Why brand loyalty matters even more
The blurring of personal & business life
Rumour has it that pregnancies have been postponed and Grannies have been kept alive by artificial means, all to ensure the family is not forced to cancel its customary holiday weeks at the Lorünser in the Alberg. The traditional hotel in the Austrian Alps has created brand loyalty which, unlike the snow, doesn’t melt between seasons.
That allegiance is what companies must attempt to create now to attract and retain talent, amid boundary blurring and changes in investment criteria.
The war for talent in financial and professional services firms is exacerbated by the appeal of Tech, both start-ups and established ones, which market their coolness and their social aspirations. * Meanwhile, the demarcation lines between personal life and business life are blurring on the back of the digital revolution and flexible working. It is no longer acceptable to use the phrase, “Well, that’s business!” when referring to a morally dubious choice.
And investment decisions by millennials, who stand to inherit substantial amounts from their baby boomer parents, are strongly linked to their values. Almost 80% of millennials described themselves as impact investors seeking both financial and social impact returns, according to a study by Toniic, a global investing forum. The sample covered six continents.
In fact, even youth who do not yet have the funds to invest, affect valuations. Witness their current campaign against the ultra-powerful National Rifle Association (NRA) in the US, which has led top investors to explore excluding gun companies from some indices and ask questions about their business models.
What must all companies do: be ahead of the curve. Firstly, the tone does come from the top and, surprisingly for an era of mistrust, trust in the voices of CEOs has increased between 2017 and 2018, according to the Edelman Trust Barometer. The CEOs most important task is to build trust, and they are expected to “take the lead on change rather than waiting for the government to impose it,” according to the report.
The CEO role is a great opportunity, which needs to be allied to specific measures. Get the younger generations of staff involved in policy changes, which will give them a sense of stakeholder ownership, rather like the Lorünser “belongs” just as much to my son as it does to me and my mother, and many, many years ago to my grandfather.
The Austrian hotel, like many of its kind, is a family business, a corporate version of the family. There is a reason the traditional family unit is one of the most successful creations ever. Its inbuilt diversity and inclusion – the toddler and the teenager force you to look at the world differently – is a given in a family business but needs nurturing in the corporate world.
How do you report on matters like the CEO’s increased focus on profit sustainability and a substantial growth in employee engagement and loyalty? A classic set of accounts does not reflect this. Nor does an Environmental, Social and Governance (ESG) report. Instead, integrated reporting is the way forward.
One of the pioneers in Total Contribution reporting is The Crown Estate, a fascinating business which owns real estate assets like most of St James’s in central London, as well as managing the seabed around the UK. The method consists of measuring the impact of six pillars: physical resources, natural resources, financial resources, people, network and know-how, in order to see how the business is creating value for all stakeholders.
The downside of not incorporating ever more responsible business practices is an increase in company risk – not least to the share price. Look at BlackRock CEO Larry Fink’s widely-cited February letter: “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers and the communities in which they operate.”
$6.3 trillion BlackRock itself is deficient in what it what it preaches – 32 governance and stewardship specialists to be doubled in number by 2020 is proportionately smaller than many of its rivals with smaller funds under management – but what matters is that they are reflecting the zeitgeist. And let’s not ignore the undertone of menace from one of the world’s largest investors.
Realistically, companies won’t manage to create the Lorünser experience. But the voyage there will bring them as close as it can, benefitting all stakeholders.
*Note that Big Tech are now known by the acronym FANG (Facebook, Amazon, Netflix, Google), a clear indication that their tax juggling, privacy-gouging practices are starting to affect their brands. In fact, the 2018 Edelman Trust Barometer showed trust in platforms decreased in 21 out of 28 countries compared to 2017.