February 23, 2009
Employees Make it, Then Buy it
By Bernice Hurst, Managing
Partner, Fine Food Network
While many companies
worldwide are debating the wisdom of bonuses for employees at all levels,
Panasonic has gone even further. The company is demanding
that they give something back by supporting the business with purchases
of unsold equipment.
The Times in the U.K. carried a report from
its Asia correspondent about the memo sent out to 10,000 Panasonic staff
exhorting them to spend the equivalent of £1,000 (U.S. $1,440) each by
July. Apparently the policy isn’t new, as executives “have been ‘encouraged’
for years to fill their homes with Panasonic goods as a symbol of corporate
loyalty.” As the targets are mostly at management level, a spokesman
said that “the company did not expect refusal rates to be high” despite
the fact that salary and bonus cuts were also announced.
On top of longstanding
policies of encouraging employees to sing company songs and otherwise show
loyalty, Toyota and Fujitsu have also increased pressure on staff, according
to The Times. Some 2,200 of the car company’s top staff have been
praised for buying new cars while Fujitsu’s president sent e-mails to 100,000
staff suggesting that if everyone in the company got together to increase “employee
ownership rates” of Fujitsu PCs and mobile phones “then it will
become a great power.”
Promotions at Sony and
Sharp take the form of discount sales that the story says have involved
a “clear sense of pressure” to be seen supporting the company
by buying its products.
Trying to deal with a
major economic downturn, The Times concludes “even if other
Japanese companies are less aggressive about compelling staff to buy their
products, many are expecting the Japanese corporate tradition of socially
enforced loyalty to kick in and force the issue anyway.”
Discussion
questions: What do you think of policies around encouraging or even requiring
employees to purchase company merchandise? Will seeing a company’s employees
buying its products encourage shoppers to do the same?
BrainTrust
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Discussion Questions
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Much of this has to do with generational disconnects. Older generations have been brought up with employer loyalty as part of their culture. I don’t believe that sentiment runs very deep in today’s younger workers. The challenge is that not all employees have a direct impact on the product’s quality. If manufacturing is offshored, then the worker in the US most likely will have less of a connection to the product. If it is their money, they will buy a product that they feel will be of value, especially if the product is a significant investment. Being loyal to your brand of soda is not the same as being loyal to your employer’s brand of car.
At my employer, although we no longer make our own consumer PCs, we still have an employee purchase program that provides significant discounts on PCs, and the program encourages us to share these discounts with our family and friends. This drives a definite level of loyalty, as I have purchased many PCs through this program.
Encouragement is always a better path than requirement, so perhaps more employers can entice loyalty through more progressive programs.
Any company pressuring their employees to buy and use their products only is a sign of desperation.
No doubt, a large portion of employees who received that mandated email smirked at it…the suggestion, the timing, the money at hand.
I’m sure that email sent out to employees was a sure-fire morale booster.
Encourage, yes. Demand, no. If the company has a superior product then the employees will want to own it. And if the company offers employee discounts and incentives, then they will likely be loyal employees as well as consumers. The key is that they have to believe in the product and company that they work for. If they do, then they will WANT to own the products.
Demanding it is extreme and I do question if that is actually happening. I don’t see how a company can force someone to go out and buy something when they are unaware of each individual’s personal financial situation. I have a hard time with the viability of this report/reporter. I just don’t see it as something possible. I own a company and don’t know how any employer could ever enforce something like that. It’s unrealistic.
Such pressure tactics are not new (either offshore or stateside). Still, the only type of “encouragement” employees receive should come in the form of purchasing incentives, i.e., employee discounts. Requiring, asking or pressuring staff to purchase company goods, however, runs the distinct risk of making willing brand advocates into unhappy, bitter employees–and that can have a very long, negative impact on operations.
These companies may feel their actions here are well intentioned, but a better course of action is to do what other companies are doing: implementing reasoned, cost-saving measures. It might also help to manufacture products that general market consumers actually want.
I haven’t seen any studies that show a relationship between employee requirements and loyalty. I don’t see anything in this offer to make this change.
It is only a great incentive to offer corporate products at a discount to employees. However, if a company has to require their employees to purchase their products, they have greater issues to deal with in terms of product positioning, pricing and quality. Most company employees are proud of their products and support these in many ways, including purchasing them.
Forcing this issue, only demonstrates that there are product weaknesses that the company hasn’t overcome that needs to be addressed. Having employees purchase these products, even to balance inventories is absurd, let alone a foolish position for any company. External product purchases provide critical information for every company on how to purchase and manufacture their products, as well as how to position and price them. Interrupting this information by distorting it through employee purchases only stops the company from realizing the true weaknesses of each product.
