Management 2.0, talent and employer branding

Following up on a post on Authentic organizations by CV Harquail a few weeks ago, I've just come across an excellent article in Management Today (January 2009, pps 50-54) by Simon Caulkin. This short piece has got me thinking about a presentation I'm going to do next week on employer branding. In some previous work, I've been suggesting that the talent management agenda, which was at the heart of firms' desires to brand themselves, is still an important driver, though in a changed form - less concerned with celebrity and individualism and more concerned with building social capital and trust. Caulkin's summary of some work by Julian Birkinshaw and Gary Hamel at the LBS Management Lab and Hamel's recent book on the Future of Management puts some flesh on my arguments and will help re-orient them a little.

To summarise the article, the recent crash has been 'an astounding market failure' (Birkinshaw) and a result of management 1.0 with its focus on incentives, self interest, neglect of risk management and trust relations, all tied to the dominant shareholder value model of the 1980s onwards and the corporate financial models developed and taught in business schools which privileged financial engineering over general management (e.g. Efficient Markets and capital asset pricing). Organizations have been treated as markets for the last thirty years rather than as fulfilling important social functions in society, a business philosophy associated with buying and selling of companies at the drop of a hat, the rise of wealthy individuals and private equity as an dominant ownership model (see Peston's book on Who Runs Britain and some of the later essays in Michael Lewis's collection on 'Panic: the Story of Modern Financial Insanity'), outsourcing, downsizing and, importantly, attributing success to talented individuals, paying them exhorbitant salaries to keep them happy and granting them enormous tax breaks. Nowhere has this been more evident than in financial services, which is why Britains Chancellor of the Exchequer Alistair Darling is seeking to tackle this 'culture' problem as he defines it as a necessary prelude to getting the economy working again. Caulkin cites the growth of M & A activity and the recent but enormous impact of the financial services sector on the British economy, which accounts for around 35% of economic activity now as opposed to 10% thirty years ago, so squeezing out the so-called real economy. Until very recently, it was a case of tails wagging dogs, with managers having to respond to the demands of deal makers, powerful individuals and hedge funds.

Citing Sumantra Ghosal's 2006 article that business schools have been teaching too much self interest and not enough ethics, Hamel and Birkshaw have moved to 're-orient management from compliance to creativity, from flogging efficiencies out of existing resources to generating new ones', from zero sum management to positive sum games. In short, the call is for management 2.0 to focus on innovation and stakeholders rather than costs and shareholders (for a better insight, you might want to read Rakesh Khurana's brilliant book on the transformation of American business schools).

What management 2.0 looks like is detailed in an HBR article (cited in an earlier post) resulting from a conference held at Half Moon Bay, California, in May 2008. This brought together some of the leading managers, thinkers etc in the field. The consensus was that companies needed to articulate a purpose beyond making money (higher values), to ensure distributed leadership and strategy-making (rather than the traditional top-down model), fostering community and citizenship and building trust - none of which are new but speak to the legitimacy dimension of the corporate reputations agenda I've been banging on about for the last so many years.

So what do companies that currently embrace management 2.0 have in common. First, an emphasis on higher values rather than seeing managers as merely hired hands to serve market purposes. Second, to avoid the formulaic thinking imposed by business schools and mimetic, unreflective behaviour of firms; doing things differently and doing different things are the order of the day - the innovation agenda. Third, governance based on internal values and risk assessment needs to be internalised (which is the UK Chancellor's message, the message of prudent banking put out by prime minister Gordon Brown, and the message of our recent chapter on HR's potential contribution to governance). Fourth, the restoration of trust among key stakeholders, a return to the old style pluralistic conception of managers holding ring of competing claims made on the business? Fifth, a preference for old style instrinsic rewards rather than the appeal to greed of recent years (Deci's warning over the perils of extrinsic rewards, and Maslow and Hertzberg revisited? - the longer I'm in this game, the more I see old wine in new bottles and the consequences of yesterday's solutions causing tomorrows problems).

