Importance of Employer Branding

Employer Branding

1.0 Introduction:

Employer Branding is the most critical people management topic in today’s flattened global business environment. The economic downturn has further brought attention to the importance of people in delivering the brand promise. Increasingly the shareholder value of a company rests in its intangible assets e.g. its people, reputation and culture. Organizations spend millions on their corporate brand. But how much do they invest in their Employer Brand?

Employer branding plays an important role in attracting and retaining talent in the face of a shrinking talent pool. HR professionals are considered primarily responsible for employer branding initiatives, with most of the companies reporting HR as one of the key stakeholders in employer brand management. While employer branding is predominantly seen as the domain of HR, marketing also plays an important role

2.0 Literature review:

2.1 What is Branding?

It is a way to package information about functional attributes, economic value, and psychological

benefits so it’s easily understood and absorbed by the target audience.

Marketers today engage in two different types of branding namely external branding and employer (internal) branding. The latter yet to pick up in full speed, has tremendous potential in this increasingly competitive scenario.

2.2 External Branding

Defining External Branding: The image that an organization projects to consumers, suppliers, investors, and the public.

An external brand gives information on the attributes of the goods or services to current and potential buyers.

It answers questions such as:

2.3 Internal Branding

Defining Employer Branding: The image that employees have about what what type of employer an organization is. Whether the brand is explicit or implicit- and even if it has not been deliberately developed- every organization has an internal brand.

An Employer Brand (or Internal Brand) gives current and potential employees information about the employment experience and what is expected of them.

It answers questions such as:

Employer branding can be defined as “a form of the corporate branding by which companies establish an image of services they provide, in order to attract or motivate employees” (Bates, 2001).The below provides an overview of the different types of branding. Product branding focuses on communication to customers about the company’s products. Corporate branding communicates the company’s financial results to the stakeholders.

In the marketing literature, the importance of reconciling perceptions of the firm’s internal and external image in managing the congruence of all brand messages has been recognized (Dukerich and Carter 2000; Duncan and Moriarty 1998). Not only does this positively influence the perceptions of these messages among employees, potential employees, and customers, but it also ensures that employees are ‘properly aligned’ with the brand and what it represents (Keller 2002). This allows employees to ‘live the brand’ and reinforces corporate values and expectations of performance among new and existing employees (Ind 2001). Ind also recognizes that some companies have de facto employer brands without a formalized marketing approach. However, at a time when the financial markets are increasingly recognizing human capital as a source of value for firms and shareholders (Cairncross 2000); Michaels et al. (2001) propose the explicit development and communication of the Employee Value Proposition (EVP) to attract and retain talented employees. Clearly, there are a number of different marketing inputs that contribute towards the formation of the employer brand, from the development of an EVP to recruitment marketing plans, and outputs which may require advertising, press coverage, sponsorship, word-of-mouth endorsement and contacts with employees (Kennedy 1977; Dowling 1994 2002; Stuart 1999). In this way, the formation of the employer brand image is closely associated with the firm in its role as an employer.

In the recruitment literature, Gatewood et al. (1993) find that the employer brand image is a particularly significant predictor of early decisions made by new recruits about their employers. Turban et al (1998) find that employer brand image positively influences both applicant perceptions of recruiter behaviors and post-interview job and organizational attributes. As to how potential recruits form images of a particular organization, the phenomenon of signaling has been investigated and found to have an influence on employer brand image, particularly in the early stages of the recruitment process (Taylor & Bergmann, 1987). That is, recruitment experiences are taken as ‘signals’ of unknown organisational characteristics (Barber, 1998; Rynes, Bretz and Gerhart 1991). For example, job applicants may infer employer brand values based on their recruitment materials e.g. an organization that emphasizes promotion and salary may be perceived as valuing dedication to career (Honeycutt & Rosen 1997).

Also, Goltz and Giannantonio (1995) found that recruits infer more positive characteristics about an organization when exposed to a friendly recruiter than an unfriendly one. Moreover, Rynes, Bretz and Gerhart (1991) find that line employees have a bigger signaling impact than staff recruiters and that both are conditioned by the feedback of applicants regarding their impressions of the employer brand image.

