Senior executive performance measures do not yet value EB

Just how important is the Employer Brand to FTSE 250 CEOs?The answer seems to be ‘Not much’ on the basis of how they are rewarded.

Last week, I saw a presentation by the leading remuneration adviser Kepler Associates who work with 50 of the FTSE 250 Remuneration Committees. They revealed some excellent thought provoking recent research they had conducted amongst REMCOs and one aspect prompts me to write this blog.

This was the blend of financial and non financial measures used in these companies annual bonus plans to demonstrate the usage of short term incentive measures. Financial measures led with Profit/EPS followed by Cashflow, Revenue, Returns, EP, Total Shareholder ReturnandNet Asset Value. 

How did people related dimensions fare in The Non Financial measures which typically had a weighting of 20-30% of the total?  In descending order of usage(based on the % of short-term incentive schemesoperating across the FTSE250) the table listed-

-          ‘Personal Objectives’36%comprising areas like controllable costs, maintenance of capital disciplines, enhancing value via M&A

-          Health and Safety measures12%

-          Operational Measures 9%

-          Customer satisfaction 7%

-          Staff satisfaction – bottom of the list with 4%

So much for ‘People are our most important asset’ type statements! When I questioned thispretty abysmal figure (which is made worse if one considers the effect of the weighting towards financial measures), the answer from the consultants and the audience of Non Executive Directors was the difficulty of objectively measuring performance.Attracting, retaining and motivating talent is becoming even more of a critical issue for companies. However, the challenge remains on how to effectively combine key performance indicators in bonus plans that are measureable, understood by participants and acceptable to shareholders.

My view is that they have not tried hard enough. Of course, an overall measure of employee satisfaction is a very broad issue but there are many indicators of EB performance which seem to me to provide a better assessmente.g.

-          Can the CEO recruit and retain great senior talent? ie business critical executives who either turn down offers to join or existing stars who become voluntary leavers

-          Overall employee turnover figures on voluntary leavers improve

-          Sickness/Absence figures drop

-          Ditto Employment Tribunals

-          Net Promoter scores strengthens ie the % of people who would recommend an outsider to join less those who would not

-          A fall in the premium over current remuneration which a new employee will need as an incentive to come aboard.  Truly top employers with great EBs will pay less because of the CV building reputation they provide.

It seems to me that this vital assessment of people related ability cannot just be one number and are a combination of actual behaviour as well as attitudes. Whatever the combination it needs to be a more respected set of measures than most REMCOs seem to seek. Maybe they need more familiarization with what really matters at work as demonstrated in the implementation of people and commercial strategy.

Final thought. How do HR facing people feel about their contribution to a measure of Executive performance ie ‘Staff Satisfaction’ which is so low in the table? What does that say to others about the importance of their work? What does that say about their preparedness to eyeball REMCO and show them a better way? What if anything do REMCOs know about the Employer Brand anyway?

Simon Barrow

simon@pib.co.uk

07 976 700 603

HRD confidence and courage at Carnival Corporation

At a private meeting two evenings ago I heard a leading UK CEO state what he expects from his Human Resource Director (who was sitting at the same table). He spoke of the phenomenal business and reputation failures which are down to people and cultural issues and he believed that any HRD needs the insights, confidence and courage to ensure that the CEO and the Board are aware of these risks and the need for a plan to address them. He added other expectations including the ability to inspire, to be a great communicator (and to be responsible for internal communications) and to make sure HR plans reflect the Company’s strategy.

The ensuing discussion started with HRD confidence and courage and It made me wonder about the background to the recent Costa Concordia cruise ship tragedy and the role of its master Captain Schettino. The Captain may face prosecution for his role but I have broader and more systemic questions for his successful employers Carnival Corporation and its CEO Micky Arison:

-       What are the key responsibilities of any Carnival Captain in the company’s fleet of 101 ships (and 10 on order)? In particular the role of safety and the maintenance of safety culture? Frankly, I don’t give a damn about his/her customer service duties - the Captain’s Cocktail Party and the like that is deck chairs stuff compared to his core duties.

