Scope of Employer Branding
There are many ways in which an organization can brand itself Most of the time organizations do resort to a few of these unknowingly as well. This is because almost all the activities that an organization carries out have an impact on the perceptions of people have about it. However for a conscious employer who wishes to ‘brand’ itself in its desired way, the following are the reasons:
Employer’s can brand very effectively during the recruitment process. This is mainly because this is one time when an organization reaches out to a large pool of potential employees. The company can brand by giving out pertinent recruitment advertisements and implement recruitment practices in the best possible way. An employer may show youth playing in the cafeteria in its recruitment advertisement if it wants to promote `fun at work’ culture.
Even while selecting process, fine indication about the work culture and the processes in an organization can be let out. While a person comes to an organization to give an interview, that person consciously or unconsciously forms picture about the company hence care should be taken that any potential employee is treated courteously by all the touch-points in the organization. This is all the more important because perceptions and opinions are formed by these very small experiences that candidates have with the organization. Nowadays, some of the organization call and keep in loop even those candidates who do not get selected in the organization. This kind of activities gives positive image about the company. Hence they speak highly of an organization even though they are not selected.
iii) Training & Development
The scope of branding during training and development is internal to the organization. The current employees have a certain level of expectations from their employer. When proper training and development opportunities are provided to them, they think highly about the organization. This results in a satisfied employee base which eventually spreads around the good word about the organization.
iv) Compensation & Benefits
Compensation and benefits to the employees are very effective ones even though this component seems to be a narrow one in the scope of branding. Most of the aspirers rate their overall compensation and benefits as one of the most important parameters in selecting an organization. Among the potential employees a few companies have been branded as very good paymasters as they have persistently worked towards developing such an image. A few innovations in the compensation structure can also help an organization in building a unique brand for itself. `Infosys’ was the first company in India to introduce ESOPs in the pay structure of its employees. This one is now also remembered and revered for this initiative.
v) Performance Management
Among the employees of new generation this is an aspect that is gaining prominence in branding since they are more concerned about enhancing their performance. Most of the talented employees prefer an organization where performance is valued over the organizations than it is given relatively less importance. Hence the organization has to establish and develop systems which are transparent and which encourage the overall improvement in the performance of an employee.
vi) Work Culture
For creating a strong employer brand one of the important parameters is providing excellent work culture in the organization. This has to be developed over time. Now almost all the companies are trying to earn a name for them with the highly unique and effective work culture that they have developed over a period of time. This again leads to highly satisfied employees who spread the positivity and vibrancy of the culture to others.
Apart from the above mentioned parameters, some of the other parameters also are considered for developing a strong employer brand like work environment, organizational culture, symbolic benefits, work life balance, brand promise, brand communication etc,. The advantages in terms of economic, psychological, operational and functional benefits that are implemented through employment that can be analyzed by the employer also come under employer branding.
Significance of Employer Branding
Employer Branding allows an organization to create an attractive image of itself as a distinct and desirable employer destination. Employer Branding serves as a management framework that can help to improve recruitment, retention and commitment, in addition to increasing productivity and the focus on priorities. The Employer Branding concept is based on the conviction that any organization can be seen as a brand. Similar to customer brands, employer brands offer employees a variety of functional, economic and psychological advantages. The value of employer brands and customer brands depends upon differentiation from other brands and the visibility of the benefits offered by the brand. Because of several similarities, marketing research and techniques are required for both these. Employer branding offers functional, economical and psychological advantages. Hence it is considered as significance for the organization.
The three major benefits of employer branding are identified in various research programmes conducted and they are generally cited as being enhanced recruitment, retention and employee engagement or commitment. Further studies that have explored the benefits of being an ’employer of choice’ (suggesting a strong employer brand reality, though not necessarily the conscious or explicit application of employer brand management) cite very similar benefits. While these improvements do not necessarily represent business benefits by and of themselves, there is a broad range of further evidence to suggest that these three factors can contribute significantly to overall business performance.
i) Helps to reduce costs
It is true that primary role of brand generally adds value. Strong employer brands can also help to reduce cost. It is proved in a study that there is a correlation between levels of employee engagement and cost of goods sold. The most significant area in which costs can be reduced is in recruitment. In addition to this in a study United States at Work 2000, human capital consultant, AON, estimated that replacing an employee costs half of his or her annual salary. In a organization, if the staff turnover is lower than that of their competitors it will provide an obvious advantage in terms of your cost base, and strong employer brands tend to enjoy higher levels of employee retention. A study in US by Hewitt Associates and Vanderbilt University confirmed the relationship between strong employer brands and high levels of retention. This study also found that the average employee turnover rate of the Fortune 100 best companies to work for in America was 12.6% compared to general average of 26% resulting in significantly reduced recruitment costs. It all shows that a strong employer brand can reduce the cost in all the aspects of recruitment and retention.