Very often employer branding is thought to be restricted to recruitment communications and only be concerned with the attraction of employees. In reality however, this is not the case. An employer brand explains how the organisation has been communicating and engaging with all of its stake holders – be it current, prospective or past employees.

Another critical thing to be noticed is that unlike other branding initiatives, an employer brand is not a true brand in its own right. It is not something envisioned and executed by recruitment and advertising agencies that stands alone and separate. An employer brand will be successful only if it operates in conjunction with the organisation’s corporate and consumer brands.

It therefore becomes pertinent to find a connect between employer brand and the existing brands and reflect the behaviours exhibited throughout the organisation, to investors and consumers. It should be able to bring out the real and the aspirational truth about working in an organisation and mirror the values that are exhibited through the external corporate and consumer brands. If there is a disconnect between the two, the ‘brand promise’ that is given to new employees will vanish as the reality of working in a very different organisation to the one promised.

The roots of the concept of employer branding stretch back to the 1990s. However, due to uncomfortable market conditions and a grim recession, the concept could not flourish completely and it has only been in the last five years that employer branding has become a major force.

In 1996, Simon Barrow and Tim Ambler gave this definition: We define the Employer Brand as the package of functional, economic and psychological Benefits provided by employment and identified with the employing company. The most significant role of employer branding is to provide a comprehensive framework for management to be able to define priorities, increase productivity and improve recruitment, retention and commitment.

Employer branding may seem superficial from a certain point of view, since it is not directly helping in increasing the sales s and thus impacting bottom lines but it is definitely here to stay. Organisations have realised that its people provide one of the few distinct competitive differentiators in today’s world. Good talent management makes sense and employer branding is an important part of an organisation’s armoury from now on. In order to be able to create a successful employer brand, there are three critical stakeholders who must be involved.

• Senior management: to give insight into the vision, strategic intent, core objectives, competition landscape and understanding of consumer’s attitudes towards the organisation.
• Key employee groups: in order to give opinions on the activities that take place on the work floor, benefits, management and communication within the organisation.
• Relevant external labour pools: to highlight their understanding of an organisation, any roadblocks to success and perception of the organisation in the market. Like all other kinds of branding exercises, employer branding does – and will – pay off.

Following are some benefits to a good employer branding exercise:

• True differentiation in campuses from where recruitment is done
• Enthusiastic and aspirational set of messages to be sent out to potential as well as existing employees
• Mainting a brand consistency through the candidate/new starter journey
• A better understanding of how the organization is perceived externally
• Higher engagement levels for the existing employees

Financial returns can also be observed in the long run through efficient employer branding practices. If the right kind of employer branding exercise is done, it will lead to a reduction in the amount of money needed to invest to bring good people into the business.

The Employee Value Proposition (EVP) is an important outcome of employer brand. It essentially comprises of the promise that the organization makes to current, future and potential employees. In the process of defining an employer brand, the organization’s EVP is automatically created.

For example, on a recent employer branding project for HSBC, it was found that the central tenet of the organisation was the investment in, and development of, their employees. The organisation invests hugely in its people, there are opportunities to work locally, nationally and internationally. Because of these reasons the EVP that was developed for HSBC was ‘Here you can’.

As mentioned earlier, Employer branding is not just about reaching potential employees but also about the existing ones. It is about an employer promise which is consistently carried through all stages of employees’ experiences of that organisation – through recruitment processes, into employment and then even after having left the organization.

There is a strong correlation between the engagement and commitment levels and the different stages in the lifecyle of the tenure in an organization. An employee who joins an organisation with an exemplary EVP will exhibit high levels of commitment compared to if he were joining the organization with a poor EVP. After a year, if the EVP is correctly managed, commitment will fall but not as low as the commitment level in organisations with a poor EVP.

2.4 Current Scenario

A lot of work has been done on employer branding, its importance, characteristics etc. Firms from diverse industry sectors have formally defined, and are strategically managing, their employer brands. There is no doubt that many practitioners view having a successful employer brand as desirable but there has not been much progress on measuring the effectiveness of employer branding. Quantifying employer branding is very critical from new talent point of view as an “index” is psychologically better conceived and also making a comparison among organizations.

Currently analytics companies such as Hewitt Associates and Mercer conduct surveys for the best employer brands once every year based on certain parameters. However, these surveys are valid only for a certain period of time and there is no mechanism to compute the value of an employer brand at any other point of time.

