An employer brand that motivates, engages and creates value is more important than ever as organisations navigate a flatter economy.

Shalina Poulter, Partner in the Commercial, Sales & Marketing practice at Eton Bridge Partners, and Katrina Stewart, Partner in Executive Search, Human Resources practice, share insights from a recent roundtable breakfast at Fortnum & Mason with senior professionals from the Marketing and People functions, exploring the importance of employer brand in attracting and retaining talent. The discussion centred on the strategic interplay of the marketing and people functions to create a compelling internal brand.

Key takeaways were:

• Finding the ‘soul’ of the business is key to establishing an authentic internal brand.
• Private equity faces specific challenges maintaining brand equity through the deal cycle.
• The slower economy makes a robust internal brand an increasingly valuable asset.
• Governance/ ESG is ever more central to employee decision making.

Finding the ‘soul’ of the business and achieving buy-in

Creating an employer brand that unites people is a powerful driver of retention, performance and recruitment. “Businesses built by lots of small acquisitions need to find the soul,” noted one attendee. But a shared culture must also allow for an element of individual freedom in order to keep motivation high. Our attendees advised focusing on three or four key non-negotiables that are decided centrally with more freedom allowed elsewhere.

An organisation which has an established consumer-facing brand can find it easier to establish a common culture than a business-to-business (B2B) organisation. For example, high street opticians Specsavers has such seamless branding across its stores, you wouldn’t guess it was a franchise.  For B2B organisations looking to build loyalty around a brand, creating this organically from the grassroots, rather than top down, can work best. Initiating a ‘big conversation’ to involve the whole organisation can be a way of making people feel as if they have ownership. “You need to let the history of the business and authentic stories come through; build relationships outside the mini silos,” said one attendee. Identifying the influencers within the organisation and getting them onside with the vision is key; “there’s a real power in turning naysayers into believers,” noted one attendee.

The private equity dilemma: brand equity vs cost reduction

Our attendees noted a specific challenge for private equity (PE) firms managing the employer brand through the deal cycle. Building an internal brand is a long-term project and there can be tension between the 3- to 5-year PE cycle and the ability to invest over the longer term. As the sale date approaches, investment is reined in to enhance the financials and that can put pressure on the internal culture and employer brand buy-in. “If you get to the exit point and you haven’t built that culture, then you will start to struggle,” noted one attendee.

Our attendees felt that employer brand was becoming a more important factor in value creation for PE firms than in the past. Today’s employees are informed and empowered; a robust internal brand and common culture can attract both talent and potential acquisitions to the table. “The value creation piece has shifted – yes the bottom line is always important for PE, but the people side of things has become more important,” noted one attendee. Indeed, one attendee noted a business where the brand equity was so strong it had contributed more to the company’s sale value than the P&L.

Being known for positive people policies can also be an asset for PE firms looking to acquire; if a PE house has a reputation for not caring about the people in the business, it may mean founders are less willing to sell to them. “Founders want their employees to be proud of the brand,” commented one attendee.

A flat economy increases the import of internal brand

Economic headwinds are likely to continue amid fiscal orthodoxy, lacklustre growth and a squeeze on household finances. The CBI is forecasting the UK economy to grow by only 1% this year and the Resolution Foundation thinktank expects the average UK household to be £1,900 worse off by January 2025 compared to December 2019.

In uncertain economic times with relatively flat growth, employees can be more risk averse and less likely to change jobs. The flexibility of the offering to employees has become more important; for example, allowing home working or a hybrid office/remote package. Our attendees felt that a ‘carrot rather than stick’ approach works best; “Don’t design for the underperformers – have the trust and then deal with the minority who aren’t behaving as you expect,” advised one.

Generational differences were also a key topic with our attendees noting the younger generation is more vocal in their wants and needs; “they don’t need ‘permission’ like older generations did.” One attendee pointed out that economic uncertainty can bring opportunity as well as risk and provide time to think about how you can do things differently. “The employer brand piece becomes more important, you’ve got to have the best people around you at times like these so you can get the best ideas.”

ESG is increasingly part of employee decisions

Employees are increasingly aware of governance/ ESG issues. They want to understand how their employer stacks up against their own ethical values, world view and other employers. “People are looking for this before they take the job; it depends on the tone from the top as to whether that person believes in the value of the employer brand or believes they are purely focused on the financials,” noted one attendee.

There can be a disconnect between how committed boards say they are to ESG and what happens on the ground – a case of talking the talk without walking the walk. Tougher economic conditions could also be pushing ESG further down the agenda. But a true commitment to ESG is crucial for retaining internal talent and attracting external talent, particularly from younger applicants. One attendee noted a company who trebled job applications from younger candidates after they had achieved B Corp certification. More than ever, the internal brand is meshing with ESG credentials; employees are asking, “Can I do my best work here, am I proud of what I am doing and does that resonate through the external brand?”

We would like to extend our thanks to all the attendees for a fascinating discussion and for sharing their wealth of experience and insights. Please do get in touch if you would like to discuss your next steps in confidence.