in these uncertain times. But one thing is certain: only by reengaging your talented employees and instituting management practices that turbocharge their brainpower will you have both the ideas and the commitment to overcome adversity, flourish in prosperity, and continue to attract smart people for years to come. In the words of James S. Turley, CEO of Ernst & Young, “In a down market, leveraging your talent to create competitive advantage is more important than ever.”