This Article Was Published in E-Customerserviceworld.Com in October 2004

This article was published in e-customerserviceworld.com in October 2004

Bringing the brand to life internally

Peter Hutton, Managing Director, BrandEnergy Research,

Steve Moffat, Communication Strategist

The internal communications function is in a dilemma. The most successful businesses have recognised that their success depends on creating an internal culture which facilitates the effective delivery of the brand values to customers and other external stakeholders.

But who is responsible for creating this culture? Who has ownership of the brand internally?

The notion that the brand exists, and needs to thrive, internally is relatively new. Most businesses are handicapped by a highly functionalised structure creating silos which cannot accommodate the idea that brands need to be a core part of the internal culture.

Marketing is focused on delivering the brand externally. HR is concerned with recruitment and retention not with internal culture or employee branding. Operations are concerned with product and service delivery. The focus of corporate communications is mainly on external audiences, and so on.

What often happens is that the responsibility is delegated to someone with a title which has something to do with internal communications. They usually have few resources and a brief to produce an internal newsletter to keep staff informed of what top management want them to know or to make the working environment more humane by reporting on retirements and sponsored charity events.

But all this misses the point. The most successful companies are the ones that have seen that the traditional silos need to be broken down if the real potential of the business is to be realised. Value is best created by the different functions working in an integrated way, not by working in parallel and only coming together at Board level, if then.

This is the thinking behind a new concept called Brand Energy. This has been defined as:

‘The energy that flows throughout the system that links businesses and all their stakeholders and which is manifested in the way these stakeholders think, feel and behave towards the business and its products or services’

The starting point is to ask ‘how do we create most brand energy’. This is the energy that comes from having a clear mission, vision and values which the staff buy in to and a culture that encourages participation and involvement at every level.

Some businesses have had this energy from the start and leadership is critical. The founder of Wal-Mart, Sam Walton, had a simple view: You should listen to everyone in the organisation and figure out ways to get them talking. People at the front-line in particular are the ones who best know what is going on.

When he was alive he was known to go into his stores unannounced and invite staff and customers to congregate at the front of the store so they could tell him what he should be doing to improve it!

His approach and style may be unique, but he laid the foundations of the most successful retail business on the globe. And he did it by utilizing as much of the potential of his staff as he could at every level of the business.

It is increasingly recognised that business performance is intimately tied in with culture, especially in the service sectors. But the culture is something that cannot just be left to a small group responsible for internal communications. Internal communications need to be part of the culture and it also needs to be two-way not one-way.

One way of looking at the internal brand is that it is what the business is saying to its employees. Businesses communicate constantly with their employees through actions and decisions that are made. A tiny proportion of communication is through the ‘controlled’ communications of the staff newspaper or the all-staff email. Employees are more likely to be impacted by the way people are treated, the style and agendas of internal meetings, the things people get rewarded for and encouraged or discouraged from doing, the things money gets spent on or the things that appear in the media without being communicated to staff first.

All these signals tell staff whether the company’s priorities are long term growth or short term cost control; customers first or organizational systems and procedures first; maximizing short term shareholder returns or creating long term value for all stakeholders; inclusiveness and staff involvement or exclusiveness and top down command and control; working in silos or connectedness across the whole business; team working or empire building; honesty and openness or covering up to make top management look good; sharing responsibility and solving problems or allotting blame; recognising achievement or taking staff effort for granted?

Research[1] has established that there are four zones of employee experience that seem to account for whether staff, and therefore the internal culture, is energised and productive. These have to do with:

Self fulfillment – Call centres and retailers generally have a very high staff turnover because they attract many people who want short term employment to earn money, not for personal fulfillment. They are inclined to leave as soon as they can find something they really want to do.

Support through resources - spending priorities in the health service have ensured that some hospitals have severe shortage of wheel chairs so that porters hide the ones they find to ensure they do not have to go hunting around for one when they are required to transport a patient.

The way people are treated, especially by line management - Virgin has long proclaimed that it regards its most important stakeholders to be its staff. Its annual parties at Richard Branson’s country house are legendry as symbols of appreciation for the efforts the staff put in to serving customers throughout the year.

and

Engagement with what the business stands for, its mission/vision/values - Shell, normally a company that tries to be highly ethical, would have significantly de-energised its staff by the announcement that it had been misleading investors over a number of years about the size of its oil reserves.