It is well documented that loyal employees lead to loyal customers, so this is a very polarizing topic.
Years ago at Macy’s we recognized that employees were indeed great customers but never were we required to make purchases (though the employee discounts were attractive back then).
The Japanese have always done some things very differently and this is not an exception. It’s understandable at the more highly-compensated management levels given the culture but at lower pay scales, it’s problematic.
This really hinges on whether employees see this as being forced to make purchases they don’t want/need or can’t afford, rather than being provided a benefit (incentive) to do so. In the case of the former, it will ultimately backfire and when the job market picks up these will be the first employees out the door. Customers will follow.
Most of the comments so far seem to address management’s responsibility and what they should do–understandable given how the discussion is framed.
But what about employee’s responsibilities to their employers? It doesn’t seem very fashionable to talk about that these days at all.
Mandating that employees spend a certain sum by X date on company products certainly seems like a desperate directive from Panasonic. But is buying a competitor’s product when you have a need “biting the hand that feeds you” for an employee?
Employees should WANT to purchase the products they make and sell. If they don’t, you have problems. And forcing your employees to purchase your products is only likely to make those problems worse.
If its a good product, the employees will buy it anyway. What is described in the article sounds like desperation that in reality nothing but a pay cut. After awhile an employee feels more like a cult member than a worker. That’s why I work for myself. I think this would be terrible for employee morale. Maybe if I worked for a beer and liquor company, I’d be more inclined to comply.
With some companies selling thousands of SKUs, the issue becomes more complicated. For example, one of my clients sells over 15 categories of products with hundreds of SKUs in each, and they are distributed in every tier of retail. Employees dabble in the company’s products, usually through company sample sales (vs. full-price retail) but even so, not one is a head-to-toe, fill-the-house evangelist for the full line of products.
Another curve ball: Many companies knowingly sell cheap, “throw-away” products in high-volume categories for which price is the only consideration. Should employees of these companies be expected to dutifully support products that they know are of inferior quality? I vote for freedom of choice.
I don’t have difficulty with companies requiring their employees to purchase company products. I would hope that those companies give their employees significant discounts.
I would not expect nor want a salesperson at H&M to be wearing clothes from Zara. Or, the General Motors employee to have a Camry in his driveway.
The same goes for a Panasonic employee. What is the message if I visit the Panasonic employee at home and he has a Sony TV or a Bose sound system? It isn’t a matter of corporate loyalty, it is a matter of message.
I do have a problem with the requirement to purchase a certain amount of product. Perhaps, a caveat to that is that the employee can purchase those products at significant discounts and resell them. If I already have a house full of Panasonic products, where do I put the new ones?
Here’s an idea–how about a decree that says Management must first buy the products? Let them spend their money on company items as a sign of good faith and then encourage employees to follow suit. How many of us think that this will happen? If the Management is not willing to do it, why should they expect the employees to make the purchases? Again, a perfect example of what’s wrong with corporate America.
Striving for employee loyalty should be the objective of every employer. But trying to mandate it in most cultures will not work.
Yes in today’s economic times employees may bow to the pressure. But they will remember the instant and will fight back the minute they think they have the upper hand.
Make it a good deal, give them a positive incentive and the program can work. Force them to buy things they don’t need, can not afford, or that are of poor quality is the best way to kill the program and employee morale. Now more than ever companies need motivated employees who will go above and beyond what is required.
I find the words “forced” or “demanding” odd. Encouraging employees to buy your goods makes sense. On top of that the discounts offered are usually very generous. I think these reporters are attempting to make a mountain out of a molehill.
Hasn’t done General Motors much good, has it?
If you produce a superior product and offer employees a good enough discount then it’s in everyone’s best interest for an employee to become a customer. Mutual backscratching.
But if you cut salaries, hours and benefits then try to mandate that everyone buy company products, you’re just a bully that doesn’t deserve to survive tough times.
Success will depend on how it is packaged and presented to employees. An email demanding that I spend $1440 by July is probably not going to get me or my team spending anytime soon. Internal promotions on the other hand may do a better job of opening up the wallet.
I was on a competition shop recently and the store manager scolded a trainee for mentioning a previous purchase at that competitor. ‘You should keep your money in the company’ was the store manager’s comment and I thought to myself, not only are you telling this trainee what to do for 8 hours a day, now you are telling him how to spend his money when he’s not working? Perhaps in Japan but I don’t think the idea will be well received here.
