Marketing and HR; HR and Marketing

Employer branding is much more than applying marketing concepts and tools to attract people to join and stay with the employer. Marketing should be integrated with overall HR strategy. The reverse is that marketing should also realise that HR is crucial to the success of the business. Indeed, in today’s globalising, high-value services economy, the role of HR is growing in importance.

Author: Ton Barning and David Plink

 

 

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1. Introduction

 

 Traditionally, branding has been a marketer’s job. And they obviously do a good job, when you consider Interbrand’s annual list of ‘Best Global Brands’. For example, Coca Cola has a brand value of US$ 70.5 billion; IBM US$ 65bn; Microsoft US$ 61bn; and Google US$ 43.5 bn. Of course HR benefits from these outstanding brand performances - top brands attract top candidates, instil a sense of pride in current employees, and motivate them to deliver outstanding work. For these companies, their Employer Brand benefits directly from the strength of their consumer brand.

Unfortunately, many HR professionals work for companies that are not in a position to benefit from a strong consumer brand. They operate either in a business-to-business market or offer a service that is less well articulated in terms of consumer benefits. They have to formulate a specific Employee Value Proposition (EVP) with which they communicate their employee brand values and build a strong Employer Brand. Instead of benefiting from the marketer’s efforts, they have to be a marketer themselves.

But even in companies like Coca Cola or Microsoft, HR managers have to adapt to a marketer’s approach. A brand manager nowadays is not only concerned with the product itself, but most of all with creating and establishing long-lasting relationships with customers. They want them to be loyal and instead of purchasing once, they want them to come back over and over again. To achieve this loyalty, they know that clients look further than just the product attributes.

They want to know about ‘the company behind the brand’ – and to be able to trust that company. That’s why Coca Cola has its Coca Cola Foundation and invests in its Healthy Active Living programme. And this is where brand management, even for the Best Global Brands, becomes people management.

So, HR and marketing are strongly related at two levels. First there is HR’s concern with employer branding and employee relationship management. Marketing methods and techniques can help to shape HR’s input to talent development, providing benefits, work-life balance and so on, and convert this into actually attracting, retaining and engaging talent. Secondly, HR management is having an increasing impact of on marketing and sales. HR strategy and implementation can create an energised workforce that can substantiate the promises made by brand managers.

2. Objective of this paper

This paper offers insights to understanding better the symbiotic relationship between HR and marketing. It suggests areas where HR professionals can learn from marketers and, moreover, how HR in turn can make a crucial contribution to marketing. It considers how marketing theories and techniques can help HR to achieve an improved return on time, money and effort invested, resulting in a better performing workforce. Conversely, HR theories and techniques are crucial to enhancing the brand experience among all stakeholders.

HR and marketing ….. it’s a marriage made in business heaven. Unfortunately, they do not speak the same language just yet. First of all, we will give an overview of the important global trends and developments that underline the need for a common language. Then we will explore which terms, definitions and techniques might form a combined approach.

This paper is the first in a series of three:

1. Employer Branding: the marketing approach of HR; the HR approach of marketing
2. The HR manager in the role as marketer
3. The HR marketer: what needs to be done?

3. Trends and developments: ‘P’ for ‘People’ in the marketing mix

Customer loyalty is usually assessed under the famous ‘Four P’s’: Product, Place, Promotion and Price. Recently, marketers have realised that there is an important fifth ‘P’ in the marketing mix: People. However, the marketing view of People tends to regard them as an instrument in the product-oriented approach, primarily focused on the sales transaction. People have to ‘close the deal’ and therefore they must have the right sales attitude and qualities. HR plays only a supporting role in recruiting the right people and then providing training facilities to develop the right competences in these people.

In some industries this marketing view of ‘P for people’ is still evident and relevant. For example, research into the fast food industry has shown that it’s not the taste of the food (Product), or the restaurant (Place) or advertising (Promotion) that lures customers to come back for another visit. It’s by far the people who serve them. The same is true for airlines. For instance, fliers who consider United Airlines’ employees to stand out, are over 18 times more likely to select United again than fliers with a more negative appraisal of employees. Advertisement has a much lesser impact on customer loyalty. Customers who think United’s advertisement is outstanding, are only six times more inclined to fly United again. (Gallup, The power of the fifth P.)

Several global business trends and developments show that the HR role in marketing is moving from one of support in a few specific industries such as fast food and airlines, to a much more strategic role in all industries. These trends underline the importance of HR increasing its familiarity with marketing, and making it easier for HR professionals to legitimise their role on the executive boards of organisations.