-       Against this standard, how are Captains appointed? What tests of competence, character, intelligence and leadership are in place?

-       What training informs Captainson the latest technical, navigational and human factor thinking?

-       How is a Captain’s current ability assessed? An airline pilot will have regular simulated flight sessions, during which a Training Captain will subject him or her to many potential incidents where flight crew knowledge and judgement will be rigorously reviewed.

-       What was the management style of Carnival and the values which actually underpinned behaviours (as opposed to the usual list of commonplace worthy beliefs)?

-       What was the role of the Carnival Group HRD (according to the website it is Jerry Montgomery appointed in 2011 and, according to the Carnival press release at the time ‘a long time hospitality industry veteran’)? Reverting back to my central point of HR confidence and courage, did he have a record of alerting previous employers to the potential risks of people and cultural issues in the context of safety? Equally, did his predecessor Wayne Byers have this reputation? It was Mr Byers retirement after 28 years which prompted the need to recruit.

-       According to the same release Jerry Montgomery reports to Howard Frank, Carnival Corporation’s Vice Chairman and COO. Did Montgomery express an opinion on the areas above and if so did Mr Frank and Mr Arison act on it?

Carnival have announced a review to be led by Captain James Hunn a retired US Navy Captain and currently the company’s senior VP of Maritime Policy and Compliance. The press release states they will ‘review all safety and emergency response policies and procedures, officer and crew training and evaluation, bridge management and company wide response and support efforts’. Captain Hunn will report to the Health, Environment, Safety&Security Committee of the Board and to Howard Frank , vice chairman and chief operating officer of Carnival Corporation & plc’

This reminds me of the Bank of England’s enquiry into the Nick Leeson/Barings Bank collapse. It was all about the relevant process not about culture and the behaviours which were really valued. The Carnival enquiry needs to be broader and assess the overall employer brand of the company including the priorities of its leadership.  As I heard recently ‘Culture always has Compliance for lunch’. I hope that the level of HR involvement is included and I have to say that I also hope that Captain Hunn, as an existing company employee, does, like any great HRD, have the confidence and courage to search and report on the soft issues as well as the rule books. Carnival has a brilliant record and deserves no less.

The Employer Brand of England post Cameron’s veto

Any great employer brand depends on clarity of direction and unity among the top team which is not something we saw at the Brussels conference on the night of 8/9^th December. David Cameron’s veto of the proposed treaty reminded me of three business workshops where I have seen an individual separate themselves from their colleagues. In each case you could see it coming – a talented exec behaving in a way which was bound to put them outside the stockade and not really being ‘one of us’ anymore. The first time was on an ad agency offsite where a senior colleague could not cope with the then Chairman and made no secret of it. A week later he announced he was setting up on his own. A second was at a Nabisco meeting where a senior executive calmly stated that he was to be part of a group buying a competitor. His words were met with awed respect.  A third was at an oil and gas explorer where a talented renegade’s behaviour meant he was clearly also heading for the door en route for independence.

I thought of those individuals when I saw Cameron’s news and the body language and expressions of the other leaders. Later came the verbatims like ‘he was never really with us’. However,our PM was unlike my three business people in that they already had a clear alternative destination. I am not sure Cameron did.

My point is that you can take an independent line in a group session when you have an ace up your sleeve and have chosen the moment to play it. Yet in Cameron’s case the talk since has been about rebuilding bridges and remaining in the 27. No actual change to protect the City has been won.I am not an economist and I don’t know what the future of the eurozone is likely to be. However, I do know about relationships at work and anyone being the one veto out of twenty seven is putting themselves at risk if they want to stay on the team. That is particularly so when the big topic is a macro one and highlighting local concerns is out of line. That behaviour has weakened the trust and respect England commands. I say England rather than the UK because somehow the Scots, the Welsh and the Irish are not in the same boat - it is the employer brand of England which has been damaged given the English sceptics and the English media. I fear that business values here maybe tarnished in the eyes of our partners as being more like those of Bill Cash than Martin Sorrell (who I was glad to see stating that he would prefer us to remain ‘inside the tent’).  It is good to see that similar observations have been made by many Brit business leaders over the past 12 days.