Funny, but I have worked for five producers of food products and still buy their products weekly. No one is forcing me but I guess that I was so impressed with the products that my loyalty remained in force, decades after leaving their employ. I guess that, unless you are in the Peanut industry, most employees are pretty proud of their companies and using the company’s products just becomes second nature.
The best answer so far is encourage, yes–require, no. However, we’re completely missing the cultural view and history that drives the dictate by Panasonic.
Nevertheless, employees make the best ambassadors. However, the comments drive out the wedge formed by current economic situations and the culture that produced the results that we live with today. Sure you can say, “If your employees won’t buy it, why should anyone?” But should they? There’s more to it than the simple question of–should they? The simple answer is yes, definitely they should. However, (there is always that however, isn’t there?) have their companies failed both them as employees and their consumers? This is where the typical loyalty equation between company and employee gets gray.
I hate to always use the auto industry as an example in this type of discussion, yet it is paramount to this very equation. While at the same time that wages and benefits in the industry were skyrocketing, their products and services were failing both the employee and the consumer. Thus, an environment was created where the employees, now financially most capable to support their own company with a loyalty purchase were at the same time buying their first import car. Many bought them in the face of having to park them elsewhere besides the auto company plant parking lot. Imagine being failed to such an extent that you would turn down incredible discounts and purchase your competitor’s product, park a half mile away and walk to your office or place on the line. A tough choice. They made it. Not only a few made this decision, they made it in numbers. Facing the ridicule of their employer, their fellow employees, their community, and the union–they still made it.
Further, the companies’ arrogance failed them in realizing that they had lost their most valuable ambassadors. The employees further lost the connection that if they didn’t buy, few else would either. Both to blame? Sure. But that discussion is even more emotional and beyond a paragraph or two.
This isn’t an easy topic. It’s more than an “it’s a two-way street” discussion. It is, though, the most complete instance when the factors of the ‘value equation’ can be most completely identified. The most complete list of failures and successes can illuminate results stirring emotion either way.
Lastly, no matter how the whole employer/employee relationship shakes out about loyalty, it boils down to neither side can feel harmed. If that can be eliminated, then loyalty becomes easier. Even as an employee and an expected consumer, you are still a consumer. Neither your employer nor a retailer owns your loyalty and makes that decision for you. As a consumer in the end, you give your loyalty by making continuing purchases over other choices. In the end, it could be just that pure.
If you sell great products it pays to give nice discounts to your employees because they’re great marketers for you, on a person-to-person basis. Twisting arms? Not a great tactic to motivate love. Some companies use employee discounts to enhance recruiting and make up for poor cash compensation (airlines, book publishers, restaurants). And what if your company only sells goods and services consumers can’t use (40% discount on aluminum smelting, 25% discount on precision military explosives, 10% discount on colonoscopies)?
The Japanese culture may allow this to transpire without the backlash such actions would have in the US. However, that doesn’t make it any less wrong. This action is nothing less than a forced pay cut which will do nothing but harm the individual employee at a time when they are already taking forced salary reductions. Worst of all, even if the majority of the employees make the forced purchases, it will not be enough to move the needle on Panasonic’s results.
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Much of this has to do with generational disconnects. Older generations have been brought up with employer loyalty as part of their culture. I don’t believe that sentiment runs very deep in today’s younger workers. The challenge is that not all employees have a direct impact on the product’s quality. If manufacturing is offshored, then the worker in the US most likely will have less of a connection to the product. If it is their money, they will buy a product that they feel will be of value, especially if the product is a significant investment. Being loyal to your brand of soda is not the same as being loyal to your employer’s brand of car.
At my employer, although we no longer make our own consumer PCs, we still have an employee purchase program that provides significant discounts on PCs, and the program encourages us to share these discounts with our family and friends. This drives a definite level of loyalty, as I have purchased many PCs through this program.
Encouragement is always a better path than requirement, so perhaps more employers can entice loyalty through more progressive programs.
Any company pressuring their employees to buy and use their products only is a sign of desperation.
No doubt, a large portion of employees who received that mandated email smirked at it…the suggestion, the timing, the money at hand.
I’m sure that email sent out to employees was a sure-fire morale booster.
Encourage, yes. Demand, no. If the company has a superior product then the employees will want to own it. And if the company offers employee discounts and incentives, then they will likely be loyal employees as well as consumers. The key is that they have to believe in the product and company that they work for. If they do, then they will WANT to own the products.
