Sometime in the next year or two, I predict U.S. companies will undergo a human resources crisis. As businesses stabilize and people become accustomed to a certain degree of economic uncertainty, a high level of turnover is likely to threaten companies’ recoveries.

Employees who survived multiple rounds of layoffs over the last couple of years have become burnt out from taking on more work for lower pay and reduced benefits. They’ve likely developed some battle wounds as they’ve conflicted with managers over scarce resources and under-funded projects and fielded complaints from customers who’ve been dissatisfied by the less-than-stellar service that’s resulted from staffing shortages. Many of the folks who were laid off have taken on jobs they don’t really want at companies they don’t really want to work for, just to secure a steady paycheck. As soon as people suspect there are other options, they’ll start looking for the first opportunity to leave.

I am not alone in my prediction. In a recent New York Times Preoccupations column Jon Picoult, founder and principal of Watermark Consulting, wrote, “Layoffs, cutbacks and stress inflicted on employees in the economic downtown have left many of them discontented and disengaged…A turnover storm is looming.” And I’ve heard similar remarks from recruiters and human resources consultants. People are itching to jump ship. It’s not a question of ‘if,’ it’s only a matter of ‘when.’

Companies need to prepare for this crisis by shoring up their human resources capabilities — ensuring their recruiting efforts are primed to attract new talent and their on-boarding and training is ready to smoothly integrate a wave new people into the organization. But they also should try to offset the crisis, turning their attention from workforce reduction to workforce retention.

Companies should invest in employee engagement now before it’s too late. Back in 2009, the Gallup organization determined that less than 30% of the corporate workforce is truly engaged in its work.  That figure has probably only gotten worse as pent-up frustration has kept pace with pressures to post signs of recovery.

Employees’ intellectual and emotional fulfillment from and commitment to their employers needs to be strengthened. Not only is an engaged employee less likely to leave their company, they’re also more likely to support the company’s interests and contribute to its success.

According to another report by Gallup, firms with high employee engagement levels enjoy 12% higher customer advocacy, 18% higher productivity, and 12% higher profitability. Best Buy provides a great case study: for every one-tenth-of-a-point increase in employee engagement, each store increased profits by $100,000 a year.

So there’s a strong case for making employee engagement a priority now more than ever – and I would go one step further to advocate for employee brand engagement.

By employee brand engagement, I mean the positive, multi-dimensional connection between employees and the company’s brand. This is more than what typically results when companies do internal marketing or “invertising” and employees are considered an audience which must “buy” what the marketing team is selling. Feeling good about the organization and having a positive outlook on its future are important, but they’re not likely to address employees’ more deeply rooted needs for personal significance and reward.

When employees are truly engaged with the brand, they are involved in the development and delivery of brand value to customers. They are informed, inspired, and well-instructed on how to support the brand in their daily decision-making. Employees who are engaged with the brand play a critical role in the way the brand is experienced by all stakeholders. They see themselves as “brand operators” who develop, maintain, and activate the brand across all of their activities — and this serves as a point of pride and reason for increased commitment to the organization.

Instead of generic or disparate initiatives to increase employees’ engagement, companies should use their brands. A brand is the strongest engagement tool a business has because of its power to connect. Employee brand engagement connects:

1. employees to customers – A brand helps people understand how the company serves customers. It defines the unique value the company delivers to customers and why that value is so important. When employees understand how what they do ultimately impacts the customer, they have a clearer understanding of what is expected of them and how they can be most effective. And satisfied customers are an immediate, obvious, and tangible reward.
2. employees to each other – A brand also defines the unique way a company interacts with all of its stakeholders – from front-line employees to the executive team, from vendors to buyers, and between business partners. It unites people with a common objective, drives the values and culture which determine how people treat each other, and sets a high standard of work for everyone.
3. employees to a higher purpose – A brand gives more meaning and importance to a person’s work by speaking to the broader mission of the organization. Just as consumers’ expectations of companies are rising, so are employees’ – most want to know the company is about more than making money.

Employee brand engagement isn’t a cure-all – some well-engaged people will still choose to leave. More money, for one, can be a strong draw to leave. But for many, experiencing the connections the brand provides is a more powerful motivator to stay.

Of course, none of this is true if the organization views the brand merely as an expression of what it does. Employee brand engagement requires that the company uses the brand as a tool for driving the business.