Clearly these issues are not things that can be tackled by a small team of internal communicators. Bringing the brand to life internally means making the culture one that really delivers on the brand values. The challenge is to create an internal environment that continually engages staff with the business at what ever level and in whatever function. And it also needs to be based on an integrated model of the business. Failure to do so results in messages being sent by one functional silo which not only conflict with those being espoused by other functions but which can significantly de-energise the culture.

Sainsbury’s recently announced that it was ceasing its policy of giving a £100 Christmas bonus to its staff and instead giving them an extra 5% discount on purchases for three months from October to December. You can see the impeccable logic. ‘Sainsbury’s employs 140,000 staff. We can save £14m by cutting out the £100 Christmas bonus. In ‘return’ we will increase the staff discount on purchases by an extra 5% from October to December. Although margins will be eaten into, we will not be selling at a loss and anyway, it’s far better that we get our staffs money than the competition.’

Or is it? What is this communicating to staff? ‘We lose our Christmas bonus in order to boost profits for shareholders. To get back the equivalent benefit we have to spend £2000 on groceries at Sainsbury’s, whether we want to shop at Sainsbury’s or not. And can’t we save that much by shopping at Asda anyway?’

The timing of the announcement, with the arrival of Justin King, the new Group Chief Executive and his £1.4 million free share allocation, is likely to be a coincidence but only deepens the wound and adds more weight to the argument. A team in HR working independently to save money and increase staff spend in stores discover a significant opportunity. The new Group Chief Executive arrives and within a couple of months, the change is announced. The net outcome is a powerful negative message that resonates through employees.

On the balance sheet staff appear as a cost. But they are also a significant part of the equity of the business. The danger of sending messages like these to staff is that the good ones will leave and join competitors driving up recruitment and training costs, undermining efficiency and compromising customer service. Something that was designed to drive costs out of the business will quite likely have the opposite effect.

Contrast that with Tesco. Shortly before Sainsbury’s made its announcement about withdrawing the Christmas bonus, Tesco announced it was putting aside £189m of its profit for staff bonuses (around £727 per staff member, on average). It also announced a trial scheme to stop paying sick pay for the first three days of absence and extra rewards including holidays for those with exemplary attendance records.

What is this communicating to its staff? ‘We value your loyalty. We recognise that some people are taking advantage and putting extra strain on those that are conscientious and loyal and we wish to discourage the former and encourage and reward the latter. We are a commercial organisation that aims to make a profit but we would like those who work hard to generate that profit to share in it.’

As a result Tesco is likely to see reduced costs from staff absence due to feigned sickness, a better working atmosphere due to a greater alignment of the values of the organisation (fairness and equity) with the values of their staff, greater commitment and loyalty from existing staff resulting in lower recruitment and training costs and the ability to attract better quality, more committed staff to their stores resulting in better customer service and customer loyalty.

But it is a mistake to think that you can bring the brand to life internally just by concentrating on the internal culture. The purpose of any organisation is always rooted externally. Its role is always to serve its external stakeholders, particularly its customers. So the internal culture needs to be consistent and aligned with the expectations of the external stakeholders. And the staff generally know this.

When Richard Baker arrived to take over as Chief Executive at Boots last year he is reputed to have asked all his staff to tell him what his priorities should be. The key issues that were identified all had to do with providing better service and being more responsive to customers: they said he should put more staff into the stores, review Boots pricing and ensure quicker decision making at head office. These became his priorities.

In the truly successful integrated business internal communications is not a one-way flow of information channeled through the internal communications team. It is a complex, open and constantly seething process of everyone in the organisation listening and responding to each other, to customers and to other stakeholders. In Sam Walton’s view, you tell everyone (your staff) everything; the more they know about the business they're in, the more they will care; the more they care the more they will act as if they care and the more successful the organisation will be.

Peter Hutton is founder and managing director of BrandEnergy Research which provides research and brand consultancy services to major public and private sector organisations. Prior to that he was deputy managing director of MORI.

Tel: 020 8770 3960

Steve Moffatt worked in senior internal communications and brand development roles in Abbey National and Sainsbury’s before setting up his own consultancy specializing on advising on internal communications.

Tel: 01234 241932

[1] Research undertaken by Peter Hutton with organisational energy consultants, Stanton Marris.