ii) Customer Satisfaction
The rallying cry for many service organizations over the last decade has been ‘living the brand’. This follows a recognition that differentiation in the marketplace is generally reliant on the overall quality of the service experience, and this experience is heavily reliant on the way in which employees behave towards customers. While employees’ understanding of the customer brand proposition is clearly important, it is generally accepted that the motivation to truly `live the brand’ requires a more general commitment to the organization. Most research into the employee’s role in delivering customer satisfaction has therefore focused on the broader concept of employee engagement and commitment to the employer brand. ISR’s retail bank syndicate study (2003) identified that those branches with upper quartile engagement levels were associated with 20% higher levels of ‘extremely satisfied’ customers than those in the lowest quartile. Standard Chartered Bank’s study of their own employee engagement and performance links similarly demonstrated that retail branches with highly engaged employees were 1.7 times more likely to achieve above-average customer satisfaction ratings.
iii) Favorable Financial Result
While reducing costs and increasing customer satisfaction provide a strong business rationale for focusing greater attention on the employer brand, the case ultimately rests on demonstrating a clear link between the strength of the employer brand, high levels of employee engagement and financial performance. Many of the retail studies quoted above have put a figure on the financial implications of higher employee engagement. The Sears study concluded that a 4% increase in employee satisfaction translated into more than $200 million in additional revenue. ISR’s retail bank study also identified that a 10% improvement in employee attitudes/engagement to the organization would add 2.5% to the value of sales in the branch network per year. Standard Chartered Bank’s study15 found that retail branches with highly engaged employees were associated with greater revenue growth (+6%) and greater profit margin growth (+100%).
There is a significant evidence to suggest that a strong employer brand, associated with higher than average levels of employee engagement, will help you to reduce costs, improve customer satisfaction, and ultimately contribute to better financial results. These are general business benefits that are relevant to all organizations. There are also a number of further potential benefits relating to specific life stages and ‘rites of passage’ for the organization.
Characteristics of Successful Employer Branding:
Employer branding can be used by Human Resources as an instrument in the recruitment process to attract and recruit suitable people to the organization. However, for the employer brand to be a competitive advantage, it needs to fulfill some criteria. A study claims that there are similarities between Employer Branding and other types of branding, such as product branding and corporate branding, and they characterize successful brands through attractiveness and accuracy, which they claim is also applicable on successful employer brands. This implies that a strong employer brand is characterized by being known and noticeable, relevant and resonant, and differentiated from its competitors. Between the employer and the employee there is also a psychological contract and the expectations regarding obligations for both parties are settled during the recruitment process. The employer is supposed to offer and provide the employee training and development, in exchange for the employee’s performance. If the psychological contract is fulfilled, a high degree of loyalty and engagement of the employee are concerns of the firm.
Functional and Symbolic Benefits
Backhaus and Tikoo (2004) divide the employer brand image into functional and symbolic benefits. Functional benefits describe components that are objectively desirable, such as the salary and economical benefits whereas the symbolic benefits are related to the subjective perceptions of the company and are identified as associations, ideas and feelings. To communicate these benefits, and emphasize the symbolic ones, EB can be used as an instrument to communicate benefits of a brand to potential employees (Backhaus & Tikoo 2004). By conveying the specific attributes for example innovativeness and flexibility connected to the brand, organizations can develop a strong and positive employer brand that will attract individuals suitable for them. The expression of symbolic benefits is crucial in industries where the functional differences between organizations are insignificant. EB can then be used to differentiate the company, as an employer, from others. In the context of recruitment the potential employees will find the organization more appealing if it possesses the attributes that the applicant finds important.
A study suggests that the values presented by the organization need to be adequate and honest. The information provided is both potential, and the existing employee has to be realistic and realizable. If the message delivered through the employer brand is exclusively positive and the promises made unrealized, there is a risk that the dissatisfied employees will increase the employee turnover negatively affecting employer brand. The information concerning, for example, organizational culture needs to be accurate in order to enable high employee retention. This is confirmed by Morocko and Uncles (2008), who explain that the values inherited in the brand have to be accurate and delivered continuously. It is also consistent with the views of other authors who argue that the properties and values of the employer brand need to be implemented into the leadership and management processes in order to be sustainable and accurately functioning. Hence employer brand management functions as a means of translating and communicating the values into the everyday work of the employees.
For citing this article, use:
- Vijayalakshmi, V. (2017). The impact of employer branding on employee attraction and retention.