Managing Identity: Buying Into the Brand at Work

Marion Crain | 95 Iowa Law Review 1179 (2010)

Employment has shifted from a relatively stable and secure relation in which shareholders bore the risks associated with the market and firms buffered the risks vis-à-vis workers to a dynamic relation characterized by employment insecurity and individual responsibility. Modern businesses face new management challenges stemming from decreased employee loyalty and difficulties in supervising and controlling the workforce. Firms have responded by implementing internal branding programs that parallel consumer marketing programs but target workers rather than consumers. The goal of such programs is to re-align employees’ self-interest with that of the firm, persuading employees to internalize the firm’s brand so that they “live the brand” and react instinctively “on-brand.” Identity-based brand management, the most aggressive and potentially effective of the internal branding programs, aims to induce employees to view their employment as a personal relationship akin to a family tie, imbuing the economic transaction with emotional significance. In this psychological framework, workers’ decisions to invest in the firm—by staying and rejecting other labor market alternatives, and by purchasing company stock in their individual retirement plans—signify emotional attachment and faith rather than reflecting a cognitive process of choice. Understanding how identity-based brand management programs work sheds light on why employees consistently ignore conventional advice against over-investment in company stock in their individual retirement accounts, with potentially disastrous effects should the firm fail. The recent wave of “stock drop” litigation triggered by the recession reveals an even more disturbing trend: as the recession deepened, employees invested more, not less, in their firms.

Despite its willingness to regulate consumer advertising and dissemination of information to shareholders, the law has steadfastly refused to regulate internal branding or the investment choices that it influences. The traditional justification for the law’s refusal to intervene to protect employees from losses stemming from over-investment in their firms has been that employees unilaterally choose to make these investments: they choose employment at a particular firm, they choose to remain at the firm, and they choose to invest in company stock. Drawing on research by management theorists, economists and sociologists concerning the potential for manipulation of employees’ psychological framework through identity based brand management, I argue that the law’s matrix of unilateral choice to invest at a particular moment in time is only half the story. Though employees are not mindless victims or dupes, their vulnerability to brand management programs that influence their frame of reference over time fundamentally alters the lens through which they view investment choices. Branded employees come to see their relationship with the firm in affective terms rather than as a market transaction, and their investments signify faith and loyalty rather than reflecting a reasoned choice between investment options. I contend that the absence of regulation is unsustainable, and sketch the contours of possible legal responses.  more...