Corporate Reputations, Branding and People Management

Susan Hetrick, Graeme Martin

• Publisher: Routledge
• Year: 2006
• ISBN:
  9781136413827
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The book helps HR practitioners understand corporate-level concepts and their relevance to the key strategic agendas of organizations by drawing on a wide range of ideas from branding, marketing, communications, public relations and reputation management. It then examines how effective people management strategies and the role of HR specialist can contribute to this corporate agenda. This contribution lies in four key areas: organizational communications strategies, developing compelling employee value propositions and employer branding; HR strategies, employer of choice policies and talent management; creating new forms of psychological contracts and building stronger individual-organizational linkages through employee identification, employee commitment and psychological ownership; and in developing supportive employee behaviors. The book is based on a new model of the links between HR, corporate reputation and branding, developed from an extensive review and synthesis of different bodies of management literature. This model has been refined from extensive case research and practical experience in building corporate reputations and brands. Specially researched cases include Orange, Aegon, Scottish Enterprise, Hudson International, BSkyB, Standard Life Investments and the Royal Bank of Scotland.

CHAPTER

1

The importance of the corporate agenda and its links with human resource management

Introduction

In a recent book on branding and reputation management, John Balmer and Stephen Geyser (2003) perceptively argued that the drive towards ‘corporateness’ was one of the major trends among organizations in developed and emerging economies. This argument reflects the twin problems facing the architects of organizational design-achieving a balance between getting people to cooperate with one another (the corporate agenda) and getting them to display initiative (encouragement of individuality and differences) (Roberts, 2004). Exploring this trend towards corporateness, which we believe to be only partly supported by evidence from Europe, North America and Asia, is the starting point for our book. Let's begin our examination with a small sample of this evidence from two cases of corporate America. We have chosen these two since there can be few better justifications for a book on management than the importance of its subject matter to the fate of the world's most powerful nation and to one of its major corporations. Take a few minutes to read the illustration in Box 1.1, written just after the end of the war with Iraq in 2004.

Box 1.1 America's Image Abroad: Reputation
Management, Branding and People Management

According to an Economist article published just after the end of the Iraq war, Keith Reinhard, the chairman of American consultants DDB Worldwide, was recently set the task of selling American business and American brands to the rest of the world following the bad post-Iraq war international press. His 2004 message to Yale University business students was that he loved American brands,‘... but they are losing friends around the world and it is vital to the interests of America to change this’. He argued that the reputation of America abroad was at an all-time low and this perception, ‘however misguided’, was damaging the economy.

To tackle the problem, Reinhard, helped by some senior executives in America's advertising industry and university academics, set up a pressure group to improve the reputation of the USA overseas. The idea was not new, since President Bush had speculated on the reasons why ‘everyone hates America’ after September 11th, 2001. But Reinhard felt the need to use consumer research to tell American business what most people outside the USA seemed to understand about America's declining image.

His worries have been subsequently reinforced by an extensive DBB study covering 17 countries, which provided the feedback that ‘America, and American business people, were viewed as arrogant and indifferent toward others’ cultures; exploitative, in that they extracted more than it provided; corrupting, in how they valued materialism above all else; and willing to sacrifice almost anything in an effort to generate profits’. Further evidence came in the shape of a survey of global brands by Roper ASW, another consulting firm, which showed a marked decline in support for, and trust in, American brands.

Source: Economist, 2004

This case illustrates how important ‘corporateness’ is for America's continued competitive success and shows how national and organizational reputations and brands are interlinked. It also tells us something about the extent to which America's image abroad and that of its major corporations depend on intangible assets such as brands and reputations (Hagel and Seely Brown, 2005). Because of this increasing dependence, these corporate-level concepts have become major areas of strategic interest among the boardrooms of companies in sectors as diverse as financial services, information and communication technology (ICT), retailing, food and beverages, hospitality and tourism, healthcare, local and national government and charities.