A day or so after the veto I got an email from a Belgian friend regretting the line our Prime Minister had taken and fearing for the future of a country of which he is very fond. Next time I talk at a conference across the channel I bet I get a question on this topic and any Brits doing business there from now on can expect the same. I would prefer to be asked about something else but in replyI shall say that big business and the sceptics here are very different.  What the veto has done is to prompt business Brits to rally support for continued UK/ European teamwork because it remains critical for all of us. There is no alternative (as Mrs Thatcher used to say in a different context)

Simon Barrow

simon@pib.co.uk

Why an Employer Brand project can be demanding, yet transformational, for HR

Everyone likes to pigeon hole everybody else and in particular about what you do. While I have for years stressed the importance of coherence across an organisation as a critical ingredient for Employer Brand success, any conversation about what I or People in Business does often concludes with “so you’re part of HR then?”

Well yes of course we are (and proud of it) but we are also part of marketing, of corporate identity, communications, line management and senior management thinking. However ‘pigeon holers’ don’t think that way and so, if pressed, we are indeed part of the supply side to employers when it comes to the management of their people.

If that is the case, what makes the purchasing and project management of Employer Brand assignments different to most of the goods and services bought by HR?

I had a look at the constituents of the people industry looking at the list of exhibitors at the UK CIPD’s annual exhibition. What a varied crew of suppliers to the world of work starting with Alcoholics Anonymous and including Eye Care, Language teaching, Relocation, Mental Health, Equality and Human Rights, Child Care, Incentive Planning, Pensions, Employee Assistance, Employee Research, IT Services,  Internal communications, Mediation and then of course every form of Recruitment service with the interesting exception of top end head hunters (what does that tell you about the relationship between Executive Search and HR?)

What in the main do these suppliers have in common for the HR buyer? I believe it is as follows:

·         The rest of the organisation will clearly look to HR to provide this external help when it is needed

·         HR’s advice on the choice will be trusted and will get rapid approval (if indeed sign off within an existing budget is required)

·         HR will not need to undertake extensive cross functional discussion before proceeding

·         The service exists to address an immediate need and is transactional rather than part of a long term strategic plan

·         The supplier does not need to ask questions outside HR in order to provide the service

·         There is little internal political risk involved. A supplier who fails can be replaced 

Let’s now look at the services which HR should in my viewbe critical to, yet tick NONE of the above boxes e.g. Organisational Development, Change Management, M&A planning and integration, senior management teamwork and leadership and the development and management of the organisation’s Employer Brand.

It is impossible to create an effective Employer Brand without the involvement of other functions e.g. Marketing, Internal Communications and Corporate Affairs plus of course Operations and Senior Management. 

Furthermore, an Employer Brand project maybe a catalyst for change in several aspects of the working experience and the ‘touch points’ where people see the truth about the organisation at first hand. If all it does is alter the artefacts of communication it is unlikely to succeed.

No one but HR should initiate Employer Brand projects since they demand an intense understanding of your people and the processes which affect them. However, HR must have the confidence, persuasiveness, commerciality and breadth to engage all the other critical internal partners to plan, deliver and maintain a distinctive, compelling Employer Brand which is rooted in reality. This is the sort of HR which a restless and ambitious CEO should demand. If the HR department does not have these qualities that is ultimately his or her responsibility.

Employer Brand projects can be transformational not only for the organisation but for the reality of HR at its best.

Simon Barrow

29^th Nov 2011

People in Business, 200, Aldersgate Street, London EC1A 4HD

Employers don’t tell the truth about work

We know how Employer Brand Management OUGHT to work but one of the issues it must overcome is that so many employers do not truly represent the essence of what it is like to work for them. Most of the 401,000 pages on the subject of ‘employer branding’ on Google are about identity and communication not content about the reality of the workplace.

Business people have known for 80 years that the heart of good marketing is based on understanding the truth of the customer experience and then memorably communicating it. Yet in the world of work employers too often don’t tell the real truth but kid themselves with internal and external communications which are bland, samey and risk free (and don’t kid anybody else).