And what does this mean for employer branding, corporate reputations and HR? As we have argued in some recent work and presentations, the talent management agenda is still an important driver but the focus should be as much on social capital and social legitimacy as human capital. I'm also more convinced than ever that employer branding and talent management has to address the innovation agenda and the creation of intellectual capital in organizations. It also has to address the need for surfacing employee voice and challenge to ensure that powerful interests do not dominate in ways that stifle innovation and lead to excess, which is a tall order for those brought up under a management 1.0 regime. So how do we create EVPs and employer brands that achieve these laudible but sometimes competing aims to simulataneously integrate and differentiate?

Recession-proofing Employer Branding

What future for employer branding seems to be all the rage just now in the current recessionary context. The CIPD are developing a conference on this topic in May, which I've been invited to speak at (thanks Anita and Rebecca and hello from down under). As luck would have it, I was doing a presentation yesterday with two colleagues in Sydney - Paul Gollan and Kerry Grigg - for a mixed audience of practitioners and academics, where we outlined some thoughts on this issue plus a future for employer branding that we're currently working on. I'm not the best judge, but I think it went down reasonably well, so the drift of the presentation may be worth sharing with some of the readers of this blog.

The core of my argument and of a new paper we're writing is that employer branding is recession-proof in the sense that it was never only or mainly about talent wars/ talent shortages caused by bouyant economies, though recruiting talented people was and will remain an important driver. Part of the presentation yesterday was that the four drivers of employer branding and its impact on corporate reputations are still relevant in todays recessionary economic circumstances - the need for talent in knowledge economies and knowledge intensive organizations, the long terms demographic problems faced by most economies, the long term decline in employee identification with employers and decreasing levels of trust, and the rise of idiosyncratic careers built around individuals rather than organizations. What has probably changed over the past decade is that employee expectations of good employers have been slowly ratcheted up by organizations engaging in practices such as employer branding/employer of choice schemes from which they will find it difficult to disentangle. Yes, organizations may not be recruiting so much, particularly in financial services, construction, retailing and manufacturing, but the impact of how they cut costs by laying people off and how they continue to create positive internal images for existing employees (particularly those currently being blamed for the mess we're in) will continue to have a major impact on their corporate reputations.

By corporate reputations, I'm referring to some really big ticket issues - corporate branding, corporate governance and corporate social responsibility - which require deft handling to manage the inevitable tensions between the needs of organizations to be simultaneously different through corporate branding and legitimate ( or the same) through the exercise of good governance and social responsibility. In many respects, these are, or should be, the key drivers of strategy and the endgame of good people management. Having just finished reading Robert Peston's excellent book on 'Who Runs Britain', which is an insightful guide to the complex financial engineering 'rocket science and crude incentivization that has been at the heart of the current problems, I'm more convinced than ever of the need for HR and employer branding to address these issues.

However, there is another agenda that places techniques like employer branding centre stage and that is the innovation agenda. We've been writing quite a bit about this recently, but to cut a long story short, good evidence suggests that innovation relies less on investment in human capital (talented individuals) and more on social capital (creating bonding and bridges or social networks) and organizational capital (what's left when people walk out the door at night, e.g. structures, systems, processes and technology etc). If advocates of employer branding and the HR function wants to make an impact, addressing the innovation agenda (wealth creation) in knowledge economies by ensuring that such innovation is socially responsible and well governed (ie. risk managed) is the place to be. Our argument is that employer branding has much to offer in this direction - by helping create the necessary diversity of talent, social capital and social networks needed for innovation. But such branding will only do so if it is authentic and is rid of much of the brandwashing and marketing/communications spin with which it has become associated. And this is where Web 2.0 comes in - these tools have enormous potential for surfacing authentic and challenging employee voices in organizations as well as facilitating collaboration and networking beyond conventional organizations boundaries, both of which are drivers of organizational learning and innovation.

Not everyone agreed with these arguments, so it may be worth a discussion either on this blog or at the events such as the ones that the CIPD and ourselves are running with the IES.