Note also the implication in the case that the reputation and brands of ‘USA inc.’ and those of its major corporations are closely aligned with the poorly perceived actions, values and attitudes of American managers and employees. To illustrate this relationship, let's drill down a little from the perceptions of the USA as meta-brand to an example of how these perceptions may be formed at a micro level. This second illustration, in Box 1.2, is based on our personal research into a particular US-based company-in fact, one of its most cherished-and we shall return to it later in the book for a few other lessons.

Box 1.2 AT&T's Re-branding of the NCR Corporation

AT&T, a major US telecommunications and technology company, acquired another American giant, the NCR Corporation, in 1991 following a hostile takeover bid. Initially, the headquarters management of AT&T adopted a ‘financial control’ approach to NCR and did not interfere in its product-market strategy; for the first two years it allowed its subsidiary companies and plants in more than 40 countries to operate as semi-independent units. This hands-off approach particularly applied to its most profitable and high profile subsidiary based in Scotland, at the time, the largest design, development and manufacturing facility of automatic teller machines (ATMs) in the world. The Scottish company was the ‘jewel in the crown of NCR’ and had featured heavily in the international business press as a model of success. Its CEO was also revered by people inside and outside of the UK-based company as a model leader. The rationale for allowing the Scottish operation substantial autonomy was two-fold. First, its product range and expertise fell outside top management's main interests, which were in acquiring a computer technology company. Second, it was a major contributor to NCR's profits, highly disproportionate to its size and investment requirements.

However, after a period of two years of little or no strategic intervention, AT&T's corporate management team decided to transform its NCR acquisition en masse by adopting a global branding strategy. The name of NCR, a company with a 100 year history, was destined to be expunged from history and replaced by the more corporate-sounding name of AT&T Global Information Solutions (AT&T (GIS)) and headquarter management decided to take a more interventionist approach to all aspects of the business, including its previous technology-based, ‘macho’ culture. This radical change was justified by headquarters because large financial losses were being incurred by virtually every business unit in NCR, that is, apart from the Scottish subsidiary.

AT&T's president brought in Jerre Stead, a new US-based CEO for AT&T (GIS), because of his high profile track record in turning around an ailing electrical contracting company and another AT&T acquisition. Strongly influenced by a US academic-consultant ‘guru’, the new CEO embarked on a near-messianic attempt to re-brand AT&T (GIS) by using corporate and organizational identity management techniques, constructing a new vision statement and introducing a culture change programme. This re-branding process was also marked by: (1) disposing of many of the old NCR management team in America; (2) developing a much more strategic and ‘hands-on’ approach to strategy and tactics, in contrast to the sole concern with financial control by the previous NCR management team in Dayton, Ohio; and (3) basing the cultural/identity change programme on putting employees and customers at the heart of the new corporation's policies. This programme involved three central elements. The first was christened the ‘Common Bond’, which included a best-practice, ethical mission statement, new values framework and set of working principles designed to ‘empower employees and customers’. The ethical and empowering features of this programme are worth emphasizing at this stage, because it has been argued that the ‘mutuality model’ of HRM, based on treating people with respect, was more likely to lead employees to view the effort positively and to accept company actions that might have negative consequences for a minority of employees. Second, the programme involved flattening existing organizational structures and attempting to empower the local managers and workforce by, among other techniques, re-labelling managers and supervisors as ‘coaches’ and workers as ‘associates’. Third, Stead took a personal lead in the programme by attempting to drive the changes through in a matter of nine months, including many personal appearances in the UK and an enormous investment in corporate communications.

We tracked the effects of the programme on employee attitudes, values and acceptance of the new identity over a four-year period to allow changes to bed down. However, Stead left the company after only 18 months following the sale of NCR by AT&T, which more or less signified a failed acquisition and the end of the programme. It should come as little surprise to readers that the attempted identity and culture change failed miserably during the 18-month period of Stead's stewardship. The explanations we unearthed were quite complicated but centred on:

The programme being seen by local management and employees in the Scottish subsidiary as an American-originated and orientated programme, and a one-size-fits-all solution. It was viewed as the personal mission of two US nationals based at headquarters (Stead and his academic guru). Stead was also seen to lack a track record in managing international companies, which showed in the extremely US-biased, evangelical language and content of the programme.