The tragedy is that most organisations have some great unique features (some of which certain candidates should steer clear of) but you don’t see that in their communications . Read even what some household name organisations say about working for them and you just don’t get the real essence - the flesh and blood of the brilliant successful businesses they are. The truth is often submerged under what is still a play safe, politically correct bureaucracy and, because it’s regarded as ‘internal’, they don’t have the energy or will to change it.

Yet think of the range of sources employees can access: Glass Door, Vault, Student Room, Milk Round, You Tube, Google Search and of course Facebook. All of that information is uncontrolled by employers. You can’t escape the truth so why not tell it in the first place?

It’s when you are inside an organisation that you see the real thing as I did when working with the late but formidable Arthur Andersen, then at the height of its powers. Here is what I heard a senior executive say to a group of potential accountants:

Come here and you will work with clever clients.

Come here and you will work with clever colleagues.

Come here and you will qualify faster than any of our competitors.

Come here and you will be a partner by age 32 or you probably won’t be here

Understand that this is an up or out culture and that applies throughout your career.

However, if you do leave us this is a great springboard – just look at our alumni.

But finally, DONT come here if you are not an argumentative character who will challenge others in meetings and being challenged. You’ll be miserable.

 

With the benefits of hindsight you can see the seeds of Enron in that speech – the ambition, over confidence and arrogance which ruined them. However, that was the truth about Andersen but you never saw it in the well designed, well written prose they used about themselves as an employer.

News Corp has been much in the news this year. Getting under the skin of Rupert Murdoch does not happen easily but Michael Wolfe’s book on the man gives you an indication of what News employees I have known have felt over the years. Consider:

• Reject the idea of a higher calling in journalism. It’s about competition and winning.
• When he’s not there he’s there as palpable absence. You never know when you’re on his mind.
• Every second working for Murdoch is a second spent thinking about what Murdoch wants. He inhabits you!

News Corp has inspired enormous dedication, creativity and loyalty from its people. You will get the real thing when you talk to them but not when you read or view what the company formally says about itself.

My message is that Management need to be courageous and be themselves - a person is never more effective than when they are really telling the truth.

Consider what Steve Jobs said. Is not this the essence of Apple for its people?

Technology alone is not enough –it’s technology married with liberal arts, married with the humanities, that yields us the result that makes our hearts sing

Yet so much of people management does not aim this high - the avoidance of risk is more important than the creation of inspiration. And that comes from the top – if senior management puts more pressure on HR to be distinctive rather than risk free we would see more great Employer Brands emerge.

Simon Barrow


Look out for my next three blogs – a) Great EBs mean busting the silos, b) Changing the DNA of the people industries who serve employers c) the life changing opportunity for HR in EB management

Simon Barrow
simon@pib.co.uk
44 (0) 203 375 4156
People in Business, 200 Aldersgate Street, London, EC1A 4HD, UK

Two meetings with Rupert Murdoch - both with a major EB insight

It's not often that two brief conversations with a CEO give you an immediate insight into the heart of an Employer Brand.

