Mindstretches® // All in the mind?

Notes from a mindstretch® on brand and the psychological contract


21 June 2005

Present:

After introductions, the session began as usual with a definition of the psychological contract, or PC    and some thoughts about what it meant in practice.   The PC can be transactional in that regardless of the length of relationship with the employer, there are still a set of expectations, usually around pay, and which don't include security (for example, the secondary labour market).

It's when the PC is relational that it starts to bear more resemblance to the idea of brand – when there is an idea of a longer-term relationship and where there is trust and a promise, or promises.

This theme was developed in the next slide.   When consumers experience a loss of faith in a service or product, often they will switch or “bad mouth” it – or just leave. This is a simplified version of what happens when a promise perceived to be part of the PC is broken, as not everyone has the option to leave an organisation. They may stay inside the company and may work against it – or simply not work.

‘The Good, the Bad and the ugly'

Diane's case study was about a mid-size law firm, not part of the Magic Circle but in the top 25 in the UK , with 1200 staff and 130-plus partners.

She explained that as she joined the law firm, it had attracted unfavourable coverage in one of the legal publications, Legal Business , which runs an annual, informal league table, where employees are asked to make comments on their place of work. Changes at the firm had taken place, but internal communication had been poor. While comments had only been made by 16 people, the impact of the report was significant. Working together with the HR director, Diane developed a strategy to improve confidence and commitment internally, and the reputation of the firm externally. The change programme was underpinned by two pieces of research – a tranche of client research and an internal employee survey. This gave the two sides of the picture required to provide the basis for an integrated culture change and marketing strategy to address brand and reputation issues, tied to the firm's vision and business plans.

Internally, the survey assessed and benchmarked views and attitudes about about partners' and staff ambitions for the firm and a number of other key issues including vision and values. For the client research, as well as looking at the performance of the firm, clients were asked to consider what services would characterise the law firm of the future, in order to test out the perceived need for an integrated service proposition. This would focus on the delivery of a broad commercial service, looking at problem solving, rather than the traditional delivery of services by law firms as a series of vertical specialist areas, like employment and property. This was important to encourage teams of lawyers to work together to develop client business, rather than in silos.

The issue for staff was that – particularly following the merger - they wanted clarity about the kind of firm they were working for, what the values of the firm were, and better communication. The internal survey had a good response of more than 60%. The firm was helped in the clarification of the values by an external consultancy.

In this process, staff sat down to talk about the values with partners, and the firm committed to a national plan to address issues. This was a clear indication that senior management was serious about taking action. Diane said that going through the process made a difference to attitudes across the firm.

Diane said that the branding process which involved developing a clear picture of what the firm wanted to become was helpful in making concepts about vision and values easier to grasp. She said that she thought the firm was unusual in that the managing partner and the management board had identified an agenda for change, and were open-minded about how to make this happen. An important part of this process was the development of a firmwide business strategy with detailed plans for all departments of the firm. Commercial and cultural ambitions were integrated.

Having resisted pressures to introduce a new brochure and website when she first arrived, Diane was now able to commission a new corporate identity which reflected the culture and the commercial direction of the firm.

At this point, Adele asked how long it took to embed the values.

Diane responded that this was a continuing process; workshops had initially been run across the firm to make the values ‘live' in the context of team working and working with clients. In particular, a leadership programme for partners had encouraged a commitment to greater ambition for the firm, and to more progressive ways of doing business.

When looking at the progress of the firm since the branding exercise, Diane gave brief details of success measures:

The improvements in communication were in large part due to new team briefing systems. Partners are responsible for developing local and national plans and delivering the changes identified through the staff survey; groups in each of the offices give feedback to management on the implementation of the changes. This communication channel has had a significant positive effect; staff have stopped reporting against the firm. In addition, Diane said that the values were reinvigorating the appraisal system and that the firm was working towards a 360º process. The firm was now more open about financial success measures. The reputation of the firm was very important to the partners in building confidence. The strategy to improve external reputation had been measurably successful; successes had been much more widely recognised internally and in the market place, and this had significantly contributed to the firm's business ambitions.

Karen then suggested some of the elements which came together in the idea of employer branding.   The definition of identification was an individual's desire to associate with the organisation and commitment was defined as a strong belief in, and acceptance of the organisation's goals and values and a willingness to exert effort on behalf of the organisation and maintain organisational membership. A comment was made that many of these concepts seemed to overlap and Karen agreed.

The next slide    caused much discussion. Karen suggested that many employers' promises are made explicit because elements of them appear in job advertisements, but misunderstandings occur because the extent to which, for example, training and development or opportunities for promotion are fulfilled, is rarely stated. Gary made the point that the sort of relationship identified here appeared to be more transactional than anything else and the group talked about the sort of recruitment campaigns which promised applicants more than the basics – for example, the opportunity to make a difference.

When discussing whether it was feasible to talk about “managing” the psychological contract    we talked about the appraisal process as a platform for renegotiation implicitly, if not explicitly. Karen Porter told the group that a new IT-based form of 360º appraisal meant that senior staff in her organisation did not need to talk to anyone about their performance if they didn't want to!

Mahen made the point that this might be appropriate for mature workers who had accepted responsibility for their career and could be expected to act on their own initiative to do something with the feedback. …and after this short digression, we moved on to talk about the importance of the PC    – whether management of it was possible, or not.

The benefits of getting the relationship right between employees and employers are significant, whereas getting it wrong are equally significant.   According to research, the most significant reactions from employees are – not surprisingly - around violations of the PC involving job security. Also not surprisingly, very recent research has indicated that breaches of the PC can lead to increased union commitment and a view of increased union instrumentality. Karen also pointed out that while cynicism is a less specific and more general view of the organisation, a violation of the PC leads to action – withdrawal of OBCs, even sabotage and ultimately, exit.

The discussion moved onto the links between identity and branding     . Studies of the unemployed indicate that the stress caused by not having a job is not wholly financial and that the whole notion of work is tied up with our view of ourselves. In which case, it was suggested, employer branding should speak to the perceived identity of the employees that the organisation is looking to attract. The “matching” of employees and organisations through the sorts of messages delivered by the employer brand should reduce the stress of socialisation – or fitting into the company as a newcomer.

There was some discussion about the ultimate recommendation for employers – which was the staff who worked at the organisation. The Legal Business survey quoted by Diane seemed to be the nearest to “consumer testing” for employees – where people are able to give their views on the organisation they work for. Karen felt that the Times 100 Best Companies to Work For was also an indicator – but that the selection processes seemed a bit ad-hoc.

   – but the prizes for organisation which manage – and deliver – their identity were significant – that a robust psychological contract and employee identification with the organisation increased commitment and satisfaction – and this is a virtuous circle. MORI research from a few years ago said that satisfied employees were five times more likely to be advocates for their employer than other employees.

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