Frequent corporate missteps have hit the headlines recently in the traditional press, not to mention social media channels where numerous cringe-worthy incidents are shared around the globe in a matter of minutes. No industry is immune: the airline, automotive, accounting, pharmaceutical, banking, broadcast, and transportation network industries have all been in the hot seat most recently. In situations like these, PR crisis specialists are typically called in to handle the aftermath and to minimize the harm done to the customer brand.
What’s often overlooked, however, is the damage such actions inflict on what’s known as the employer brand. The employer brand is “essentially what the organization communicates as its identity to both potential and current employees. It encompasses an organization’s mission, values, culture and personality. A positive employer brand communicates that the organization is a good employer and a great place to work.” (Source: SHRM)
Since the employer brand is inextricably tied to the external customer brand, hoping that you’re going to solve a crisis by focusing only on the external front is short-sighted and can be lethal to the whole enterprise.
It follows that, in times of crisis, organizations also deal with all possible repercussions on their employer brand because, ultimately, corporate values are at stake. Everyone understands that, short of large scale intentional institutional corruption, individual employees can be dishonest, mistakes are often made, and even the best-intentioned policies can backfire. But how the organization deals with the crisis, from admitting wrongdoing to apologizing and offering restitution, is a reflection of its core values – most notably, its integrity. A real or perceived betrayal of integrity will always have a negative impact on both the ability to recruit and retain talent.
The Ramifications on Recruitment
In most industries today, it’s a seller’s (candidate’s) market, and great candidates have lots of options. This is especially true for positions in upper echelons and/or when there is a need to hire executives with very specific skills. Considering (as reported by Hunt Scanlon, April 17, 2017) CareerBuilder’s forecast that 45 percent of U.S. employers plan to hire full-time, permanent employees in the second quarter, recruiting top talent is becoming an even greater challenge. In a dramatic reversal from just a few years ago, candidates today have many choices — including staying put in their current jobs — and don’t want to associate their personal brand with an employer that has a real or perceived issue with integrity.
In fact, job seekers, many of whom experienced professional stagnation during the recession, are far more concerned with their own personal brands than ever before. They want to make wise career moves by working for industry leaders whose names will amplify their social media profiles, rather than detract from them. Candidates today can and will evaluate your company’s reputation not just by scanning the headlines in the Wall Street Journal but through their personal experience as a customer, via online reviews by current employees (Glassdoor.com alone has 22 million members and data on nearly 300,000 companies in 190 countries) and through reference-checking via their professional networks.
As a result, we see a lot more candidates opting out of active discussions when they feel that working for a particular organization, because of its reputation, or perceptions formed during the interview process, will taint their resume and make it more difficult to find their next position.
The Ramifications on Retention
As far as retention, workers as a whole aren’t particularly engaged at work. The most recent report by Gallup shows that 51 percent of U.S. employees say they are actively looking for a new job or watching for openings.
The situation is even more critical in the ranks of up-and-coming employees, especially when you consider the cultural attributes of younger generations. Seventy-one percent of millennials, according to Harvard Business Review, are either not engaged or actively disengaged at work, making them the least engaged generation in our domestic workforce. Culture and values have a very different meaning for millennials than they do for generations before them in the workplace, and many will depart their jobs if they view their employer’s actions, responses to issues, and overall agendas inconsistent with stated corporate values and/or their own personal values.
We see strong evidence of this in the proliferation of contract workers and independent consultants. Employees no longer consider that they work for “the company” as they did in the past; this generation’s perception of their employment experience is that they work for the client, their colleagues, and their boss and they are constantly checking that all are aligned with their sense of culture and values.
What You Can Do
While not all-encompassing, here are several action steps those readers associated with the HR function can take:
First, routinely evaluate your employment and HR operations from top to bottom to analyze risk and do as much as possible to make sure that they are scandal-proof. Admittedly, there are no guarantees that something bad can’t occur. But pay particular attention to policies that have the potential to lead to bad behaviors. Compensation practices, for instance, motivated a prominent bank’s frontline office staff to open up over two million bogus customer accounts. As part of your risk management process, also focus on the assessment of people, by, for example, conducting iron-clad independent background checks as part of your hiring process.
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Second, don’t just establish a whistleblower policy, enforce it. Companies have come a long way in establishing formal processes on reporting fraud, unethical behavior and violations of company standards and policies but much more can be done particularly in terms of making employees feel safe in stepping up and reporting malfeasance. Having a stated whistleblower policy without a safe environment for disclosures is just as bad as not having one at all.
Third, practice reputation management at the recruitment level by keeping your ear to the ground so you know what is being said about working for you. Executive recruiters can be a good source of real-time data on how your brand is perceived in the market. Candidates themselves are a good barometer to measure how your employment brand stacks up against those of your competitors. Also use exit interviews to understand why your organization may be losing good people.
Fourth, recognize the role your own employees play when it comes to your organizational reputation. With social media, employees can make or break company reputations. The ever-growing number of “best places to work”-type surveys can help you attract and retain people but striving for a high ranking by gaming these surveys (not an uncommon practice) is a meaningless achievement unless the survey reflects reality in your workplace. Integrity matters.
Fifth, be prepared to act if something bad does happen. Get involved in the management of the crisis to ensure that none of the actions can do further damage to your brand. Don’t hope that the issue will “go away” on its own as one news organization recently did by paying out $13 million in sexual harassment settlements on behalf of its star, only to ultimately fire him anyway after advertisers fled the network.
Integrity Starts at the Top
Many of you probably, like me, grew up with parents telling you, “Stay out of trouble.” Rule No. 1 for mitigating a reputation crisis is to be sure your organization acts with integrity all of the time. No exceptions.
This takes leaders who understand that building organizational value starts with core values. In fact, Ethisphere claims that the reputation of a CEO contributes nearly half (49 percent) of a company’s reputation which, in turn, is deemed to contribute to 60 percent of a company’s market value. According to Weber Shandwick, CEO reputation also attracts (77 percent) and retains (70 percent) employees. Their research also shows one out of every two executives (50 percent) say that their CEO’s reputation impacted their decision to accept the position, and 58 percent say it keeps them at the company.
As John G. Blumberg, author of Return on Integrity: The New Definition of ROI and Why Leaders Need to Know It writes about integrity: “It yields a return like no other investment can make. When integrity becomes a part of our culture at work, alignment becomes natural. Engagement becomes authentic. Service becomes genuine. And, collectively, these return a better performance with better results.”
In summary, despite implementing best practices related to regulatory compliance and risk management, organizations will still encounter significant issues when integrity is in short supply within their corporate culture. This requires a need to shift the focus away from technical, rules-based standards toward a more values-based approach. Values-based approaches mean that not only will organizations comply with all applicable technical rules and reporting guidelines but with the spirit or intent of the company’s mission, vision, and values. That, in turn, will help them attract, hire, and retain the best.