Importance of Employer Branding

Importance of Employer Branding Employer Branding 1.0 Introduction: Employer Branding is the most critical people management topic in todays 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 its 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 â€Å"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 companys products. Corporate branding communicates the companys financial results to the stakeholders. In the marketing literature, the importance of reconciling perceptions of the firms 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 P roposition (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 organisations 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 todays world. Good talent management makes sense and employer branding is an important part of an organisations 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 consumers 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 organizations 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 â€Å"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, â€Å"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 â€Å"ease in attracting candidates† (84%) and â€Å"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 respondents ‘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 organizations 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 Cronbachs Alpha Cronbachs 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 Bartletts 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