Demanding it is extreme and I do question if that is actually happening. I don’t see how a company can force someone to go out and buy something when they are unaware of each individual’s personal financial situation. I have a hard time with the viability of this report/reporter. I just don’t see it as something possible. I own a company and don’t know how any employer could ever enforce something like that. It’s unrealistic.
Such pressure tactics are not new (either offshore or stateside). Still, the only type of “encouragement” employees receive should come in the form of purchasing incentives, i.e., employee discounts. Requiring, asking or pressuring staff to purchase company goods, however, runs the distinct risk of making willing brand advocates into unhappy, bitter employees–and that can have a very long, negative impact on operations.
These companies may feel their actions here are well intentioned, but a better course of action is to do what other companies are doing: implementing reasoned, cost-saving measures. It might also help to manufacture products that general market consumers actually want.
I haven’t seen any studies that show a relationship between employee requirements and loyalty. I don’t see anything in this offer to make this change.
It is only a great incentive to offer corporate products at a discount to employees. However, if a company has to require their employees to purchase their products, they have greater issues to deal with in terms of product positioning, pricing and quality. Most company employees are proud of their products and support these in many ways, including purchasing them.
Forcing this issue, only demonstrates that there are product weaknesses that the company hasn’t overcome that needs to be addressed. Having employees purchase these products, even to balance inventories is absurd, let alone a foolish position for any company. External product purchases provide critical information for every company on how to purchase and manufacture their products, as well as how to position and price them. Interrupting this information by distorting it through employee purchases only stops the company from realizing the true weaknesses of each product.
It is well documented that loyal employees lead to loyal customers, so this is a very polarizing topic.
Years ago at Macy’s we recognized that employees were indeed great customers but never were we required to make purchases (though the employee discounts were attractive back then).
The Japanese have always done some things very differently and this is not an exception. It’s understandable at the more highly-compensated management levels given the culture but at lower pay scales, it’s problematic.
This really hinges on whether employees see this as being forced to make purchases they don’t want/need or can’t afford, rather than being provided a benefit (incentive) to do so. In the case of the former, it will ultimately backfire and when the job market picks up these will be the first employees out the door. Customers will follow.
Most of the comments so far seem to address management’s responsibility and what they should do–understandable given how the discussion is framed.
But what about employee’s responsibilities to their employers? It doesn’t seem very fashionable to talk about that these days at all.
Mandating that employees spend a certain sum by X date on company products certainly seems like a desperate directive from Panasonic. But is buying a competitor’s product when you have a need “biting the hand that feeds you” for an employee?
Employees should WANT to purchase the products they make and sell. If they don’t, you have problems. And forcing your employees to purchase your products is only likely to make those problems worse.
If its a good product, the employees will buy it anyway. What is described in the article sounds like desperation that in reality nothing but a pay cut. After awhile an employee feels more like a cult member than a worker. That’s why I work for myself. I think this would be terrible for employee morale. Maybe if I worked for a beer and liquor company, I’d be more inclined to comply.
With some companies selling thousands of SKUs, the issue becomes more complicated. For example, one of my clients sells over 15 categories of products with hundreds of SKUs in each, and they are distributed in every tier of retail. Employees dabble in the company’s products, usually through company sample sales (vs. full-price retail) but even so, not one is a head-to-toe, fill-the-house evangelist for the full line of products.
Another curve ball: Many companies knowingly sell cheap, “throw-away” products in high-volume categories for which price is the only consideration. Should employees of these companies be expected to dutifully support products that they know are of inferior quality? I vote for freedom of choice.
I don’t have difficulty with companies requiring their employees to purchase company products. I would hope that those companies give their employees significant discounts.
I would not expect nor want a salesperson at H&M to be wearing clothes from Zara. Or, the General Motors employee to have a Camry in his driveway.
The same goes for a Panasonic employee. What is the message if I visit the Panasonic employee at home and he has a Sony TV or a Bose sound system? It isn’t a matter of corporate loyalty, it is a matter of message.
I do have a problem with the requirement to purchase a certain amount of product. Perhaps, a caveat to that is that the employee can purchase those products at significant discounts and resell them. If I already have a house full of Panasonic products, where do I put the new ones?
Here’s an idea–how about a decree that says Management must first buy the products? Let them spend their money on company items as a sign of good faith and then encourage employees to follow suit. How many of us think that this will happen? If the Management is not willing to do it, why should they expect the employees to make the purchases? Again, a perfect example of what’s wrong with corporate America.
Striving for employee loyalty should be the objective of every employer. But trying to mandate it in most cultures will not work.
