Top Brands, Lower Salaries: Study

Let’s take it a step further, what does it look like for a brand that’s just taken a negative hit for something they’ve done and the brand power is trending down? Can they attract the talent for less to dig themselves out?

It’s finding something—even if it’s just one thing—to sell. Think again about the startups. Many don’t have a strong brand and they have to sell something else. It’s more like when you have a strong brand, you ought to use it. But if you don’t have a strong brand, you need to focus on other aspects.

But on the other extreme, if you think of VW being what Enron was in the U.S. a few years ago, that puts you in an extremely difficult position. Because then you really have to overcompensate for it. At some point, you’re just going to have to pay your way out of an HR crisis in terms of your tarnished brand name. I wouldn’t be surprised if VW is going to have to attract top engineers with a lot of money.

I’ve observed some of the HR data in brands with crisis and you see higher staff turnover, lower percentage of job applicants, higher absenteeism, lower engagement, just everything across the board. The effects tend to be larger with your people than it does with the customer. Because your people identify so much more with the brand than the customer does.

What gaps do you see in your research and what kind of future research does that call for?

We’re actually following up on some of this research. We got access to some of the Fortune data on the best places to work. One of the potential—and this is not a firm conclusion yet—but one of the potential negative effects is that some people want to work for you simply to get your brand on their resumes. That could actually increase the turnover you have. People might not actually be genuinely proud or engaged to work for you. In that research, we are actually differentiating between up-and-coming brands and the blue-chip, very large brands.

So we’re trying to disentangle now is if the lower pay can have negative effects. Does it de-motivate them? Does it make them want to put the name on the resume and then move on? Because that is not in the better interest of the company that’s investing in training and attracting the talent.

What does it look like for employees who might know a similar position at another company with equal resume brand power is paying their employees more? How do companies retain that talent?

There are two points that are important here. The first is I’ve heard from so many companies that they’ve lost their talent to the Googles and Facebooks and Twitters of the world. And then it usually comes with a second comment—they’re not even paying them more. So that’s one aspect. I don’t think they are necessarily paying more than other places.

The second point is, we have to be very careful to separate—especially for executives where it’s largely performance-based pay—to separate the effect of brand on other things. So I’ll give you a simple example. Imagine I want to understand the effect of height on jumping ability. I have to correct for the person’s weight, for example, when I do that. Or training, for example, or something else. The point is, we have to correct for certain other drivers than pay, in order to tease out the effect of strong brands.

What type of person will benefit the most from your MOOC?

I designed this MOOC in particular for people with working experience, and about 70% of them have a job or part-time job. They’re from 168 different countries, which is great. It’s for those that can apply those lessons, which are a little more about the softer skills. One of the things I notice here at London Business School is that while our students—even though they have work experience—while they’re in the program, they want to take some of the hard courses, like the finance courses. These are the ones they think will benefit them the most. But five years out, they typically come back and say they’d wished they’d taken the softer courses—people-management types of courses.

So this is really a course that you can intellectually understand if you’re an undergraduate. And I think it’s accessible in that sense. But the real power comes in being able to apply it at work. So for this MOOC, I’ve actually designed a whole bunch of to-dos. Not the traditional assignments where you have to memorize facts and figures—there’s a bit of that to have a more objective measurement of performance—but it’s really about people going out and actually applying this to their brands or if they’re not currently working, to some other brand.

What are the three or so most important lessons you hope students take from your MOOC?

The first real lesson is around the more functional aspects. Most brands are facing competitive parity and that what really differentiates brand is the experience we have with them throughout the customer journey. As we learn about the brand, when we consume the product or service, all those different touch-points, which are, of course, manned by people. And it’s really about the differentiation that’s based increasingly less on product or price or what I call effectiveness of quality. And much more on the experience.

The second lesson would be, if you realize that, then building brand is not so much about the brand promise, like advertising or the visual identity. It’s really about the behavior of people at all of these touch-points, which is then about changing people’s behavior, which is really about habit change. And that’s very, very different from creating ads or visual identity and many companies literally have no clue.

And the back end of that, and the third lesson, is it really puts HR in the driver’s seat, really as a cross-functional team when it comes to building brands. It’s not so much about the brand promise, but the delivery of the brand promise, which will differentiate firms going forward.

Any final thoughts?

I think the research we covered well, but for the MOOC, what I’d say is, I’ve taken a few MOOCs—just to get a sense of them—and mine, I think, at the end of the day, is a first step in the direction where I hope MOOCs will go, which is our vision here at London Business School to make a profound impact on the way the world does business. And a lot of the MOOCs today are about learning. But I think it’s really about doing. And that I find very interesting. So it’s less about intellectual learning in a university setting but I really think it will impact people by having them do things differently.


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