A STRATEGIC SERVICE VISION FOR EMPLOYEES: THE INTERNAL BRAND

Many service organizations are distinguished from their manufacturing counterparts by the large numbers of people they employ (more than 130,000 at IKEA), who interact with customers as they simultaneously create and deliver services. This absence of a buffer between production and marketing poses significant challenges to those responsible for developing and executing service strategies. Just as customers seek results and solutions, so too do employees. These results and solutions comprise expectations that an employee has for the job. This is one side of what has been termed "the deal."

Prospective employees know who the best employers are. They hear about them from friends, visit websites, and are conscious of favorable or unfavorable publicity. All of this determines the value of what is often called an organization's internal brand. Employers with strong internal brands have to do little recruiting. In a typical year, with little recruiting effort, Southwest Airlines receives more than 200,000 applications for what often turns out to be no more than 5,000 job openings. For the airline's management, the primary task is identifying precisely those who will fit with its operating strategy. In the case of Southwest Airlines, that means identifying prospects who are empathetic to others, Customers and fellow Employees alike, and can work well in teams—because that is the way the organization works.

Organizations that do a good job of focusing on the best talent for themselves accomplish this by enabling prospects to self-select through clear communication of the mission and values of the organization, as well as "how we do things around here." For example, working at IKEA is not for everyone, particularly those seeking to get rich quick. But for those to whom it appeals—often those seeking a structured, cooperative work environment—it is regularly named on lists of best places to work. It has no trouble filling its ranks with those who buy in to the company's mission and reasons to work there, shown in the sidebar.

When an organization fails to deliver on expectations, it can expect reduced employee loyalty, higher turnover, employees who decide to become unionized, or even legal litigation. IKEA has not been exempt from these blemishes, having been charged with practicing mandatory overtime and having faced a vote for unionization in one of its stores. While the company's management appears to have taken corrective action, these are cautionary warnings of the importance of "the deal" and whether or not it is kept.

Notice what IKEA does and does not promise. It promises interesting jobs; an opportunity for personal development and international experience; good, well-selected co-workers with a certain amount of humility; and a large social network, presumably for support. It says nothing about high compensation or perks like reserved parking and an executive dining room. They don't exist. No false expectations are created here.

Organizations that focus on the right talent enable prospective employees to determine whether or not they fit and to opt out early in the orientation process. Zappos.com goes one step further by providing an incentive to opt out, offering a trainee $2,000 to quit during the orientation and training process. Zappos' management assumes that it is a test of a candidate's motivation—and it is worth a lot to avoid hiring the wrong employee. As Richard Fairbank, CEO of Capital One, has said, "At most companies, people spend 2% of their time recruiting and 75% managing their recruiting mistakes." The extra effort to market an organization to talented prospects who are enthusiastic about "the way things are done around here" is equivalent to marketing efforts that focus on customers with specific characteristics and preferences.

How well does IKEA do in delivering on its promises, its service concept for employees? Several clues help us answer this question. IKEA's operating strategy, from the standpoint of its employees, simplifies many of the jobs they perform. For example, the need for selling is minimal. "Story" tags on the merchandise are intended to do much of the selling. This frees employees to spend more of their time in interesting activities like setting up rooms, albeit with rather specific sets of directions.

The warehouse is laid out to provide easy access to merchandise, nearly all of which is boxed and ready to go for easy handling. Equipment is designed for ease of operation and compatibility with the physical facility.

The company's support systems are designed to ensure a steady flow of merchandise to store warehouses so that customers rarely experience the disappointment of a stockout. This increases both sales and the incidence of customer satisfaction that is reflected back on co-workers. The successful delivery of results that this facilitates reinforces positive views among co-workers that IKEA is a good place to work.