How Treating Employees Well Boosts Brand Value

Chobani and Starbucks lead the way

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This election season is putting issues like the fight for a higher minimum wage front and center, shining a light on how corporations treat their workers. And what's become clear is those companies that take care of their employees—and let their customers know about it—stand to boost their brand value.

According to Andrea Sullivan, CMO at Interbrand, consumers' purchase consideration for both b-to-b and b-to-c brands is higher—and they're willing to pay more—if a company treats its employees well. Eighty-four percent of consumers consider a company's social commitments, including employee treatment, before deciding what to buy or where to shop, and 82 percent consider them when it comes to which products and services to recommend to friends, according to a 2015 study on global corporate social responsibility (CSR) by Cone Communications.

"Branding used to be about what's happening outside of your door, but, increasingly, about 75 percent of the work that brands do is more squarely focused on how they get the greatest performance out of their employees, and how they lessen the gap between the executives and the front line [employees]," Sullivan said.

Some companies, like Chobani, are literally sharing their wealth with their workforce. In April, the company's CEO, Hamdi Ulukaya, introduced a growth-sharing plan that gives full-time employees units that are worth around 10 percent of the company if it is sold or goes public.

"It's always been Hamdi's dream for Chobani's success to be shared across the company," said Michael Gonda, vp of corporate communications at Chobani. "People love to see a company stick to its roots and its values. The announcement made our fans really delighted, and it became an indication of businesses being a force for good. In today's environment, that's a very powerful thing."

The earned media Chobani gained from the move likely will endear the brand to more consumers, said Max Lenderman, CEO of School, a nonprofit agency that is part of the Project: WorldWide network. "When the Chobani piece came out, it seemed like every single news outlet carried that for 24 hours. It's very hard to buy that kind of exposure," he said. "And when Chobani goes into CSR mode or creates a cause campaign around a new product launch, they have that much more credibility now because they have this bedrock of consumer perception that this is a company that strives to do good. They're walking the walk."

Similarly, Starbucks has benefitted from its long history of employee-friendly policies. While most retail companies set health insurance eligibility at 30 or 35 hours per week, Starbucks has offered health insurance to part-time employees working an average of 20 hours per week since 1988. Starbucks also pays for college tuition for full- and part-time employees through the Starbucks College Achievement Plan, a partnership with Arizona State University, which launched in 2014. Eighty-seven percent of the company's brand affinity is driven by the way Starbucks treats its employees, according to a 2014 Starbucks customer survey.

"When we do the right thing for our employees, it's also the right thing for our business," said Corey duBrowa, svp of global communications at Starbucks. "When employees are satisfied and engaged, the result is deeper customer connections and an elevated customer experience."

Indeed, better customer service, and by extension higher brand loyalty, often is a byproduct of treating workers well, said Lisa Manley, evp at Cone Communications. "It's a virtuous circle. When your employees feel more engaged, they're happier and more loyal, and that's automatically going to translate to the service they're providing your customers."

And focusing on employee well-being stacks up well against other CSR efforts, Lenderman said. "When corporations fund disaster relief efforts in Sri Lanka or AIDS eradication in Africa, a lot of people say, 'Why can't they do something closer to home?' These employee programs are as close to home as you can get," he said.

This story first appeared in the May 16, 2016 issue of Adweek magazine.

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@ChristineBirkne Christine Birkner is a Chicago-based freelance writer who covers marketing and advertising.