When CEO Glenn Murphy leaves Gap on Feb. 1, as the company announced last Wednesday, he will leave behind a changed retailer.
When he took the helm in 2007, the company was suffering from executive turnover, too much bureaucracy and apparel that wasn't resonating with customers. Seven years later, he has redesigned stores, bought new brands and expanded the retailer's presence online and overseas. Though sales in its core brand have fallen in recent months, his pending departure unsettled investors enough that, combined with a report of disappointing sales, Gap's shares slumped the day of the announcement.
But one other trademark of Murphy's recent tenure has been Gap's active efforts to promote itself as a progressive employer. In February, the company announced that it would be raising the minimum wage for all employees, first to $9 by June of this year and then to $10 by 2015. President Obama went shopping in Gap's stores to applaud the move and other companies followed suit.
Then in August, the company promoted its equal pay practices and the number of women it has in leadership roles. (Sixty percent of its director-level employees and half of its vice presidents, for instance, are women.) It also launched a broader "Let's Do More" campaign that focuses on what women confront in the workplace, as well as on the minimum wage conversation and other sustainability issues.
Gap's equal pay initiative, coming in the aftermath of many tech companies' reluctant sharing of their own diversity stats, was hailed as "an uncommon display of transparency." Making a public declaration that women are paid the same as men, and having those numbers analyzed by an outside firm, was considered highly unusual.
But the one-two punch was no accident. Both the pay increase and the focus on gender parity were part of a conscious effort human resources types call "talent branding," in which companies publicize their employee practices to customers as well as future employees. Gap's human resources chiefs — along with Murphy, incoming CEO Art Peck and many others in senior management — saw a chance to appeal, particularly, to a younger generation that increasingly cares about the broader values at the companies where they shop or work.
"We said to ourselves: We need to do a better job of telling the story of how we do business, because our consumers actually care about that and our potential employees care about that," says Eric Severson, one of Gap's senior vice presidents of human resources. They wanted to build on the "do more than sell clothes" philosophy of the company's founders. (The son of one will even return as chairman with Murphy's departure.)
Severson and Dan Henkle, who co-lead the human resources team, say Murphy was instrumental in supporting both moves. "He was saying 'look, [minimum wage] is an issue where clearly there's this widening disparity as far as income levels go,'" Henkle recalls. And Gap, with its large base of employees who are in their first jobs, could sense the effects. "We can either act or we can wait and we can just see the train coming down the tracks. This is something that's going to happen."
Gap, they say, also wanted to boost wages to seek a higher caliber of employee. Technology is increasingly making the job of a front-line retail worker more complex than folding T-shirts or using a cash register. For instance, the prevalence of "reserve-in-store" programs means there's a focus on finding workers who can convince shoppers to buy more than just what they reserved online."What we're asking our sales associates to do today versus what we asked for in the past is much more," Henkle says.
Henkle and Severson, Gap veterans who took on their current roles roughly a year ago, say the company launched both campaigns at times of heavy media coverage of each topic, which helped them get more publicity. "The issue of income inequality was getting so much attention," Henkle says. "If you were even just a little bit tuned in to the issue, you really couldn't miss it."
Meanwhile, the company shared its gender pay news on Women's Equality Day, in a year when conversations about women's advancement have been an inescapable part of the zeitgeist. "We do want Gap Inc. to be viewed as the premiere place for women to work and we want to be differentiated in that regard," Henkle says. "Pay equality fit well into that overarching strategy."
There are, of course, risks to touting good practices. It can draw attention to other controversial ones. In May — following the company's use of the #letsdomore hashtag, but before it launched its letsdomore.com site — the activist group 18MillionRising, which advocates for Asian workers, set up a hoax Web site at GapDoesMore.com designed to look official. It promoted Gap's support for better working conditions and compensation for garment workers in Bangladesh, an issue that has drawn fire for the company from critics.
Still, the benefits may be worth those risks. Henkle and Severson say that since announcing the minimum wage news, job applications are up 24 percent across all of its brands.