The Changing Context of Employer Branding

This post is prompted by a number of initiatives we're involved in that deal directly or indirectly with the changing context of employer branding (EB) and HR (see next paragraph). It is also prompted by direct communication from a colleague who has just posted an item on 'reverse employer branding' on http://authenticorganizations.com/. This post is definitely worth reading because it points out that the reputation of 'toxic' firms can spillover to their employees, so making them less employable in the future because of their association with the unethical/inept practices of their leaders. This must certainly be a worry to those employees/managers in some of the major UK/US financial institutions that have had to be rescued or allowed to collapse over the last few months.


To return to the initiatives we're lucky enough to be part of (and do a bit of advertising for the Centre), the Chartered Institute of Personnel and Development has just promoted two important initiatives in this field. The first is their 'Shaping the Future' programme, the Scottish edition of which we are launching with them in Glasgow on March 27th with a working lunch for an invited group of HR directors to consider the future of HR in the current economic conditions. The second is an advisory board established by Rebecca Clake of the CIPD to examine the role of EB research in the current recessionary context. In addition to these initiatives, we're also running a one day seminar we're running with the Institute of Employment Studies in Glasgow on EB in changing contexts on April, 16th.


So what does all of this activity add up to? Well, all will have to re-visit EB with a critical hat on because it was largely a product of the talent management agenda and employee shortages of a few years ago. For some people, EB and recruitment were almost synonomous. Therefore, what is the future for EB when talent management takes a downturn?

A few months ago I posted some thoughts on that issue following a series of seminars in Australia, to which I still adhere no matter how deep the recession bites. However, I'm working with two sets of colleagues in Australia and Canada on different projects that may have something more to say about this question. The Australian project, with colleagues from Macquarie (Paul Gollan) and Monash (Kerry Grigg) and supported by ADCORP and other organizations, is examining the impact of EB not only on the talent management/human capital agenda, but also on the creation of social capital (creating strong organizational identities and creating strong bridges/networks among people) and organizational capital (e.g. Web 2.0 - our CIPD report on this comes out in a few weeks). Surprisingly, some excellent research has shown that both of these forms of capital have more of an impact on innovation than human capital/talent. The Canadian/British project is a new book I'm editing with Ron Burke and Cary Cooper on Corporate Repuations for Gower. A key focus of this book is on managing reputation risk, which leads me back to the opening comments on reputation spillover and reverse employer branding. The more I think about this issue, the more important I think it is to investigate. So thanks to CV, the author of Authentic Organizations, for raising this issue. Any comments, experiences, examples would be greatly appreciated to help inform our events and research.

HRs Role in Governance

Been very busy with writing deadlines, so no posts recently. We've just finished writing a chapter for a book edited by Suzanne Young on Corporate Governance, a particularly important issue just now, especially given Gordon Brown's recent criticism of governance in the British financial services sector. We've argued in the past that HR has a key role to play in governance and sometimes a negative one. I'm thinking here of a paper written by Bert Spector in 2002 claiming the HR was the unindicted co-conspiritor in Enron because of its advocacy of a certain brand of McKinsey-style talent management.

Our focus in the chapter, probably quite apposite given the UK Government's 'nationalisation' of some of the UK banks to inject more responsible management (see John Kay's insightful comments on Newsnight last night), is to look at this issue in the public sector, particularly healthcare. To help us think about this issue, we've adapted some excellent work by Jaap Paauwe on four faces of governance and its relationship to risk. Our adaptation, which we have illustrated with material from current research into the Scottish healthcare system, shows how governance of the HR function itself - how it is organized and led - play directly into the 'three pillars of governance' in healthcare. Firstly, it does so by shaping staff governance (or climate governance) - the ways in which staff are encouraged to participate and exercise voice in their organizations. Secondly, staff governance has an obvious and important impact on clinical governance - the balancing of innovation in heathcare with risks to patient safety etc. Innovation is key to creating public value in any 'enterprising' public service, but there are often real risks to innovation that must be governed effectively (the banks have suffered from this because senior managers didn't seem to know what was going on in their innovations in the wholesale banking market for which they were responsible). Finally, clinical and staff governance directly impacts on the third pillar of financial governance, which in turn refracts back on these two other pillars. How NHS boards (with many lay members) are selected, developed and performance managed will have an enormous influence on the management of innovation in healthcare. In turn, the costs and demands by professional for greater innovation will impact on financial prudence among these authorities.