This sense of US parentage was markedly enhanced by an absence of prior consultation and discussion with local management in the Scottish subsidiary, apart from some HRM staff who stood to gain from the process. Quite simply, the views of the prominent and well-respected local CEO and many of his staff had not been sought on the appropriateness of re-branding a company that was an acknowledged world leader in its field.

Source: Based on Martin, Beaumont and Pate, 2003

This second case not only illustrates the desire by firms such as AT&T for a strong sense of ‘corporateness’ as a means of competitive advantage, but also details how reputations and brands are made or broken by the values, attitudes and behaviour of people, most notably leaders and board members, who shape the cultures and identities of their firms. Perhaps just as important from our perspective, it also implies great potential for more effective human resource management (HRM) to contribute to the corporate agenda by designing and executing HR strategies that support and drive corporate strategy rather than those that hinder or follow it.

This book, then, addresses these issues from an HRM perspective, uniquely as far as we are aware, because a strong case can be made that brands and reputations are driven from the inside-sometimes well but often poorly. Because of this ‘inside-out’ thesis, it follows that HR specialists have a great deal to contribute if they can grasp the corporate agenda, organizational needs for corporateness and begin to understand and use the language and insights of branding, marketing, communications, public relations and corporate social responsibility (CSR) specialists. Such a grasp has become progressively more important because of the so-called ‘war for talent’, which will become even more intense given the changing demographics of the major world economies of Europe, Asia and even the USA (Pfeffer, 2005), the changing basis of competition towards the knowledge-based and creative industries (Florida, 2005) and the calls for more socially responsible, sustainable and well-governed organizations (Clarke, 2004; Jackson, 2004).

For example, IBM is warning firms of the persistent talent shortages brought about by the baby-boom generation reaching retirement age, with their head of human capital management cautioning that the ageing population will be one of the major issues facing organizations in the 21st century. Most European and Asian governments are facing quite rapidly ageing populations, but even the USA, which benefits from high levels of talented immigration, is estimated to be short of 17 million people of working age by 2020. Another example comes from a recent set of consulting surveys on the importance of corporate reputations and corporate branding not only to senior executives in America and Europe but also to Asian executives, including Chinese CEOs (Hill and Knowlton, 2004). One of these surveys conducted in 2004, in conjunction with The Economist's panel of more than nine hundred senior executives worldwide, showed that 93% of these respondents believed customers considered corporate reputation to be either important or extremely important while 31% of them also believed that corporate reputation was one of the top three factors that customers consider in deciding to purchase from a company. Seventy-nine per cent of these senior executives also believed corporate reputations were one of the top three factors that influenced investors in investment decisions. Recruiting and retaining talent was seen as the most important benefit of building and maintaining a strong corporate reputation, with 43 per cent seeing it as one of the top three factors in attracting people to join (second only to compensation and career growth). The survey of 120 senior leaders of major Chinese companies showed that corporate reputation and brand building were the most important objectives for their organizations. Three-quarters of respondents said that brand building was the most important business outcome of their companies’ reputations. Nearly all of these executives saw these brands as very important for developing strategic partnerships and for recruiting and retaining talented people.

Before going any further, ho...

Table of contents

• Cover Page
• Half Title Page
• Dedication
• Title Page
• Copyright
• Table of Contents
• Foreword
• Preface
• Acknowledgements
• Chapter 1 The importance of the corporate agenda and its links with human resource management
• Chapter 2 Managing corporate brands and reputations
• Chapter 3 Organizational identity, action and image: the linchpin
• Chapter 4 The quality of individual employment relationships and individual employee behaviour
• Chapter 5 Four lenses on HR strategy and the employment relationship
• Chapter 6 New developments in HR strategy and the employment relationship
• Chapter 7 Corporate reputation and branding in global companies: the challenges for people management and HR
• Chapter 8 Corporate communications and the employment relationship
• Chapter 9 Corporate strategy, corporate leadership, corporate identity and CSR
• Chapter 10 The corporate agenda and the HR function: creating a fit-for-purpose future
• Index