2.5 Absence of Measurement of Effectiveness of Employer Branding:

Sixty-two percent of respondents to a recent survey said they support employer brand initiatives, but only 24% have metrics in place to measure these initiatives. The research was conducted by the Bernard Hodes Global Network. Not surprisingly, “The study reveals that a key driver for employer brand development is the need to acquire talent in a competitive global market,” said Alan Schwartz, president and CEO. Other findings of the research include:

• The most frequently cited key expectations of employer branding were “ease in attracting candidates” (84%) and “recognition as employer of choice”(82%).
• Ninety-four percent of respondents use their corporate Web sites more than other channels, such as printed materials, to promote the employer brand.
• Seventy-nine percent of respondents reported that HR is one of the key stakeholders in managing the employee brand.

3.0 Research Objective

The objective of the research is to develop a quantitative frame work on employer branding of organizations. As a first phase of this work, I would first identify key metrics to measure employer branding. The second phase of the study would develop a generic framework which would help new talent and/or organization to calculate the index of a brand as an employer.

4.0 Rationale

Such a mathematical framework would help to estimate and compare the value of an employer brand at any point of time that would benefit all the stakeholders including current employees, potential recruits, competitors etc. It would enable organizations to understand if their efforts are in the right direction and how they stand vis-a-vis their competitors

5.0 Hypothesis

All organizations make efforts to establish themselves as sought after employer brands. However, the perception of the employer brand varies from person to person be it a new talent or an existing employee.

6.0 Research Questions

• Identifying key attributes that employees/ new talent consider important when looking at an organization as an employer brand.
• Relative weightages given to the attributes identified above
• Developing an index to calculate comparable values for various employer brands across industries

Research Methodology

Research Design

The study was divided in two phases. First phase was focussed on conducting an in depth secondary research along with qualitative primary research to identify wide range of attributes or metrics which impact employer branding of an organization. This was followed by the designing of questionnaire targeted at final year students at various post graduate colleges.

The second phase of the study further analyzes the collected data to build up a mathematical relationship between these set of attributes and index of employer branding. The index would be a guide for new recruits to quantify the employer brand and also help them to compare employer branding of different employers.

A total of 3 focus group discussions were conducted, which had respondents who were in their final year of graduation and could also be looked at as potential employment seekers.

The participants in the FGD were students from management institutes like MICA, Lal Bahadur Shastri (Delhi) and Fore School (Delhi). Each group lasted for about approximately 90 minutes.

The discussion guide contained questions about the respondent’s ‘ideal’ workplaces, naming the organizations that they would like to work for and the reasons for it, the attributes considered while considering potential employers, employers that they would least be interested in along with the reasons for it. The discussion finally concluded with the means and methods by which the students finally go about for seeking employment. The main objective of conducting focus group discussions was to come up with a set of attributes that capture all important aspects of employer branding. Through these focus group discussions I was able to arrive at a set of 48 attributes, all of which seemed extremely important from an ideal work place point of view. The following are the attributes that emerged from the various FGDs.:

A friendly and informal working environment

An attractive overall compensation package (Basic, HRA, LTA) (fixed component)

Application of knowledge

Bonuses (Variable Component)

Brand name of the organization

Customer-orientation

Emotional attachment with organization

Encouragement for new initiatives

Feel good factor with the organization

Financial Health of Company

Flexible working schedule

Frequency of appraisal cycle

Gaining career-enhancing experience

Global alignment of the organization (MNC)

Good relationship with colleagues

Good relationship with superiors

Growth opportunities

Humanitarian organisation – gives back to society

Impression formed by recruiters of the organization

Industry in which company operates

Innovative employer – novel work practices

Innovative products and services

Internationally diverse mix of colleagues

Job Content

Job content and satisfaction

Job security within the organization

Knowledge sharing opportunities

Knowledgeable supervisor

Leadership style of supervisor

Non-monitory benefits (medical check-ups, insurance at work place, club memberships, maternity/ paternity leave)

Opportunities for overseas exposure

Positive feedback from current or previous employees

Products (essentials, luxury etc)

Quality of Top Management

Reputation of the organization

Rewards & recognition

Scope for creativity

Scope for lateral movement

Stock Options

Stress-free working environment

Supportive and encouraging colleagues

Supportive supervisor

Synchronization between corporate goals and employee future plans

Training and development of its employees

Vision of Leadership

Website of the organization

Working hours/ week

Working in shifts

All these attributes were tested in the survey instrument to arrive at the final set of metrices for measuring the value of employer branding.