Our key message is that HR at a strategic level has to understand these causal links, and has to manage its own house to make an impact on these three pillars of governance in healthcare and in other industries. All three rely on effective people management, but aren't always seen as part of HRs role. HR should 'step up to the plate' to help make their organizations legitimate as well as different, which are the two central objectives of reputation management. As an aside, a good starting point for understanding the governance problems of the financial services industry would be to read Niall Ferguson's excellent book, 'The Ascent of Money', which was my Xmas reading and why I haven't had time to post

Why Organizations Succeed and Fail: A Corporate Reputations Perspective

For those of us interested in why organizations succeed and fail from a reputation management perspective, one of the books of the year is 'Taking Brand Initiative: How Companies can Align Strategy, Culture and Identity through Corporate Branding'. This book is especially timely because it helps explain important elements of the current crisis of financial services, and also helps us explain some of the problems being experienced in healthcare. The book's authors are two of the best academics in the field - Mary Jo Hatch and Majken Schultz. They have produced a practitioner-oriented work that should be read by all HR, corporate communication, marketing and strategy professionals. The book is based on an ongoing research programme and ideas that first saw the light of day in an article in the Harvard Business Review in 2001, material which we used in our corporate reputations, branding and managing people book. It is also based on an edited book written mainly for academics on organizational identity.

Using this lens and a theory of organizational identity, they restate their well-known idea that organizations should constantly work towards aligning their vision (for being different and legitimate), their image (or reputations among key stakeholders) and culture (how employees and managers think, feel and act) for corporate branding to work and for organizations to be sustainable in the long run. They cite many examples from their own research and the work of others to demonstrate the validity and usefulness of their model, as well as draw on a considerable body of sound theory that should give some comfort and to practitioners and academics alike. Though they don't use financial services companies as examples, their analysis, especially of organizational narcissism, should be required reading for banks worldwide, a line we took in a case in our corporate reputations and HR book questioning the future fitness of the financial services industry in 2006.

Some of the key messages of this book are as follows. First, the 'most successful corporate brands simultaneously communicate belonging and differentiation...' (p. 21), a simple but powerful message that applies to private and public sector organizations, including our current work on the health service which is faced with major difficulties in attracting talent in the longer term, in enaging its current employees and in having a lack of image among employees for being a patient-centred service. They argue that organizations which are able to manage the tensions between integration and differentiation, one of the key paradoxes in business, do so by conducting continuous identity conversations with employees, customers and other stakeholders to create strong organizational identities. These conversations attempt to reconcile the fundamental and ongoing questions of 'who are we' as an organization with 'what is their image of us'. The attendant identity dynamics often result in two different but related dysfunctional states - hyper adaptation and narcissism. The first of these is where organizations are over-reactive to what customers and the media (and sometimes employees) think of them, so they continuously search for 'coolness' and 'cutting edge' instead of having regard for their unique heritage and core competences. The second is where organizations fail to check their internal beliefs against what stakeholders, including employees, think. This is often associated with narcissistic, charismatic leadership, protected from reality by group think, which attributes past success to their own insightful decision-making rather than the often favourable contexts in which such decisions are made - the so-called fundamental attributional error. The limitations of charismatic leadership and problems of narcissism, the subject of a brilliant book by Rakesh Khurana, was behind Enron and other corporate governance distasters, and in also being used to explain the failure of many of our financial services firms in the UK and USA.

