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Employer Branding Nightmares: The Cost of a Bad Reputation

By Universum on 17/04/2017

The number of Americans who quit their jobs climbed to one of the highest levels this country has seen since before the Great Recession. A staggering 2.98 million workers voluntarily left their positions this past August. Considering unemployment in the U.S. has dropped below 5% for the first time in eight years, employees are slowly becoming more empowered in their job selection and succession. It’s time for employers to take note! 

Employees dreaming of a new career have more options than ever. Employers are actively recruiting for more than 5.4 million vacancies and where candidates take their talents can make significant differences in the strength or liability of organizations. In layman’s terms, your company has lots of open jobs and candidates, especially highly skilled candidates, can afford to be picky.
If you think now is the time to ignore your employer brand — you’re wrong. There are more voluntary quits than ever and even large companies are making brand missteps (think Pepsi Co’s Kendall Jenner commercial, Nivea’s racially charged ad and United Airlines plane dragging situation). Within days United’s stock had lost $250 million from backlash due to their decision to bump a paying customer to make room for their own crew. The only people having a worse time than the PR department in those companies are the campus recruiting and employer branding people trying to hire employees for them.

Tweet This: United’s stock lost $250 million due to their recent mistake & how this hurts their #employerbrand

The Cost of  Poor Employer Brand

The annual cost of a poor employer brand cost the U.S. $7.6 million. These numbers come from several factors- the opportunity lost in the talent pipeline, the money thrown at new hires to overcome a negative reputation, the money spent to overcome negative press, a higher rate of turnover…the list goes on. An employer brand, either positive or negative can influence the decision in one of the largest ways, in many cases, it can be more important to top talent than total compensation.

  • LinkedIn’s report estimates that bad employer branding adds 10% to the cost of hiring, which is what it’ll cost you in additional wages to compensate for a poor reputation (bear in mind that doesn’t account for added extras like diminished morale and subsequent attrition).
  • A Harvard Business Review survey found nearly half of the individuals surveyed would entirely rule out taking a job with a company with a negative reputation. A 10% raise would only tempt 28% of them to join such a company. A bad reputation is costing quality applicants who do not want to be associated with the organization.
  • Millennials are significantly more likely to accept a reduction in pay trading for a positive employer brand. 23% would be willing to accept a small (2%) pay cut, and 15% would go as far as a 5% reduction.

Pro Tip: How companies use branding to attract college talent

A stain on a company’s reputation can cause ripple effects in the talent pool. Brand missteps, customer service snafus and poor advertising decisions can all affect hiring top talent in a market that doesn’t favor the employer. This can affect entry-level hiring, diversity hiring and executive placements at all locations.

Tweet This: A bad rep isn’t only harsh on business, but recruiting quality candidates. Read more:

How your employer brand is communicated is one of the biggest issues companies face today.  With instant access to social media, the web and other new media, job seekers can see and influence the employer brand conversation and perception in seconds. Think: posting a personal iPhone video showing an individual getting manually deplaned.

Read these 3 tips for communicating your employer brand effectively.

So What Can You Do About It?

While you cannot prevent missteps with your company’s overall brand, you can ensure your employer is strong enough to withstand the storm. Take the time today to determine what your target talent are looking for in an employer and begin building programs, processes and a plan to offer those things. Get a sense of what your current reputation is in the market and how it might compare to that of your competitors. Are your current employees happy and engaged? What is the culture like? Auditing your employer brand is a big job, but it’s necessary in today’s workforce to attract the talent that will put your above and beyond your competition.

Download the Employer Branding Pre-Audit Checklist

Companies who understand, develop and communicate their employer brand effectively will ultimately beat the competition to win top talent. Acknowledging the aspects of your company affecting this area and making improvements can have lasting impacts to your overall recruiting, retention and human capital equity.
Don’t know where to start with your employer brand? It takes more than a catchy PR campaign and a hashtag. Partnering with a company who delivers customized employer branding strategies can be the glue your company needs to keep your company moving in the right direction.

Contact Universum to Get Started Today!

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