Employer Branding in Times of Recession

There are various points of views on how recession has impacted employer

branding. On one hand, the thought process says that recession has increased the human resources because of widespread layoffs and thus made employer branding relatively less important. During the recession periods, one of the primary objectives in all the organizations was to increase the top lines while managing to reduce the bottom lines. And this was made possible by showing a number of employees the way out.

Another point of view towards the impact of recession claims that it is at these times that an organization’s behaviour towards its employees goes through a litmus test. This is the time

for organizations to ensure not to spoil their employer brand by large scale termination of employment or general misbehaviour with its existing employees. Infact this is the time to step in and make efforts towards strengthening the employer brand along with being able to retain the talent in the organization. As has been noted by many HR experts, it always easier to retain an existing and trained employee rather than to get a new one. Thus, to conclude according to this second school of thought, employer branding becomes all the more critical in times of recession, making it even more important to retain existing talent.

Data Collection

Respondents: 102 respondents from Delhi and Ahmedabad, all in the final year of graduation from management institutes.

Section 1: Demographics

The demographics include variables such as gender, age, total number of years of work experience, monthly household income, area of management specialization.

DEMOGRAPHIC VARIABLE: GENDER

What is your gender?

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1. Male

64

62.7

62.7

62.7

2. Female

38

37.3

37.3

100.0

Total

102

100.0

100.0

DEMOGRAPHIC VARIABLE: AGE

What is your age?

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1. Under 20 years

7

6.9

6.9

6.9

2. 20-24 years

68

66.7

66.7

73.5

3. 25-34 years

3

2.9

2.9

76.5

4. 35-44 years

23

22.5

22.5

99.0

5. 45 years and above

1

1.0

1.0

100.0

Total

102

100.0

100.0

DEMOGRAPHIC VARIABLE: TOTAL NUMBER OF YEARS OF WORK EXPERIENCE

What is your total number of years of work experience?

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1. No experience

29

28.4

28.4

28.4

2. Less than a year

35

34.3

34.3

62.7

3. 1-2 years

30

29.4

29.4

92.2

4. 2-3 years

5

4.9

4.9

97.1

5. More than 3 years

3

2.9

2.9

100.0

Total

102

100.0

100.0

DEMOGRAPHIC VARIABLE: MONTHLY HOUSEHOLD INCOME

What is your monthly household income?

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1. less than Rs. 25,000

8

7.8

7.8

7.8

2. Rs. 25,000- Rs. 50,000

18

17.6

17.6

25.5

3. Rs. 50,000- Rs. 1,00,000

59

57.8

57.8

83.3

4. More than Rs. 1,00,000

17

16.7

16.7

100.0

Total

102

100.0

100.0

DEMOGRAPHIC VARIABLE: AREA OF SPECIALIZATION

What is your area of specialization?

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1. Marketing

36

35.3

35.3

35.3

2. Media

20

19.6

19.6

54.9

3. Market Research/ Analytics

10

9.8

9.8

64.7

4. Finance

30

29.4

29.4

94.1

5. HR

5

4.9

4.9

99.0

6. Operations

1

1.0

1.0

100.0

Total

102

100.0

100.0

DEMOGRAPHIC VARIABLE: ASPIRED INDUSTRY

Which industry do you aspire to work in?

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1. Consulting

43

42.2

42.2

42.2

2. Manufacturing

17

16.7

16.7

58.8

3. Media

14

13.7

13.7

72.5

4. IT

3

2.9

2.9

75.5

5. Finance

18

17.6

17.6

93.1

6. Others

7

6.9

6.9

100.0

Total

102

100.0

100.0

Section 2: Information Sought

This section includes the data collected to understand the sources of information used by students to know more about a potential employer and the nature of information that is sought while developing an understanding about the potential employer.