First of all there is the growing influence of global reputation management, which makes it of paramount importance for all industries to take people management issues into account in the branding process. Secondly, we observe the development of the services-based economy, in which the product or service delivered by a business is totally contingent upon the highly skilled and trained people it employs. Thirdly, there is the growing importance of intangible assets like human and intellectual capital as sources of strategic advantage. (Graeme Martin e.a., Branding: A New Performance Discourse for HR?)
 

Reputation management and Employer Branding

Every human being and every company has a reputation. It’s the combination of what you want to be and what you really are – and how others regard you. What you want to be is represented by branding. What you really are is represented by your identity. It’s only during the last decade of the 20th century that branding experts began to realize corporate identity has an impact on your brand.

Reputation, they argue, expresses the relationship between external image and internal corporate identity. Reputation, of course, is not just a hot topic because so-called branding experts pay attention to it. It’s important because stakeholders – customers, shareholders, politicians, the public and employees – no longer take the brand promise for granted. They want to know the real story, to find out what’s going on behind the brand. And if they find out, they often share this information globally via the Internet. That’s why companies have a growing interest in managing their reputation.

Reputation management is the link between HR and marketing. Stories and images from employees create the organisational personality that will shape the perceptions of external stakeholders. HR contributes to strong reputation by:
- Stimulating positive perceptions that employees have of their psychological contract (in terms of commitment, security, career opportunity, pay and employability);
- Being an employer of choice;
- Creating an employment proposition.

HR can therefore contribute to reputation management by creating a strong Employer Brand that is consistent with all the other branding activities of the company. With a strong Employer Brand the company is not only capable of achieving HR goals such as attracting, retaining and engaging high-value employees, but also of fulfilling marketing goals by aligning its employees with the brand. It means that they know and embrace the values that the company stands for. Research by the University of Amsterdam shows that those companies with a brand-orientated workforce perform better in terms of turnover, financial results and growth.
 

Services-based economy and employer branding

Companies create sustainable competitive advantage by exploiting the resources they have at their disposal. Those resources should be rare, valuable, nonsubstitutable and difficult to imitate. Coca Cola has such a resource in the form of its soda recipe, which is unique, highly appreciated by billions of customers and impossible to imitate by any other company. In a services-based economy however, it is human capital that are the resources.

To attract, retain and engage human capital that makes a real difference, companies should offer jobs, careers, benefits, working arrangements and experience that do just that: make a difference. A strong Employer Brand leads to improved employee attitudes, which in turn achieves greater customer satisfaction and finally, boosts profits.

Growing importance of intangible assets and intellectual capital

In the so called ‘old economy’ marketing, sales, R&D and production are defined in terms of investments, aimed at maximising the return on that investment. HR has usually been defined in terms of costs. In the ‘new economy’- or ‘weightless economy’ – intangible assets and intellectual capital are broadly recognised as forming an important component of the value of the organisation. But although human capital is widely accepted to be a substantial driver of value, it is still difficult to quantify it in terms of money.

For a start, an employer doesn’t ‘own’ human capital. It has invested in recruiting, retaining and engaging talent but that does not guarantee high performance. It can create trust among customers, partners and shareholders, which may then lead to desired outcomes. It’s about prospects and expectations. That’s why Fortune magazine, in its comparison of the leading 500 companies, no longer reports on return on capital employed and profit per employee. The focus is on the use of intellectual capital and the output in terms of the added value that is generated.

According to The Times Business Supplement the Fortune 500 edition of 2010, “the most interesting figures that separate the exciting companies from the mundane are the investments in R&D, investments in people development, the customer loyalty index, and the percentage attrition of professional staff”. You cannot just translate those figures into a financial appraisal, most HR academics argue. But according to human capital academic Andrew Mayo, you should define them in terms of a ‘Human Asset Worth’. The value of a company’s workforce is indicated on a scale from 0.5 to 2.0 which is used as multiplier to the total company’s worth.

In measuring human asset worth, all elements of HR strategy, instruments and arrangements are included. As such it can be seen as a well-defined appraisal of the Employer Brand and it helps HR executives to set out a strong business case for becoming one of the best companies to work for. The next step of course will be to be recognised as a top employer, not only by top talent wishing to join it, but also by all other stakeholders.

4. Marketing approach of HR: employer branding

Before identifying an HR strategy, instruments and arrangements that can help to build a strong Employer Brand, HR first needs to embrace the way that marketers think and work. The best way to do this is to view the company as a provider of work. For HR, marketing is aimed at creating, maintaining and benefiting from high-value relationships with its ‘customers’ (employees). Employee relationship management works exactly like customer relationship management.

Roughly there are three stages in employee relationship management. First you have to establish the relationship, then you develop and maintain the relationship, and finally you get (hopefully positive) results from it.
 

