Employees can make (or break) a brand

How to build brand equity

Employees’ commitment to a brand increases when they know how they can contribute to brand equity. And management actions – from small issues like free coffee, to large issues like mass layoffs – affect employees’ feelings towards their company/brand. So, an organisation should view almost any employee-related policy or resource decision as a branding issue.

In industries ranging from hotels to insurance to retailing, everyone agrees that customer-focused employees can have a direct impact on their company’s profits. However, a not so well-known fact is that employees also contribute indirectly to the worth of a firm by affecting the brand equity too. Starbucks baristas are a positive example, and rogue traders in financial services are a negative one.

While it is obvious in these cases that employees play a crucial role in delivering brand promises, it is also becoming increasingly evident amongst more business-to-business firms, where employees play an even more crucial role in contributing to a firm’s brand equity.

Furthermore, when employees are seen as ‘elements’ of a brand or as brand ‘ambassadors’, almost any company policy can affect brand equity. So, how can firms improve organisational policies and resource allocation so that employees increase brand equity as well as profits?

Professors Betsy DuBois Gelb (Bauer College of Business, University of Houston) and Deva Rangarajan (Vlerick Business School) have conducted a qualitative study to discover guidelines that could lead to these improvements.

Employees build brand equity

The link between employee actions and brand equity appears to be universal. For example, when brand equity is high, companies are able to charge more than competitors, retain customers despite price-cutting by competitors, and weather bad news such as a product or service failure.

Increasing brand equity involves investing for longer-term contingencies to both build and sustain profit. Thus, every organisation benefits from hiring and training employees to build trust in their brand.

Findings for managers

In their study, the authors interviewed managers representing a range of companies in the United States and in Europe. They asked the managers how employees in their organisations affect brand equity, probing their influence at three levels: the employee population as a whole; groups of customer-facing employees in particular; and one or more key employees, often those in leadership positions.

Here are some key findings:

  • Almost any policy can affect brand equity
    Policies that can influence brand equity cover a broad spectrum of managerial concerns: operations, raw materials, cell phone use, complaint handling, legal action, and even taxes.
    While managers may not immediately relate these areas to branding, those interviewed emphasised that, if such policies are made without considering the consequences for brand equity, they can undermine the efforts of even the most skilled and devoted employees.
  • The employees who matter most are those who make the brand what it is, by cutting costs through supply chain management skills, by delighting customers through face-to-face interactions, by influencing customer desires to match what the brand can in fact deliver, and by creating a brand reputation and a work environment attractive to potential hires who will improve brand equity even more. Managers need to identify these employees.
  • Whether employees are viewed as elements of the brand or as brand ambassadors, they need to know what the brand stands for and how they can contribute to brand equity. They also need the motivation to deliver that contribution.
  • Managers need to provide that motivation. Company policies are one way, and treating employees well so that they treat customers well is vital.

These findings should strongly affect the hiring, training, managing, and evaluating of employees. The tasks for top management are to estimate the long-term consequences of greater brand equity, then to invest not just in the traditional brand-building areas of advertising, event sponsorships or philanthropy, but also in the employees who make the brand what it is.

In summary, an organisation can view almost any employee-related policy or resource decision as a branding investment. The authors maintain that these decisions should include consideration of their effect on brand equity and on the elements that build it – and this, inevitably, includes people.

Source: “Employee Contributions to Brand Equity” – California Management Review; Vol. 56, No. 2: 95-112, Winter 2014. By Betsy DuBois Gelb (Larry J. Sachnowitz Professor of Marketing & Entrepreneurship in the Bauer College of Business at the University of Houston, USA), and Deva Rangarajan (Associate Professor of Marketing at Vlerick Business School and Associated Professor at Ghent University, Belgium).

& Rankings

Equis Association of MBAs AACSB Financial Times Economist Intelligence Unit