Both my brief meetings with Rupert Murdoch twice were conversations to remember. A good start for any insights into the News International employee experience.
The first was just after he had bought the Times in 1981 at a lunch he gave for six ad agency CEOs including Ogilvy, WCRS, Allen Brady and Marsh, TBWA, McCanns and me representing Ayer Barker. Murdoch did not say much and watched the typical barbed banter of competitors supposedly off duty (but not really). I was seated two down from our host at an oblong table and to get him talking I asked him how much of his money was now invested in the UK. He replied ‘just over 55%’. I then said ‘Mr Murdoch you could invest anywhere why such a big percentage here?’ He replied ‘Most places you have to work hard and be very smart – in this country all you have to do is work hard!’. We all laughed but he meant it and it confirmed his role as the outsider, the restless challenger and the change agent with an anti establishment view of the UK. The move to Wapping and the breaking of the newspaper unions was yet to come.
Twelve years later I met him again. People in Business was up and running and I was in the canteen at Wapping as the guest of Les Hinton. I was telling him about the trip I had just had round the Nissan plant near Sunderland and the productivity of the local work force in crisp blue overalls. Geordies welded together as a company team in a way they never were as riveters, coal miners or in the other lost occupations of the north east. It was not the new plant, Linwood and Ryton had that too, it was Nissan’s focus, innovation and certainty that created an EB which those other new UK plants never had. At this point Murdoch ambled up with his tray and asked if he could join us.
I reminded him of what he said at the post Times lunch to which he replied ‘that was a long time ago’. Les then asked me to finish the Nissan story and I said that it was then the fastest automotive production line in Europe. I had asked my guide there what the average age on the line was and she told me ’27 but we want to get it down to 24’. At this point Murdoch said to Hinton ‘ Get up there and see it’ and asked if I could arrange that which I subsequently did with Peter Wickens the Nissan HRD (and the first employee of Nissan UK)
That was typical Murdoch the opportunist – sounds interesting, may be something for us, act on it fast. That’s his style when in trouble too. Closing the 168 year old News of the World and losing its 2.7m circulation was an example. He had to make a big move that would surprise everyone .Yet In my view he could have achieved the same impact by firing Rebekah Brooks and kept a profitable paper. As it was she left a few days later but her exit did not then improve his position.
From an EB standpoint, I can see little difference between News International and Rupert Murdoch himself. Relentless energy and opportunism, not much in the way of direction and vision. The perpetual outsider and challenger with no need to be liked. Yet News has many outstanding executives and journalists and inspires great loyalty not only to the group but to some great papers which have benefited from its ownership.
Michael Woolff captures the essence of Murdoch in his brilliant book ‘The man who owns the news’ – consider these observations. Woolff may not have gathered them from an EB standpoint but in the search for an EB which is distinctive and compelling for the right audience these are hard to beat:
-the elite at News Corp must prove they have shed any hint of elitism or even a desire for respectability.
-Rejection of the idea of a higher calling in journalism. It’s about competition and winning
-when he’s not there he’s there as palpable absence. You never know when you’re on his mind
-to work for him is to do his bidding, to follow his line
-every second working for Murdoch is a second spent thinking about what Murdoch wants. He inhabits you
The hacking story has become a global one and probably and has more to run. However, put that to one side and consider the implications of the 80 yr old Murdoch’s eventual exit. News International has powerful media properties and will become like other major companies in the sector. As the Economist says this week ‘The suits are firmly in control’ though it also believes that its feistiness will continue. Somehow I doubt that since suits are seldom feisty and unpredictable in the way Murdoch is.
Describing News’s EB point of difference a decade from now will be harder work and I suspect many of the current employees will miss the management style they have lived with for so long. This blog was prompted by just two short conversations but think what tales News International people will have to tell – and I think you will find that most of them will be positive.

