January 15 , 2018

You Can’t Calculate Employer Branding’s ROI if You Omit Its Negative Impacts

Understanding the Top 10 Problems Associated With Having a Strong Employer Brand

There are only two long-term strategic recruiting approaches: employer brand building, and talent pipelining. Of the two options, employer brand-building is by far the most powerful. In fact, it was ranked by BCG as No. 4 highest in revenue and profit impacts among all HR programs. Almost every major corporation has an effort to become a “best place to work,” and you should too. However, when you embark on calculating the ROI of your employer branding effort because ROI is a ratio of benefits vs. costs, you cannot omit the costs of the negatives associated with having a strong employer brand. And in addition, if you’re not aware of these many negatives, you certainly won’t be able to take the appropriate actions to mitigate them.

So if you work in employer branding, don’t be a Pollyanna and instead consciously identify the negative aspects of employer branding. The top 10 employer branding problems are listed below, with the most powerful ones listed first.

  1. Your firm will become a poaching target — by definition, a strong employer brand means high visibility and notoriety for your firm. However, this visibility will cause executive and corporate recruiters to target your firm’s managers and employees because of the good things that others say about it. That visibility will cause hiring managers to suggest to recruiters “get someone from company X,” and that will mean that many of your individual employees will be contacted by recruiters on a regular basis. Unless you have a strong recruiter blocking strategy, being targeted will increase your employee turnover rate.
  2. The pay expectations of your employees may rise — because your best employees will be constant recruiting targets, you may have to increase their pay in order to match outside offers. Also because of your powerful brand image, your employees may develop an increased expectation of higher pay levels because of your firm’s high status and image.
  3. An extremely high volume of applicants will strain your recruiting processes — the primary goal of a strong employer brand is increasing the number of applications for your jobs. Unfortunately, simply processing the many additional applicants will increase your recruiting costs. And with that increased volume, along with quality candidates, you will also get many more low-quality applicants, and that will require a more effective process to screen them out. Taken together that probably means you will need to hire more recruiters and scale up your recruiting technology. The increased volume of applicants will also likely stress your recruiters and strain your candidate experience.
  4. Adding factors that maintain your EB status may be expensive  maintaining a “best place to work” status is highly competitive, and as a result, you may have to continually increase your employee’s opportunities, training, and benefits on a regular basis simply to maintain your lead over other firms. Maintaining a highly desirable and differentiated workforce may increase your cost of production, and those added costs may lead to a need to raise your product prices. This may cut into your sales and profits if your product is price inelastic.
  5. Responding to benchmarking contacts takes time — because of your notoriety, all aspects of your firm will be bombarded with benchmarking requests to learn more about the best practices that you publicized. The sheer volume of those calls and requests for visits will be a huge surprise, and responding to them will take a significant amount of your employee’s time. It will also put pressure on your firm to reveal details of your best practices, which if you provide them, will lower your firm’s competitive advantage.
  6. Your new hires may be disillusioned after they start — based on your strong employer brand image and what they have read, your new recruits may have unrealistic expectations of the job and your firm. However, if your employer value proposition is uneven, some new hires may immediately experience disillusionment if your onboarding and their everyday work reality does not match the image they expected. If there is a great deal of disillusionment, your new-hire turnover will be disproportionately large and the number of negative comments that you receive on social media will also likely increase.
  7. It looks really bad if a firm loses its “best place to work” status — obviously, there is great PR value associated with successfully being included on well-known “best place to work” type lists. However, dropping off those “best place” lists can be a disaster. Your own executives will question losing this status (and your job), and it is highly likely that most employees in the industry will also notice your fall from grace. As a result, once you have built a strong company image, you must fight to maintain it, no matter what the costs.
  8. Some firms with a strong brand become arrogant — because of their “fame” as a result of their “best place to work” status, it is not unusual for some firms to become arrogant or overconfident in the area of talent management. This external validation that your firm is great might cause internal groupthink within the firm. This might eventually cause your firm to become complacent, and to reduce continuous improvement actions, and to stop tracking and responding to the talent actions of your competitors.
  9. A strong brand requires bragging, which many executives are reluctant to do — in the highly competitive world of employer branding, every firm must learn to continually brag or boast about itself. Unfortunately, many corporate executives are old school and they believe that your work should speak for itself. And in over 40 percent of the firms that I have dealt with, it will be a battle both to get executives to brag about themselves and get them to allow the branding effort to brag about the company’s excellent work and brand pillars. Resistance to bragging may also come from corporate PR and corporate lawyers. Obviously, even the slightest resistance to bragging will make you noncompetitive in an EB world where every top firm brags extensively.
  10. You can’t succeed unless you focus on the brand pillars that your targets care about – the secret to successful employer branding is to show your recruiting prospects that your firm excels in each of the areas that your targets care about. That is problematic because most EB leaders and their executives too often fall into the trap of instead highlighting the factors that the company does well. But that becomes a huge problem when “what the company does well” are not the same factors as the “attraction factor” of your recruiting targets. If a firm spends any significant portion of its time and resources highlighting “brand pillars” and employee value proposition factors that are not at the top of your target’s list of attraction factors, your firm will not reach your quality-of-hire recruiting goals. 

