Poor employer brand ‘adds 10 per cent to cost of hiring’

Companies paying more to attract candidates put off by their reputation

Businesses with a poor employer brand are being forced to offer prospective employees larger-than-anticipated pay packets to persuade them to sign up, according to new US research.

A nationally representative sample of more than 1,000 full-time professionals suggests that a company of 10,000 employees could be spending as much as $7.6 million (£5.3 million) in additional wages to compensate for its poor reputation, says LinkedIn, whose research was reported in theHarvard Business Review.

A minimum 10 per cent pay increase was necessary to convince a candidate to take on a job at a company with a poor employer brand – translating to roughly $4,723 or £3,297 per hire.

The research suggests that the three factors that contribute most to poor reputation are below-average leadership, dysfunctional teams and concerns over job security. Almost half of those surveyed said they would entirely rule out working for a company that showed these factors.

Businesses that have a misunderstood or outdated employer brand could also be missing out on opportunities to attract the next generation of talent, but resolving a poor employer brand is a more cost-effective solution to this issue than pouring money into the hiring process, said one expert.

“The most significant change [in employer branding] has been a shift from promoting employer brands through recruitment advertising campaigns to a more diverse flow of authentic, employee-generated content through social media,” said Richard Mosley, author of The Employer Brand.

“Given the greater transparency that social media has brought to employer branding, and the growing role of employee advocacy, there has been a correspondingly greater emphasis on delivering a more consistently positive employer brand experience.”

According to the Harvard Business Review, organisations reported significantly positive results in employer brand after showcasing aspects of their employee environment on social media. These included ad network InMobi, which saw applications increase fivefold over a six-month period, leading to a projected $1.7 million (£1.2 million) savings in a year.

“The crucial first step is to understand why you’re struggling to hire,” said Mosley. “Some organisations help employers determine levels of awareness among the talent groups they are seeking to hire, what these people currently associate with the employer and how this aligns with what they’re looking for.

“Once this is clear, it makes it a lot easier to define a more compelling employer value proposition, focus your communication efforts and ensure you deliver on your promises.”

Story via – http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2016/04/01/poor-employer-brand-adds-10-per-cent-to-cost-of-hiring.aspx

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