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September 23, 2018

Working for love or money?

A currency dealer counts Kenya shillings at a money exchange counter in Nairobi /COURTESY
A currency dealer counts Kenya shillings at a money exchange counter in Nairobi /COURTESY

A couple of weeks ago the BBC ran a story about the unusual nuptial arrangements of one young Kenyan couple. Wilson and Ann Mutura had postponed their wedding twice in 2016 because they were unable to raise the $300 fee. They decided to get married in 2017 with the minimum of expense, and have earned plaudits on social media for pursuing "a budget option $1 ceremony" which they attended wearing casual clothes.

The groom spent this money on two low-cost wedding rings, which he produced – amid cheering – during the exchange of vows. Other expenses surrounding the pair's betrothal were instead borne by their church. Online commentators have praised their move, pointing out that modern weddings are becoming increasingly expensive.

This romantic story seems to have captured the attention of many in East Africa. After dating for more than three years, the couple overcame the biggest hurdle in their relationship – money. Wilson told the BBC that his older brother had even advised him to forego the wedding and live with Ann without getting married. But that was not an option for the fruit seller and his fiancée who wanted "a permanent and blessed union".

So, love triumphed over money. And now, from the world of business, comes evidence that the same can happen in the balance between cost of employment and employee value proposition.

We have always known that executives like to be courted by employers who have well-known brands. Now it turns out that some are willing to “pay” for the association by accepting substantially lower compensation.

A team led by Nader T Tavassoli, of London Business School, reached this conclusion after mapping the compensation of 2,717 US senior executives against the brand strength of their firms’ leading products. For details of the study go to https://hbr.org/2015/07/strong-brands-weak-pay.

The effect, the researchers say, can be explained by what psychologists call “identity theory”. CEOs are typically the most prominent members of any organisations, so for them the self-enhancement provided by brand association is particularly attractive. Impact on pay was also very pronounced among younger executives. The researchers think that younger people have had fewer chances to define themselves professionally, so they see an immediate benefit to being identified with a respected brand.

Working for a firm with a powerful brand also signals competence to future employers. We have seen this in East Africa, where managers employed by the big names in brewing, banking and telecoms have often managed to job-hop rapidly to new career heights. However, candid employers will tell you that there have been some expensive mistakes along the way!

Modern companies are increasingly spending time and money trying to become “employers of choice”. A strong brand can do more than help recruit top-quality executives – it can bolster the bottom line by significantly lowering payroll expenses. HR departments should consider making more use of brand strength in building their employee value proposition. It might save them money.

 

 


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