A second lesson concerns the valuation of brands (and by implication employer brands). They make an important point in highlighting the limitations of brand valuation models, which, among other problems, ignore the emotional and symbolic effects of brands. As recent research has shown, these are the two most important factors in making employer brands attractive to outsiders and engaging for insiders. To gain real insights into (employer) brand value they argue that brand equity and consumer research models are more appropriate because the uncover and account for symbolism and meanings through ethnographic research into how people (employees) interact with brands and qualitative research into the meaning that brands hold for them. Which is what we have been doing in the health sector in Scotland as a complement to large-scale quantitative research.

A third lesson that is especially important for HR is the nature of the endgame. Long terms effective and sustainable corporate branding is what most organizations are striving to achieve to remain successful. This requires organizations to go beyond (1) first wave branding, which is based on a marketing mindset and is dominated by marketing/communications departments, and (2) second wave corporate mindsets, which attempts to bringing together multifunctional teams of mainly internal stakeholders, but typically ends up being fragmented by incompatible models and mindsets. Instead they posit a third wave notion of enterprise branding, which is an interfunctional and and integrated way of bringing together internal and external stakeholders in the extended entreprise in constant cycles of identity conversations. They also flag the importance of Web 2.0 tools in conducting such conversations, a key message of our recent CIPD research in the field. This imagery of dynamic enterprise-wide conversation cycles is a particulary powerful one because it extends the notion of the corporation and gets us away from the typical brand 'programmatis', which is premised on the artifical notions of beginnings and ends of change. For HR, it also reminds us that employer brands are not the endgame but are merely an input into a continuous conversation of how organizations can remain successful.

The book is not without its shortcomings. In tantalising us with the notion of enterprise branding, I don't think they go far enough in fleshing out what this may look like - maybe they want us to write what we want into this open space? They also seem to misinterpret employer branding to mean recruitment, when it is usually taken to apply to both the attraction of new employees and engagement (read identity management) of existing employees. However, these are minor points and should not detract from an important book which should be read by for all practitioners, particularly chief executives and HR directors, interested in this field.

The Dangers of Branding Leaders (and Roy Keane)

Julie Hodges and myself are in the middle of writing an article on leadership branding, so I was intrigued by a recent post on the Australian HR online magazine (5th December, 2008, HR Daily), which appeared with the headline ‘Strong CEO brand improves candidate attraction and retention’
Citing a study by Minolta in Australia, ' Richard Branson (Virgin), Bill Gates (Microsoft) and Steve Jobs (Apple) are the business leaders Australian workers are most inspired by. Westpac CEO Gail Kelly was the only Australian CEO to make the top five list. Workers were also asked to identify which of the world's biggest companies they would most like to work for. Google topped the list, followed by Microsoft, Virgin, IBM and Apple. Locally based banks Macquarie ANZ, Westpac, followed by BHP Billiton, a mining company, ranked sixth, eighth, ninth and tenth respectively.

This headlining of leaders is further testament to the notion of ‘celebrity firms’ being tied up with celebrity leaders. Violina Rindova, and her colleagues in a 2006 article in the Academy of Management Review entitled ‘Celebrity Firms: The Social Construction of Market Popularity’ argued that a celebrity firm is developed from the media’s search for organizations that symbolize important changes in society by taking bold or unusual actions and which attempt to create distinctive identities. These firms are natural targets for ‘dramatized realities’ created by the business press. Google is one such firm that has become one of the most widely discussed success stories in the business press; also Apple whose products define the industry standard.

Most of the business press coverage focuses on the founders. For example, Google is often reported by referring to Larry Page and Sergey Brin. An Economist article of January 2006 portrays Page as the ‘visionary geek-in-chief', pronouncing at software conferences on the range of new products that will help Google achieve its ambition to ‘organize all the world’s information’. The storyline portrays the firm’s celebrity through Page’s missionary fanaticism, claiming that visitors to Google feel they are in the company of religious zealots rather than ordinary employees. Much the same story could have been written for Apple in the 1980s and, to a lesser extent, for Virgin over the last decade or so.

