The Performance Benefits of Employer Branding
Developing a solid employer branding strategy has performance benefits. A recent study from the Boston Consulting Group and World Federation of People Management Associations (“From Capability to Profitability”) involving 4,288 HR and non-HR managers in 102 countries revealed that employer branding, alongside effective recruitment, onboarding, and retention, appears to be highly correlated with strong business results.
Companies that had made the Fortune 100 Best Companies to Work For list at least three times between 2001 and 2011 significantly outperformed the S&P market average during this same period, finishing 99 percentage points higher. The factors driving these differences in performance are likely the following:
- Hiring more high performers: The business value of getting the right people on the bus can be significant, which explains why more companies are measuring recruitment efficiency in terms of quality of hire instead of cost-per-hire. Research from McKinsey suggests that compared to average performers, top quartile performers deliver 67 percent more revenue in sales, 49 percent more profit in general management roles, and 40 percent greater productivity in operational roles. (Netflix calculated that the best performers are two times better than average and ten times better than average in creative/inventive work.) A strong employer brand enables you to attract more candidates, through building greater awareness, consideration, and preference among key target groups, providing the organization with a deeper and broader talent pool.
- Onboarding new hires more effectively: A strategic and systematic approach to onboarding is a necessary feature of most effective employer brand management programs. A study of nearly 200 organizations conducted by Aberdeen Group found that the 20 percent best-in-class onboarding companies retained 86 percent of their first-year employees (compared to 56 percent among the bottom third). It also found that these leading companies reported 77 percent of their employees met their first performance milestones on time, compared with only 41 percent of employees in the laggard group of companies.
- Improving employee engagement: More than two decades of rigorous and persuasive research shows that higher levels of employee engagement are associated with a wide range of positive business effects. In an analysis of its U.S. engagement database representing four million employees, Hewitt Associates discovered that average levels of employee engagement among companies that had delivered double-digit growth over the last five years were 20 percent higher than slower-growing companies. Comparing the median differences between top and bottom teams, Gallup recently demonstrated that high levels of employee engagement were associated with 10 percent higher customer satisfaction, 21 percent higher levels of productivity, and 22 percent higher levels of profitability.
- Enhancing communication and change management effectiveness: In 2013, Towers Watson included an EVP measure in its Change and Communication ROI Report for the first time. This survey drew on a global sample of 651 organizations, representing a broad range of industry sectors and headcounts. Results showed that the top third of organizations in terms of communication and change management effectiveness were significantly more likely than the bottom third to have defined a formal EVP.
- Building brand engagement: While the focus of employee engagement activities tends to be reactive and generic, effective brand engagement is more proactive and specific. In the latter approach, the organization chooses the brand pillars it wants employees to be engaged by and prioritizes its activities and communication accordingly. In theory, the resulting brand mix should incorporate a more balanced selection of factors driving employee engagement and factors that are more directly related to performance.