Segmenting, targeting and positioning

The first step in turning HR into HR marketing concerns traditional marketing activities. A good starting point is to answer the following questions:
- Which part of the labour market is important to you? (segmentation)
- What type of people would you like to attract? (targeting)
- How do you present yourself? (positioning, brand values, employee value proposition, employer brand)

Companies can answer the first two questions themselves, by researching their internal and external labour markets. It is important to look not only at the quantity, but also at the quality of your potential employees. What makes them tick? What factors make them decide that you are an employer of choice? And of course you need to know which competitors are targeting the same type of candidates.

To answer the last question, you need input from experienced and well-informed communications experts and coordination with brand management. You need to know which brand values can be translated into a distinctive and attractive proposition. Maybe you will discover that your company brand is not strong enough to be used in your employee value proposition. Or, like some servicebased companies operating in a business-to-business market, you don’t have a brand magnet at all.

The relation between corporate, products and services, and the employer brand depends upon the type of organisation you represent. The stronger your (product) brand, the more you can rely on it with your employer brand (‘that’s a brand I want to work for’). Sometimes however it also works the other way around: ‘I want to do business with a company attracting, employing and engaging that kind of talent’.
 

Job marketingmix

After segmenting, targeting and positioning it’s time to sell! To establish a highvalue relationship with employees, the elements of the traditional marketing mix now apply: Product (their job); Price (potential employee’s investment in time and effort); Promotion (content of recruitment message); and Place (the channels used for communicating job offerings).

5. HR approach of marketing: Employer Branding & Market Analytics

A strong employer brand is, of course, much more than a label. To attract and engage the top talent, your offer should be in-line with the benefits, culture and opportunities that you actually deliver. Only by truthfully maintaining and developing the high-value relationship with employees are you able to achieve the desired results. Most of all, branding is all about trust. Customers, shareholders, partners and employees need to believe that you can deliver. Not only today, but also in the future.

In building a strong employer brand that is more than just a label, the first question to be answered is: ‘Do HR and Executive Management really create the conditions within the organisation that will attract, engage and retain top talent?’

The second question would be: ‘How can we positively influence the perception of these conditions among talent within as well as outside the company?’ To answer these questions HR could learn from marketing by adopting market analytics, which can provide insights to managing talent in a structured way.

The CRF Institute helps to answer both questions. The Top Employers project gives recognition and accreditation to a company for its HR policies and practices. It supports organisations in their quest to stand out as an employer of choice. The rigorous research exercise provides insights to its HR policies and practices. Where do you stand as an employer in building the right conditions for your staff in order to increase the Return of Investment (ROI) of HR? For example measured by higher performance, lower levels of staff turnover or absenteeism?

Research by the CRF Institute among their top employers in 12 countries worldwide provides ample information about what an employer of choice should deliver. Certification as a Top Employer can give stakeholders the reassurance that the company can actually fulfil the promises it makes. As such, it is not only a powerful tool in attracting, retaining and engaging top talent, but it can provide the HR manager with the ammunition to elevate employer branding high on the agenda of board and direction.

Developing and maintain high-value relationships with employees is about creating psychological, economical and social values, about personal values matching organisational values, about trust, and about offering development opportunities. (Linda Schweitzer e.a., figure 1). All of these elements are included in the research undertaken by the CRF Institute and delivered by the Top Employers certification worldwide.

6. Employer branding is much more than just ‘selling jobs’

Most employer branding is just a matter of adjusting marketing concepts and tools to existing job offerings, without looking at the broader strategic value of a strong employer brand to the business. You can’t create, develop and maintain high-value employment relationships by just ‘selling’ jobs. HR constantly needs to research and adjust to rapidly changing market conditions. And as a result it constantly needs to evaluate the employer behind the employer brand: are HR strategy, HR arrangements and instruments still in tune with those market conditions?

Good employer branding needs qualified certification. Only by associating with an independent research institute can top employers show that they walk the talk, and are willing and able to create long-lasting, high-value relationships with employees. By doing so, they increase results in terms of higher profit and lower costs today, but they also show customers, shareholders and employees that they can deliver tomorrow as well. Certification as a Top Employer not only attributes to the marketing side of HR, but also defines HR’s role in marketing.
 

 

Sources:

G. Martin e.a., Branding: A New Performance Discourse for HR?, European Management Journal Vol. 23, No. 1, pp. 76-88, 2005

Schweitzer, Linda and Sean Lyons, The market within: A marketing approach to creating and developing high-value employment relationships, Business Horizons, No. 51, p. 555-565, Kelley School of Business, Indiana University, 2008

Mayo, Andrew, The Human Value o the Enterprise: valuing, people as assets – monitoring, measuring, managing’, Nicholas Brealy, London

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