Treat Your Employees Like Consumers

Treat Your Employees Like ConsumerstcbrPDF normal

They don’t all value the same products.

By John M. Bremen and Thomas O. Davenport

Who's Holding You Accountable?

John M. Bremen is a global leader and managing director, talent and rewards for the Americas at Towers Watson. Thomas O. Davenport is a director in Towers Watson’s Research and Innovation Center; his last article for the magazine was “Who Wants to Be a Manager?”, in the Fall 2011 issue.

How do you define your people? Through the economic expansions and contractions of the past twenty years, executives have struggled to define and redefine the employer-employee relationship, using various analogies, metaphors, and sound bites to explain the complex, shifting connection.

Employees are no longer personnel, costs, or workers—they’re associates, assets, thinkers. They’re certainly not cogs in the industrial machine—today, they’re key links in the customer value chain.

And with corporate workforce increasingly global and diverse, HR departments are recognizing the ineffectiveness of dealing with every employee in exactly the same way. Just as companies are using technology and Big Data to aim products and services at ever more carefully targeted segments of customers, they’re starting to look closely at the different parts of their multi-varied workforces.

Employees are more mobile, educated, technologically enabled, and short-term-focused than ever. They also have become savvy consumers of their organizations’ brands, culture, and employee programs—compensation, benefits, and career development, to name a few. And with the first Generation Z employees entering the workforce, employee populations’ preferences and expectations continue to change.

Along with these changes has come a greater degree of employee choice, making corporate life a marketplace and employees its consumers. Consumerism is a common theme in the migration from traditional defined-benefit pension plans to employee-driven 401(k) plans, the evolution of flexible-benefit programs and cafeteria-style plans, and the recent transition of many U.S. organizations to private health-insurance exchanges. This trend also has inspired organizations to begin tailoring elements of the work experience to their increasingly diverse employee populations.

Faced with the new reality of today’s consumer-employee, leading companies have turned to consumer marketing theory to gain insights about and connect with their current and potential talent. They now view the employer-employee exchange as analogous to an interdependent exchange between a company and an external consumer, with consumer-focused practices playing a key role.

Segmenting the Employee Population

We frequently ask our CEO clients: “How often do you spend $3 billion to develop a product offering without first finding out whether it will sell?” The response is typically, “You know darn well that if I did that too often, I wouldn’t stay in this chair long.”

Yet every year the typical global organization with twenty thousand employees invests approximately $3 billion in employee programs that include salaries and bonuses, stock grants, healthcare and retirement benefits, training, and paid time off. These employers also invest in creating employee-friendly cultures and workplaces. And too often, organizations spend these funds without clearly understanding whether the programs align with the preferences and usage patterns of those who will consume them, or whether they’re likely to achieve their intended results.

This is where segmentation can play a valuable role. Just as organizations segment external consumer populations, they can segment employee groups to explore their values, attitudes, and preferences.

Some organizations begin the process with conventional demographic categories, such as Generation X, millennials, and baby boomers. Others use more fine-grained segmentation approaches that can provide more specific insight. These include:

Strategically critical jobs or locations. These can be specific roles, geographies, and businesses that make or are expected to make important contributions to marketplace success. To identify these, employers consider the employee knowledge, experience, skills, talents, and behaviors the organization needs to win against its competition.

Levels of performance or potential. These are categories of employees’ current or expected contribution—such as “high performer” and “high potential.” This type of segmentation can be effective when leadership has confidence in the accuracy of the performance-evaluation and talent-management systems.

Levels of sustainable engagement. Employees can be grouped according to their degree of attachment to the company, their willingness to give discretionary effort to their jobs, their perception of the local work environment as supporting their performance, and the levels of physical, social, and emotional well-being they experience at work. These factors correlate strongly with financial performance.

Life-stage segments. These are highly specific groups defined by a variety of characteristics, including health-related indicators, technology usage, and media preferences.

Talent profitability. Just as organizations segment their external markets by profitability or total customer value, employers can segment employees by the contributions they make relative to their cost over multiyear periods.

Attitudinal categories. Generally analogous to traditional psychographic factors, these groupings emphasize the clusters of rewards valued by employees who differ in their expectations of the work experience.

Creating the Employment Brand

Marketing sage Philip Kotler defines a brand as an organization’s promise to deliver a specific set of features, benefits, and services to consumers. A brand also functions as a complex symbol that conveys up to six levels of meaning: attributes, benefits, values, culture, personality, and user. When the consumer can visualize all six dimensions of a brand, his or her perception of the brand is deeply imbedded; otherwise, it’s shallow.

Organizations adept at developing and marketing their external brands were among the first to recognize that employees can feel strong connections to their organizations’ internal brands. Via the internal brand, employees can associate the company with a variety of organizational attributes (“our strengths/differentiators”), benefits (“what you get for working here”), values (“what we stand for”), culture (“how we operate”), personality (“who we are”) and user (“what kind of people work here”).

An Internet search of various organizations’ public career sites reveals strong links between these companies’ employment brands and their external brands. In some cases, the external and internal brand statements are the same.

The most sophisticated of these organizations incorporate their employment brands into the employee experience through their talent-management programs and compensation-and-benefits programs in ways to which their targeted groups can relate.

For example, on its website, Google expands its “Do cool things that matter” brand slogan to include three categories, used to explain various teams and roles to current and potential talent: “Build cool stuff; sell cool stuff; do cool stuff.” It’s how the employer appeals to employees and recruits in a more interesting way—and in a manner more aligned with the Google brand—than using conventional department names, such as Engineering, Sales, Customer Support, Finance, and Administration.

Similarly, Disney has cleverly branded its reward offering—including compensation, benefits, and the career-development program—as “Support beyond your imagination.” And instead of the traditional reward categories, the company uses sub-brand program slogans that include Understand Your Pay, Pursue Good Health, Build Your Career, Take Time to Refuel, Save for Tomorrow, and Enjoy the Magic.

As employers determine how to frame their internal consumer brands, microsegmentation analysis can provide information far beyond that gleaned through conventional demographic breakdowns. These approaches help employers sharpen messages aimed at various employee segments, as they address what matters most to targeted internal groups. They also help leaders understand how employees—just like external consumers—perceive greater value when they receive clear messages that speak directly to their interests. For instance, segmenting the workforce according to “life-stage profiles” (see “How Do You Live Your Life?”, page TK) can help employers develop even more compelling internal brands and employee experiences.

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