Global Employer Brand: A Challenge

A study of executives from dozens of organizations in 25 countries around the globe by the Bernard Hodes Group Global Network confirmed what many already knew, but added a new challenge to the topic of employer branding. Nearly two-thirds (62%) of the approximately 500 respondents indicated that they had formal employer brand management programs in place, but only 24% have metrics to measure the results of their efforts.

“The old saying is, ‘what can be measured can be managed,'” observed D. Mark Hornung, Senior Vice President at Hodes and director of the firm’s U.S. employer brand efforts.

“While most agree that employer branding is important enough to devote resources to its pursuit, more needs to be done to prove its effectiveness.”

Part of this discrepancy can be explained by the difficulty in measuring the impact of brands of any kind. Even global rankings of top consumer brands rely on relatively simple estimates of organizations’ finances and credit the brand for whatever value cannot be directly tied to a tangible asset. Despite this lack of precision, there is little dispute that brands can make- or break- an organization. Many credit the revival of Apple Computer to the global success of one brand, the iPod personal music player, and its accompanying service, iTunes.

Similarly, a strong employer brand can be the deciding factor in the success of an organization. Libby Sartain, former head of employment at Southwest Airlines, documents the attraction of Southwest as an employer for much of the airline’s success in her recent book, “Brand from the Inside.”[1] Starbucks has much lower staff turnover and a constant flow of quality candidates because of the strength of its employer brand.

So how do you know if your employer brand is helping your organization and, if so, how much does it help?

One simple way is to monitor the percentage of hires you make from employee referrals. If you have a consistently high percentage of hires (more than 30%) coming from your own employees, that is a good indicator that people like working for you well enough to recommend it to their friends and neighbors. If the percentage begins to fall, that could be an early warning indicator that there are problems brewing. (Note, too, that you can have too high a percentage of referrals that can dilute your efforts to build an inclusive workplace. You need to monitor the rates carefully.)

Another measure is to survey new hires periodically during their first year after being hired. Ask them about their experiences during the hiring and on-boarding process, how the job they are doing matches up against what they believed they would be doing, etc. A good practice is to survey new hires at regular intervals- thirty, ninety, 180, and 365 days, for example. That way, you will begin to build up a database of replies that will help you measure how realistically your employer brand is communicated and where you may need to improve.

The “holy grail” of brand measurement, of course, is what impact the employer brand has on the organization’s performance. While no one has so far been able to separate out the precise contribution of the employer brand to a firm’s bottom line, there is evidence that companies with strong employer brands outperform their competitors financially.

One component of the employer brand is the investment the employer is willing to make in the employee. In a study published in the Harvard Business Review in 2004[2], researchers found that employers who invest more in their employees’ training and development outperform the stock markets by up to 35%. Even during the downturn in 2001, the authors recorded a 4.6% increase in stock value among companies with strong T&D budgets versus the declining markets.

Another measure of a strong employer brand is your rate of voluntary turnover. Common sense says if people are leaving at a high rate your employer brand is weak. But what is the value of having people stay?

Frederick Reicheld studied this for his book, “The Loyalty Effect” and found that keeping employees can pay big dividends. In one retail banking system, for example, his research found that bank branches with the same manager over seven years enjoyed 10% less customer defection than other branches. That resulted in $1 million in annual surplus revenue for those branches with loyal employees and customers.[3]

The other challenge posed by the Hodes global survey was that many still don’t agree on what, exactly, an employer brand is.

Roughly half (52%) define the employer brand as, “The essence of what we offer our employees communicated internally and externally.”

The rest of the respondents were split between “Our promise and contract to current and potential employees that defines the delivery of our HR agenda” (22%) and “A solution for the consistency, style and impact of external recruitment marketing materials” (26%).

The best answer as to what is an employer brand would be the one fewest respondents selected, the “promise and contract” between the employer and employees.

Your promise and contract with employees, current and potential, is the foundation of your employer brand. So you must examine all of the touch points between your organization and your employees to ensure that those “moments of truth” are consistent with the promise and contract you have made with employees, implied or explicit.

From how you “greet” people when they visit your employment Web site to how they are treated while they are being interviewed, to how they are introduced to your organization during orientation, to how you communicate with them once they work for you, are all facets of your employer brand.

“The good news about the global employer brand study is that it shows people are aware of its importance and are talking about it,” Hornung remarked. “There is a lot of work to be done developing metrics and implementing them. It should make the next few years in employment marketing really exciting!”

D. Mark Hornung is a Senior Vice President of Bernard Hodes Group. Called “the father of employer branding,” he works with clients such as The Clorox Company, Raytheon, Mercury Interactive and others. Previously, he developed branding for clients such as Starbucks, Discover Financial, and Nissan. Mark was CEO of Bravant, a start-up that developed an online behavioral assessment application, Career@gent(tm). Mark teaches branding in the Continuing Education department of San José State University. He has a degree in Philosophy from John Carroll University. He is co-author of Opportunities in Microelectronics Careers. His writing has also appeared in the New Yorker.

[1] Sartain, Libby and Mark Schumann, “Brand from the Inside” (San Francisco: Jossey-Bass, 2006)
[2] Bassi, Laurie and Daniel McMurrer, “How’s Your Return on People?” Harvard Business Review, March, 2004.
[3] Reicheld, Frederick F., “The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value” (Cambridge, MA: Harvard Business School Press, 1996)