Additional Employer Branding Problems That You Should Be Aware of

In addition to the top factors listed above, there are 10 additional costs and problems that you should be aware of. They include:

  • It’s a common error to equate employer branding with retail product branding — everyone knows that product branding in the corporate world is much superior to HR’s employer branding. As a result, it is quite common to benchmark against product branding. Unfortunately, benchmarking against retail product branding is a huge mistake because a decision to buy a particular cup of coffee or a box of cereal isn’t equivalent to changing jobs. If you want to get it right, instead benchmark against buying a car or house, because that’s an equivalent product brand life or lifestyle change decision.
  • There are so many lists, you might get on ones that have no actual recruiting impact — with the growth of the Internet and social media, there are now numerous magazine and online lists to get on. If you don’t ask your target recruits what lists do they see and hear about, you might waste a lot of resources getting on the wrong “best place” lists. Obviously, you should start by prioritizing each list based on which ones that the media will talk about and that your targeted top prospects will actually read or hear about.
  • Continued company growth makes maintaining a strong brand more difficult — being a “best place to work” will help to attract talent that will allow your firm to grow. But unfortunately, as the firm gets larger, maintaining your brand image will become much more difficult. Each new outside hire will actually dilute your current company culture and a larger sized, more physically spread out firm makes it much more difficult to maintain high people-management standards. It’s much easier to be an employer of choice if you are a small or medium-size firm, then if you are a large international corporate giant.
  • Over-relying on your corporate careers website for branding can be costly — potential applicants will now get as much as 80 percent of their information about a firm and its jobs from non-corporate controlled sources. As a result overly relying on a company’s corporate career and social media sites can be an expensive mistake.
  • There may be a high risk of your branding effort failing — although it’s difficult to lose a “best place to work” image, it’s extremely hard to build one from scratch. In order to be successful, a firm may need up to 25 exciting people-management programs that are worthy of others talking about. However, because creating new people management programs is difficult, it may take significant time and resources. And there is often a greater than 500 percent probability that your effort will not ever reach the point where you will be listed as a “best place to work.” If your firm has already existing negatives, the probability of failure increases even more.
  • There will be many internal political battles — many in HR view employer branding incorrectly, either externally as paid advertising or internally as another form of employee engagement. Because becoming a “best place to work” is actually the viral spreading of messages by others, branding leaders will have to change a lot of hard to change minds.
  • A strong corporate culture may inhibit the effort — corporate cultures excel at maintaining the status quo. However, if you need to significantly change your people management programs, a strong established corporate culture will actually make changing your operational approach more difficult.
  • The cost of putting together the team is likely to be underestimated — an integrated effort will require a significant budget, a team of HR professionals, and a lot of management time in order to reach “best place to work” status. A strong employer brand must also be a multi-year effort. Getting on some lists (e.g. the Fortune 100 list) requires an employee trust survey, which is expensive because it takes up a lot of employee time. Measuring and defending your EB image and countering negative Internet and social media comments can also be time-consuming.
  • Your management may need to be enhanced — current employees and new hires at a “best place to work” firm have learned to expect great managers. So, in order to maintain a great management team throughout your organization, you may need to spend time and money on finding and developing managers and leaders.
  • In some cases, the effort will require high benefits costs — because the Fortune 100 list best place to work list is the most prestigious, many try to get on it. Unfortunately, because it is heavily weighted toward employee benefits, you may have to spend a great deal of money on enhancing your benefits in order to place high on the list.

Final Thoughts

Becoming a “best place to work” or an “employer of choice” is not for every firm. However, if you operate in an industry where getting the very best employees is the top factor contributing to a firm’s success, becoming a “best place to work” may be critical.

But remember that in order to start a new or reinvigorate an existing employer branding process, you will need significant management support and funding. That means you have to calculate the potential ROI. And if your management believes that you are unaware of the problems caused by being a “best place to work” firm, you will have little chance of getting significant funding.

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About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.