Company Values and Employment Branding: Alignment and Engagement American Marketing Association March 24, 2009 Rick Garlick, Senior Director of Consulting and Strategic Implementation, Maritz Research

The Importance of Values Brands represent a value proposition to both employees and customers. Corporate values inform the mission of the company. Just as customers seek out companies that represent the values that are important to them, so do employees. Employees are more engaged when they share their companies’ values. To the extent that employees are aligned behind their companies’ core values, the more motivated they are to deliver the promised brand experience to customers.

The Current State of Value Alignment Only one-in-ten (12%) of North American employees ‘strongly agree’ that their values and their companies’ values are ‘completely consistent’ Twice as many actively disagree

The Study Maritz conducted a full-blown study to understand Which workplace values are most important to employees? How do company values impact how employees do their jobs? Which values are most important to attract and retain talent? How do company values impact customers? How do values relate to company profitability?

The Study 1478 full-time employees 18 years or older Work 30+ hours or more per week Not self employed Wide variety of business sectors Conducted online Panel provided sample Wide range of questions 65 total questions surveying attitudes toward employer

The Study Each person was also shown 26 ‘value’ statements. ‘Q-Sort process Asked to select which three value statements most and least represented the values they most associated with their company. Process was repeated for ‘next most’ and ‘next least’ important statements until all values were categorized. Cluster segmentation analysis was performed to profile each person into a ‘value segment’. Segments examined both ‘important’ and ‘unimportant’ values

Values Segments Values tended to cluster into four themes - ‘4 Ps’ Profit-oriented values Driving profit for the company and stakeholders Being entrepreneurial Being driven to succeed Competitiveness Being the best in the business Productivity-oriented values Taking initiative Fostering teamwork Innovativeness Efficiency Hard work Operational effectiveness

Values Segments (cont’d) Principle oriented values Being open in communication Fairness Caring and concern for employees Respect Trust Honesty and integrity Having high ethical standards Doing the right thing at all times Strong commitment to customer service Progressive oriented values Being environmentally responsible Having a commitment to diversity Being socially responsible Adaptability

Segment 1: High Profit-Focus; Low Principle-Focus (16%)- ‘Win at Any Cost’ Most defining values are Driving profit for the company and stakeholders Competitiveness Being entrepreneurial Operational effectiveness Being driven to succeed Least defining values are Honesty and integrity Having high ethical standards Caring and concern for employees Fairness Trust Respect

Segment 2: High Progressive-Focus; Low Profit-Focus (16%)- ‘Social Progressives’ Most defining values are Adaptability Being environmentally responsible Having openness in communication Fairness Commitment to diversity Least defining values are Being the best in the business Having a strong commitment to customer service Driving profit for the company and stakeholders Being driven to succeed Competitiveness

Segment 3: High Principle-Focus; Low Profit-Focus (15%)-’Always Do the Right Thing’ Most defining values are Honesty and integrity Doing the right thing at all times Having high ethical standards Respect Caring and concern for employees Least defining values are Driving profit for the company and stakeholders Competitiveness Being the best in the business Being driven to succeed Being entrepreneurial

Segment 4: High Profit-Focus; Low Progressive-Focus (14%)-’The Traditionalists’ Most defining values are Driving profit for the company and stakeholders Being the best in the business Running efficiently Being driven to succeed Competitiveness Least defining values are Being socially responsible Being environmentally responsible Having a commitment to diversity Openness in communication Adaptability

Segment 5: High Principle-Focus, Low Productivity- Focus (14%)-’People and Customers First’ Most defining values are Caring and concern for employees Honesty and integrity High ethical standards Doing the right thing at all times Having a strong commitment to customer service Least defining values are Operational effectiveness Efficient Adaptability Competitiveness Innovativeness

Segment 6: High Profit/Progressive-Focus; Low Productivity/ Principle-Focus (13%)-’A Cause for a Profit Purpose’ Most defining values are Driving profit for the company and stakeholders Competitiveness Commitment to diversity Being socially responsible Being driven to succeed Least defining values are Efficiency Operational effectiveness Caring and concern for employees Fairness Honesty and integrity

Segment 7: High Productivity-Focus; Low Profitable/ Progressive/Principle-Focus (13%)-’Quality and Efficiency’ Most defining values are Operational effectiveness Being the best in the business Strong commitment to customer service Efficiency Innovativeness Least defining values are Driving profit for shareholders Being entrepreneurial Doing the right thing at all times Being environmentally responsible Fostering teamwork

Which Values are ‘Best’? For ‘engaging’ employees? For attracting and retaining employees? For improving service quality? For driving profit?

Engaging Employees Four engagement questions Overall, I am completely satisfied with my job. I would be very happy to spend the rest of my career with my present company. I would strongly endorse my company to friends and family as a great place to work. I look forward to coming to work every day.

Engaging Employees Segment Average % ‘Strongly Agree’ for four items Average % ‘Disagree’ for four items ‘Always Do the Right Thing’ (15%) 28% 7% ‘People and Customers First’ (14%) 27% 10% ‘Quality and Efficiency’ (13%) 18% 14% ‘Social Progressives’ (16%) 21% ‘The Traditionalists’ (14%) 12% ‘A Cause for a Profit Purpose’ (13%) 9% ‘Win At Any Cost’ (16%) 6% 43%

Attracting and Retaining Employees Did the brand image and reputation of your company influence your decision to work there? % ‘Yes’ ‘People and Customers First’ (15%) 46% ‘Social Progressives’ (16%) 40% ‘A Cause for a Profit Purpose’ (13%) ‘Always Do the Right Thing’ (15%) 39% ‘Quality and Efficiency’ (13%) 36% ‘The Traditionalists’ (14%) 35% ‘Win at Any Cost’ (16%) 31%

Attracting and Retaining Employees Of ‘Boomers’ who chose a company based on brand reputation, 22% chose a ‘People and Customers First’ company; while only 7% chose a ‘Traditionalist.’ Of ‘Gen X-ers’ who chose a company based on brand reputation, 18% chose a ‘Social Progressive’ company; 10% chose a ‘Quality and Efficiency’ company. Of ‘Gen-Yers’ who chose a company based on brand reputation; 21% chose a ‘Social Progressive’; however, only 8% chose a ‘Cause for a Profit Purpose’ company.