Yes in today’s economic times employees may bow to the pressure. But they will remember the instant and will fight back the minute they think they have the upper hand.
Make it a good deal, give them a positive incentive and the program can work. Force them to buy things they don’t need, can not afford, or that are of poor quality is the best way to kill the program and employee morale. Now more than ever companies need motivated employees who will go above and beyond what is required.
I find the words “forced” or “demanding” odd. Encouraging employees to buy your goods makes sense. On top of that the discounts offered are usually very generous. I think these reporters are attempting to make a mountain out of a molehill.
Hasn’t done General Motors much good, has it?
If you produce a superior product and offer employees a good enough discount then it’s in everyone’s best interest for an employee to become a customer. Mutual backscratching.
But if you cut salaries, hours and benefits then try to mandate that everyone buy company products, you’re just a bully that doesn’t deserve to survive tough times.
Success will depend on how it is packaged and presented to employees. An email demanding that I spend $1440 by July is probably not going to get me or my team spending anytime soon. Internal promotions on the other hand may do a better job of opening up the wallet.
I was on a competition shop recently and the store manager scolded a trainee for mentioning a previous purchase at that competitor. ‘You should keep your money in the company’ was the store manager’s comment and I thought to myself, not only are you telling this trainee what to do for 8 hours a day, now you are telling him how to spend his money when he’s not working? Perhaps in Japan but I don’t think the idea will be well received here.
Funny, but I have worked for five producers of food products and still buy their products weekly. No one is forcing me but I guess that I was so impressed with the products that my loyalty remained in force, decades after leaving their employ. I guess that, unless you are in the Peanut industry, most employees are pretty proud of their companies and using the company’s products just becomes second nature.
The best answer so far is encourage, yes–require, no. However, we’re completely missing the cultural view and history that drives the dictate by Panasonic.
Nevertheless, employees make the best ambassadors. However, the comments drive out the wedge formed by current economic situations and the culture that produced the results that we live with today. Sure you can say, “If your employees won’t buy it, why should anyone?” But should they? There’s more to it than the simple question of–should they? The simple answer is yes, definitely they should. However, (there is always that however, isn’t there?) have their companies failed both them as employees and their consumers? This is where the typical loyalty equation between company and employee gets gray.
I hate to always use the auto industry as an example in this type of discussion, yet it is paramount to this very equation. While at the same time that wages and benefits in the industry were skyrocketing, their products and services were failing both the employee and the consumer. Thus, an environment was created where the employees, now financially most capable to support their own company with a loyalty purchase were at the same time buying their first import car. Many bought them in the face of having to park them elsewhere besides the auto company plant parking lot. Imagine being failed to such an extent that you would turn down incredible discounts and purchase your competitor’s product, park a half mile away and walk to your office or place on the line. A tough choice. They made it. Not only a few made this decision, they made it in numbers. Facing the ridicule of their employer, their fellow employees, their community, and the union–they still made it.
Further, the companies’ arrogance failed them in realizing that they had lost their most valuable ambassadors. The employees further lost the connection that if they didn’t buy, few else would either. Both to blame? Sure. But that discussion is even more emotional and beyond a paragraph or two.
This isn’t an easy topic. It’s more than an “it’s a two-way street” discussion. It is, though, the most complete instance when the factors of the ‘value equation’ can be most completely identified. The most complete list of failures and successes can illuminate results stirring emotion either way.
Lastly, no matter how the whole employer/employee relationship shakes out about loyalty, it boils down to neither side can feel harmed. If that can be eliminated, then loyalty becomes easier. Even as an employee and an expected consumer, you are still a consumer. Neither your employer nor a retailer owns your loyalty and makes that decision for you. As a consumer in the end, you give your loyalty by making continuing purchases over other choices. In the end, it could be just that pure.
If you sell great products it pays to give nice discounts to your employees because they’re great marketers for you, on a person-to-person basis. Twisting arms? Not a great tactic to motivate love. Some companies use employee discounts to enhance recruiting and make up for poor cash compensation (airlines, book publishers, restaurants). And what if your company only sells goods and services consumers can’t use (40% discount on aluminum smelting, 25% discount on precision military explosives, 10% discount on colonoscopies)?
The Japanese culture may allow this to transpire without the backlash such actions would have in the US. However, that doesn’t make it any less wrong. This action is nothing less than a forced pay cut which will do nothing but harm the individual employee at a time when they are already taking forced salary reductions. Worst of all, even if the majority of the employees make the forced purchases, it will not be enough to move the needle on Panasonic’s results.