Though employees and the business press may feel the need to put leaders on a pedestal because of their requirements to find simple solutions to the complex problems of explaining why firms (and football teams!) are successful, are there dangers in doing so, and in having a corporate brand so closely linked to celebrity leaders?

My answer is yes. Much of the academic evidence points out that senior leaders don’t have a major impact on organizational performance. For example, Jeff Pfeffer and Robert Sutton claim that the hard evidence shows the impact of leadership on performance are modest under most conditions, strong under a few conditions, and absent in others. ‘Studies from leaders from large samples of CEOs…, university presidents to managers of colleges and professional sports teams show that organizational performance is determined largely by factors that no individual - including a leader - can control’ (‘Hard Facts, Dangerous Half-Truths and Total Nonsense’ p.192) Like a number of writers in this field, they also point to the dark side of leadership – narcissism, ruthlessness, group think and risky decision-making by people believing themselves to be all powerful. So, is it better to have leadership brands that are less reliant on powerful individuals and more on distributed leadership throughout the organization, i.e. build organization systems and brands where the actions of powerful and skilled individuals matter least. And should leaders act more wisely by knowing when to get out of the way so others can make contributions?

My own football team, Sunderland, provides a dramatic recent example of the problems of celebrity and wise leadership. Roy Keane, its talismanic manager, was over-loaded expectations by success-starved supporters seeking ‘instant pudding’ and a sports press always on the lookout for celebrity stories. Keane acted wisely by resigning when there were no calls for him to do so. He rightly expressed his self-doubt that no sane person could live up to such expectations (and implicit leadership theory –see earlier post) and resigned in as low key a manner as he could. Good for him and a lesson to other leaders (and firms seeking to brand themselves on the basis of individual leaders).

Employer Branding in China

On the last leg of a marathon, which has finished in Beijing. I'm the guest of a joint venture between our centre in Glasgow and a newly established, practitioner oriented research centre in Bejing. The Cente for Employer Branding and Reputation Management is a collaboration between Peking University (the number one university in China), Zhaopin.com (one of the largest recruitment consultants in China) and CCTV, which produces the 'Best Employer in China' awards. Such a coming together of big brands in China is testament to the emerging interest in this concept (somewhat similar to Australia in last blog), as was the three hundred or so HR executives, graduate students and staff who turned up to a conference on the subject where I gave the keynote speech and received a visting professorship from Peking University.


The Chinese project is being led to my long time colleague, ex-PhD student and co-author, Dr Hong Zhang, who is currently editing a book on employer branding in China, due out late next year. My impressions from meeting with colleagues are that employer branding and reputation management are concepts that will take root in this most complex of societies. There are two reasons underlying this prediction. The first is the concern with image and identity, which, according to colleagues, is a major issue with employers in China. Consulting report after consulting report lists image and reputation as major pre-occupations of Chinese CEOs. Part of this interest seems to be a result of a lack of confidence among Chinese companies, and part is due to the second reason - the talent management agenda.


Talent management - attracting, retaining, motivating and engaging people - still remains a major issue in the big cities in China, despite the downturn in economic growth (accurate statistics on this issue are not easy to come by). A recent McKinsey report on talent management in China seems to support this impression, which is also the belief of my new colleagues in the Centre. I'm based in an hotel located in a science and technology centre next to the two big universities in Beijing, which has every big technology company in the world resident on its huge science parks. These companies require talented people and the Chinese universities cannot put them out fast enough; nor can they deliver the right levels of quality to turn this country into the knowledge-based economy in aspires to. As a consequence, Chinese companies are beginning to operate in global labour markets for talent, and its shows. Compared to my first visit fifteen years ago, the number of non-Chinese working over here has grown enormously, so much so that they have begun to locate themselves in the equivalent of 'gated communities'.


This new venture has plenty of interesting questions to ask of employer branding and talent management, and I look forward to helping them.