Attracting and Retaining Employees Additional questions related to retention I am proud to work at my company. If I had the chance to do the same work at the same pay for a different company, I would stay here The pay I receive at my company is fair for the work I perform.

Attracting and Retaining Employees ‘I am proud to work for my company’ % ‘Strongly Agree’ % ‘Disagree’ ‘Always Do the Right Thing’ (15%) 44% 3% ‘People and Customers First’ (14%) 41% 2% ‘Quality and Efficiency’ (13%) 29% ‘Social Progressives’ (16%) 23% 8% ‘The Traditionalists’ (14%) 19% 6% ‘A Cause for a Profit Purpose’ (13%) 12% 10% ‘Win at Any Cost’ (16%)

Attracting and Retaining Employees ‘If I had the chance to do the same work at the same pay for a different company, I would stay here’ % ‘Strongly Agree’ % ‘Disagree’ ‘People and Customers First’ (14%) 45% 6% ‘Always Do the Right Thing’ (15%) 44% ‘The Traditionalists’ (14%) 28% 13% ‘Quality and Efficiency’ (13%) 27% 14% ‘Social Progressives’ (16%) 24% 19% ‘A Cause for a Profit Purpose’ (13%) 12% 23% ‘Win At Any Cost (16%) 11% 42%

Attracting and Retaining Employees ‘The pay I receive at my company is fair for the work I perform.’ % ‘Strongly Agree’ % ‘Disagree’ ‘Always Do the Right Thing’ (15%) 19% 18% ‘People and Customers First’ (14%) 17% ‘Quality and Efficiency’ (13%) 14% 26% ‘The Traditionalists’ (14%) 10% 22% ‘Social Progressives’(16%) 9% 31% ‘A Cause for a Profit Purpose’ (13%) 7% 30% ‘Win At Any Cost’ (16%) 5% 45%

Values and Customer Service Two items used to evaluate the quality of customer service How much do you enjoy interactions with your company’s customers? (customer affinity) Our customers would rate the service we deliver as “excellent.” (service quality)

Values and Customer Service ‘How much do you enjoy interactions with your company’s customers?’ % Who ‘Very Much’ Enjoy Customer Interactions ‘Always Do the Right Thing’ (15%) 61% ‘People and Customers First’ (14%) 55% ‘Quality and Efficiency’ (13%) ‘Social Progressives’ (16%) 50% ‘The Traditionalists’ (14%) 48% ‘Win at Any Cost’ (16%) ‘A Cause for a Profit Purpose’ (13%) 42%

Values and Customer Service ‘Our customers would rate the service we deliver as excellent.’ % ‘Strongly Agree’ % ‘Disagree’ ‘People and Customers First’ (14%) 29% 4% ‘Always Do the Right Thing’ (15%) 27% 5% ‘Quality and Efficiency’ (13%) 21% ‘The Traditionalists’ (14%) 17% 11% ‘Social Progressives’ (16%) 12% 16% ‘A Cause for a Profit Purpose’ (13%) 7% 18% ‘Win At Any Cost’ (16%) 6%

Values and Profitability In a study such as this, it is difficult to connect an individual’s perception of his/her company’s values to actual company performance. However, responses to the item ‘If I could, I would invest my own money in my company’ have been consistently linked to company profitability in proprietary studies. Key question: Does emphasizing profitability as a core value actually lead to greater profitability?

Values and Profitability ‘‘If I could, I would invest my own money in my company’ % ‘Strongly Agree’ % ‘Disagree’ ‘People and Customers First’ (14%) 26% 9% ‘Always Do the Right Thing’ (15%) 20% 14% ‘Quality and Efficiency’ (13%) 18% 22% ‘The Traditionalists’ (14%) 16% 23% ‘Social Progressives’ (16%) 15% 28% ‘A Cause for a Profit Purpose’ (13%) 6% 33% ‘Win At Any Cost’ (16%) 47%

Value Alignment To what extent are employee values aligned with the companies for whom they work? ‘My company’s values are completely consistent with my own values.’ (value alignment item)

Value Alignment ‘My company’s values are completely consistent with my own values. % ‘Strongly Agree’ % ‘Disagree’ ‘People and Customers First’ (14%) 26% 7% ‘Always Do the Right Thing (15%) 25% ‘Quality and Efficiency’ (13%) 14% ‘Social Progressives’ (16%) 11% 20% ‘The Traditionalists’ (14%) 17% ‘A Cause for a Profit Purpose’ (13%) 2% 30% ‘Win At Any Cost’ (16%) 46%

Summing it Up Being a highly principled company is critically important for success in any/every area (e.g., attracting talent, engaging employees, being profitable, etc.) Companies that only emphasize making a profit at the exclusion of having any other higher order values seem doomed for extinction. If a company engages in ‘socially progressive’ activities, but doesn’t demonstrate any real moral commitment behind those principles, it will realize few tangible benefits. Being a ‘socially responsible company’ will help attract talent, but will not sustain employee engagement for the long-term, unless these initiatives are undergirded by solid ‘people principles’.

Q & A?

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