Simon Barrow

Social Mobility as an EB attribute - the vital missing ingredient in diversity

Readers of JD Salinger’s ‘Catcher in the Rye’ may remember Holden Caulfield’s description of the American school he went to – "it was one of those schools that advertised in the back of the National Geographic showing some hot shot guy on a horse. I never saw anything like that at Pencey Prep."
I had an exchange scholarship year at a school a bit like that 30 miles east of Philadelphia. I had done my A levels in the UK and started at the Hill School, Pottstown, PA when I was still 17. I was lucky to go there, it broke the mould of England for me and focussed the direction my life was going to take thereafter.
Reading about the apparent reversal in UK social mobility, now apparently decreasing when it was increasing, made me think of that time and wonder what steps UK employers are taking to increase social mobility within their own organisations. Universities have to worry about social mobility, should not employers also demonstrate that they care about it and sharpen their descriptions of diversity in their Employer Brand management? Employers are pressed to reveal gender and ethnic figures but how about the percentage of people they take on by type of secondary school which is a broader challenge? Universities have to answer that question, why not employers? Employers of course are meritocracies and are blind to background in their search for talent but this conceals educational facts which will add important themes to any discussion on what UK education needs.
In America, private prep schools (that is secondary schools aiming to get students into US Colleges of their choice) are just a pin prick in US cultural life. Secondary education carries little of the baggage which all forms of UK secondary education has to cope with. Few Americans are remotely interested - in contrast to the furious debate it prompts in Britain where some leading Universities contain over 40% from fee paying schools, a category which only produces 8% of the nation’s school leavers yet 54% of FTSE 100 CEOs, 51% of top medics and 70% of High Court Judges (Source HM Government). Many of these universities want to change this yet they face two obstacles:
a) They must to keep their high standards competing as they do on in a global market, particularly for academic faculty members, and they cannot act primarily as social engineers. I can hear employers making the same point.
b) Some feel, Oxford and Cambridge for example, that they cannot attract the very brightest of the state sector given their elitist reputation. The Vice Chancellor of Oxford has stated that this is one of his top two issues (the other is attracting world class academics)
This is a double whammy and the British press regularly runs stories showing that alumni from fee paying schools continue to make up large percentages of top jobs given that there are fewer Grammar schools. Small wonder so many UK parents feel they have to take on the crippling burden of fee paid education which most parents in the rest of Europe are happy to escape. I wonder what the comparable figures for fee paid alumni percentages by job category are in the US and in other European countries? I do not think that Brits do fee paid education for social reasons, it is about getting qualifications and skills which will provide better chances of a high earnings and career advancement.
This situation is made worse in the UK by the influence of London as a place to work since many of the career options above are centred there. Geography can be an important merit and demerit in EB management. The daughter of neighbour is a trainee accountant in a global FMCG company’s London office. In September the employer is moving her to Preston as part of her development. Her first reaction was to leave and get herself into a City accountant practice but to her credit she is going to make the move. It may transform her.
What do I think UK employers should do to demonstrate their contribution to increasing social mobility? I have these suggestions:

1. Redefine ‘Diversity’. Britain has treated diversity as an American import where the topic has been informed by the various US ‘rights’ movements and so the focus has been on Gender, Minority Ethnics, Sexual orientation and the Disabled. This is why it ignores social class which is the biggest cause of exclusion in UK as numerous studies have concluded.
2. Recognise social mobility within their corporate and HR communications. It is not enough just to make the usual equal opportunity commitments none of which capture social mobility
3. Make sure everybody applies on line even for intern jobs. Be seen to make it a really level playing field
4. When an executive is asked to help potential candidates referred by clients, suppliers, friends or relations, ensure that all know the organisation’s stance. Nick Clegg benefitted from personal contact in getting an intern’s job and, while he should have said so, was right to highlight the inequalities of the system. A good message ruined by perceived hypocrisy.
5. Record the school categories for their graduates in the same way that Universities do. Indeed, why don’t University Careers services record graduate employer destinations by secondary school? They have the data and it would save employers the extra bureaucracy
6. Publicise the results. I think we will find that some employers have a very limited balance in secondary school profile and others will be very broad. There is an interesting subject for analysis here – does that balance correlate with corporate performance?
7. Ask recruiters to track secondary education profile on their short lists aspects.
8. Encourage relevant Government departments eg Fast Stream Recruitment to do the same.
9. Persuade the state education establishment to change its aspirations, standards and opportunities it offers all families including those buying private education. Where is the pitch to the latter group?
10. The big one, make private education unfashionable (in many countries the decision to go private is often for non academic reasons and can imply family challenges rather than ambition) and do so by changing state standards. Will David Cameron’s children, who have started in a state primary, continue in the state system? If so, will his government encourage more of his peer group to do the same? Consider the impact on the UK state system if the parental pressure of every FTSE 100 director, journalist, judge, and doctor was focused on it? How would existing school management react? It would redefine the definition of the ‘pushy mum’! A university class mate of mine headed a comprehensive school in North London for some years. He told me how much the school would have gained if he had been able to attract a broader profile from the fee paid day school competitors he faced.

Finally, it is tempting to consider employers who have already built a reputation for both outstanding performance and improving social mobility. Top of my list would be Tesco whose culture has long targeted bright and energetic people with nothing resembling a silver spoon in their mouths. It is an unstated but powerful aspect of their EB

Simon Barrow