Here are some of my writings on that topic:

• gaining the competitive edge
• missing the brand boat
• operationalizing brands with new technologies

The series on brand value creation continues today with a look at how brands create value for companies in their Internal Business Processes.   Although a brand’s ability to create value from the Financial and Customer perspectives is probably the most important, its impact on Internal Business Processes is the most fundamental.

Let me back up a bit.  As a reminder, we’re using the Balanced Scorecard as a framework for identifying all the different ways brands create value for companies.  The Internal Business Processes section of the Balanced Scorecard is intended to help leaders evaluate how well their business is running and whether its products and services conform to customer requirements.

A brand lends itself to such an evaluation if the company has adopted the “brand as business^TM” management approach.

What is the “brand as business” management approach?  It is the deliberate and systematic management of the business around the brand — thinking of the brand as the business.  The “brand as business” management approach is based on using your brand as a management tool, not simply a marketing asset.  It’s about operationalizing your brand — integrating your brand and your core company’s operating system.  (The American Management Association recently published an article of mine which explains “brand as business” in more detail.)

OK.  So that was all to set up the discussion on Internal Business Process brand value creation.  When the “brand as business” management approach is employed, the brand impacts the three primary processes of any business:

• product development
• supply chain management, and
• customer relationship management

– and the resources that drive each.

Processes.  To the business processes themselves the “brand as business” management approach contributes focus, efficiency, and power.

• For example, in the product development process the brand focuses R&D on target requirements and value delivery as articulated in the brand platform.  And the brand is used as a filter at each juncture of the stage-gate process.  Evaluations of the fit and viability of new offerings happen faster and more easily with the brand providing a clear, consistent standard.

A strong brand also reduces the cost of new product introductions and improves the success rate of line extensions, cross-selling, and up-selling by stimulating trial and adoption among existing customers.  As noted in my post on Customer brand benefits, customers are more likely to try a new product if they already have a relationship with the brand.

• In the supply chain management process, a strong brand can give a business more negotiation power with suppliers, manufacturers, and distributors.  Having the upper hand in negotiating inventories, logistics, and payment terms is certainly a desired advantage in the constraints of the current business environment.

• Brands impact the third primary business process, customer relationship management, by helping the company to establish relationships with customers in the first place.  Over time strong brands engender trust, and when customers trust a company, they are willing to give the company information like personal data, insights about needs and preferences, and usage information which enables the company to create better customer contact and service strategies.

Those advantages then help businesses retain customers by fostering relationships which are valued by customers.  And instead of having to rely on instituting switching costs which deter existing customers from defecting to a competitor but which may also pose barriers to customer acquisition, companies with strong brands simply enjoy brand loyalty — which by definition prevents brand switching.

Brands also make customer relationships more profitable — an increase of 5% in loyal customers in some categories delivers 95% greater profitability over a customer’s lifetime, according to brand loyalty expert Robert Passikoff who founded and heads up Brand Keys, a research consultancy specializing in customer loyalty.

Furthermore, Passikoff’s research indicates it takes 7 to 10 times the cost to acquire a new customer as it does to keep an existing one.

Resources.  At the resource level of Internal Business Processes, a brand-driven management approach is about optimization.

• A strong brand optimizes your human resources, for example.  You can experience better results in recruiting because a strong brand attracts a larger and/or better applicant pool.   One fast food restaurant chain experienced a dramatic increase in responses to its help-wanted ads simply by adding visual elements from the brand identity to its advertising.

Companies which employ the “brand as business” management approach use the brand as a means for screening candidates, on-boarding new-hires, and training employees more quickly and effectively.  In “The IBM Way”, former IBM marketing executive Buck Rodgers explains the approach his company adopted, “IBM begins imbuing its employees with its…philosophy even before they’re hired, at the very first interview…Basically, anyone who wants to work for IBM is told:  ‘Look this is how we do business…We have some very specific ideas about what that means.’”

By using the brand to inform, inspire, and equip people, companies produce a workforce that is aligned, focused, and motivated.  In turn such a workforce produces more efficient operations, higher quality output, and increased employee retention.

• A strong brand also optimizes your technology resources and other tangible assets by facilitating relationships with other companies from whom you acquire or with whom you develop these resources.  The greater your brand equity, the more desirable your company is as a customer or partner to these other companies.

Internal business processes and the resources which they draw upon are beneficiaries of a brand that is well-established and well-leveraged.

Make sense?

My next post will be the last in the series — Brand Value Creation — Learning & Growth.  Stay tuned.