SOURCES OF INFORMATION TO KNOW ABOUT A GIVEN COMPANY

What are your sources of information to know about a given company?1. Peers

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

70

68.6

100.0

100.0

Missing

System

32

31.4

Total

102

100.0

What are your sources of information to know about a given company?2. Colleagues

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

41

40.2

100.0

100.0

Missing

System

61

59.8

Total

102

100.0

What are your sources of information to know about a given company?3. Family members

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

33

32.4

100.0

100.0

Missing

System

69

67.6

Total

102

100.0

What are your sources of information to know about a given company?4. Online search

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

72

70.6

100.0

100.0

Missing

System

30

29.4

Total

102

100.0

What are your sources of information to know about a given company?5. Company personnel

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

51

50.0

100.0

100.0

Missing

System

51

50.0

Total

102

100.0

What are your sources of information to know about a given company?6. Press reports

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

30

29.4

100.0

100.0

Missing

System

72

70.6

Total

102

100.0

What are your sources of information to know about a given company?7. Others

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

22

21.6

100.0

100.0

Missing

System

80

78.4

Total

102

100.0

NATURE OF INFORMATION SOUGHT

What is the nature of information you look for when applying to a company?1. Type of work

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

62

60.8

100.0

100.0

Missing

System

40

39.2

Total

102

100.0

What is the nature of information you look for when applying to a company?2. Investor information

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

24

23.5

100.0

100.0

Missing

System

78

76.5

Total

102

100.0

What is the nature of information you look for when applying to a company?3. Personal experience of employees in that company

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

42

41.2

100.0

100.0

Missing

System

60

58.8

Total

102

100.0

What is the nature of information you look for when applying to a company?4. Best Employers Survey ranking

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

25

24.5

100.0

100.0

Missing

System

77

75.5

Total

102

100.0

What is the nature of information you look for when applying to a company?5. Work life balance

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

50

49.0

100.0

100.0

Missing

System

52

51.0

Total

102

100.0

What is the nature of information you look for when applying to a company?6. Pay packages

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

71

69.6

100.0

100.0

Missing

System

31

30.4

Total

102

100.0

What is the nature of information you look for when applying to a company?7. Others

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

33

32.4

100.0

100.0

Missing

System

69

67.6

Total

102

100.0

Section 3: Reliability Analysis

This analysis has been done to study the properties of measurement scales and the items that compose the scales. The Reliability Analysis procedure calculates a number of commonly used measures of scale reliability and also provides information about the relationships between individual items in the scale.

Alpha (Cronbach) model of reliability has been used to check for internal consistency, based on the average inter-item correlation.

Case Processing Summary

N

%

Cases

Valid

102

100.0

Excludeda

0

.0

Total

102

100.0

a. Listwise deletion based on all variables in the procedure.

Reliability Statistics

Cronbach’s Alpha

Cronbach’s Alpha Based on Standardized Items

N of Items

.874

.892

48

Cut-off criteria. By convention, a lenient cut-off of .60 is common in exploratory research; alpha should be at least .70 or higher to retain an item in an “adequate” scale; and many researchers require a cut-off of .80 for a “good scale.” The Cronback Alpha in this case is .874 and thus, the data set is consistent.

Section 4: Factor Analysis

Principal Component Analysis has been conducted on the collected data in order to establish a relationship between inter-related variables and to represent them through a set of a few underlying factors. It would help in identifying the intrinsic factors thus, examining the inter dependent relationships.

The following are the specifics on the factor analysis:

1. Descriptives

1. Initial solution

2. Correlation matrix

1. Coefficients

2. KMO and Bartlett’s

2. Extraction

1. Analyze – Correlation matrix

2. Display – Screen plot

3. Extract – Eigenvalues over 1

4. Rotation – Varimax (uncorrelated factors)

5. Options – Sort by size and Suppress values less than .20

Output of Factor Analysis:

Total Variance Explained

Component

Initial Eigenvalues

Rotation Sums of Squared Loadings

Total

% of Variance

Cumulative %

Total

% of Variance

Cumulative %

dimension0

1

10.001

20.836

20.836

9.357

19.493

19.493

2

7.845

16.344

37.180

6.465

13.468

32.962

3

5.768

12.016

49.196

5.812

12.109

45.071

4

4.211

8.774

57.970

4.503

9.382

54.453

5

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