"Every company, no matter its business, no matter its market place, no matter the economic conditions, needs the right people to be engaged in making the right contributions. And every company, no matter its people needs, wants to be a magnet that consistently attracts and engages the best of talent."(Schumann & Sartain, 2009)
It has been argued whether Human Resource Management (thereafter called "HRM") should be kept as an internal department or HRM should be outsourced to a third entity instead. However, since strategic HRM was first introduced a couple of decades ago, people, especially organization boards, have become aware that HRM is irreplaceable and rather plays multiple important roles in an organization operation. Of variety of organization purposes and missions, it is fair to say that enhancing corporate value is the most important goal for organizations. Especially what we call "employer branding" has a great possibility to generate extra corporate value or even synergy effect by collaborating with other key value-creating departments.
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The purpose of this essay is to uncover what employer branding is and how HRM will contribute to the important organization mission by using employer branding.
People are an important component in any organization. In order to accomplish any growth strategy, it would be necessary to consider so called "organizational design" such as individual roles in the organization, process in which people may interact and the relationship.
The main topic of this essay "employer branding" is one of the elements of that organization design, but what is employer branding? Most of people usually think "just branding" is for one of marketing solutions. However, branding strategy from HRM side, employer branding, has gradually caught attention from many organizations.
Broadly speaking, employer branding initiated by HR department and product branding initiated by Marketing department, both are quite similar in characteristic. The first approach in this report defines characteristics of marketing and Human Resource and difference between two. In the next section, the essay clarifies organization benefit through employer branding and how employer branding is applied though actual case study and difficulties.
In the last, the essay confirms all high level responsibility and needs for HRM to develop innovative structure for future organization strategy.
What is Branding Strategy?
What "Branding" implies is not only capability to services and goods.
"Effective branding creates a strong emotional connection between the message and the product. The brand attaches the meaning, the lifestyle, the transformation, the potential, the joy, and the fulfillment to the product." (Sartain L, 2005: P89 )
Over recent periods, branding from HRM perspective, employer branding, has been spotlighted because there are multiple cases that could effectively apply for employer branding, leading to successful growth. Nevertheless, branding is still used mainly for the product / corporate marketing. In this section, it is focused into the nature and difference of branding approaches of marketing and HRM, and specific reason why an organization needs employer branding.
Brand approach from Product Marketing Perspective
In the course of buyer's selection of products, a brand will allow buyers to make their decision amongst competitive products to meet their needs and satisfaction.
For example, product identification and product quality perception from brand effect will help buyers to reduce their research cost. Additionally reliable reputation from brand effect will help buyers to avoid social risk.
Sellers can also enjoy multiple benefits from branding.
For example, differentiation from other competitors allows sellers to have extra attention from the customers. Hence high-level customer product identification and purchase prove to sellers a stable financial performance because it is highly likely that buyers become a product or service repeater influenced by decent brand effect.
In addition, to measure how much a brand will give an impact on financial terms, Mckinsey researched 51 brands in 2001 and compared how differently organizations with strong and weak brands overperform or underperform the market. The result is that "A 2.6% return above market average over the long term (provided this level of return can be sustained) is a significant figure, while weak brands are the negative 6.9% return." (JWTinside) High level awareness of brands and well-set relationship between buyers and sellers facilitates and improves their business cycle. Financial advantage is followed as a natural outcome.
Brand approach from HRM Perspective
Always on Time
Marked to Standard
From my point of view, an organization, especially in listed organization, must think about how to maximize its shareholders value as its foremost task.
The interest to apply employer branding for organization strategies has been emerging. People increasingly realize that employer branding is not just for strategic HRM, but it also has an overall strategic role to give benefits and value for an organization itself and its shareholders via human resources. In another word, whatever employer branding of an organization, it will eventually affect its overall strategy such as its growth projection.
Individuals' behaviour towards an organization is subject to what an organization is seen as an employer. Since an organization consists of employees, brand should be driven from inside out. Hence recruiting and keeping talented people is an essential driver to gain decent employer branding. In doing so, attractive employer branding holders are able to improve their productivity, polish their service and achieve their growth scenario.
Figure 1 illustrates to summarize a concept of the HRM function from overall management point of view.
Corporate mission/strategy, culture/ history, positioning in the market and type of organization influence the HRM role for its target mission. Eventually employer branding awareness will deliver to external shareholder via multiple factors such as employees' attributes, vision and leadership and financial performance. In these factors, HRM is responsible for employee attributes. Successful cases largely attributed to employees contribution. To capture talent staff attention, HRM needs to establish a well-organized internal and external operation.
(Figure 1: Human resource role impact on corporate reputation)
Source: Friedman. A. B, 2009
(Figure 2: Strategy from HRM side)
Source: "Exploring Corporate Strategy" (Johnson G. et al, 2008)
And figure 2 specifies a basic concept of the HRM operation in terms of development of employer branding. As highlighted in red, "people as a resource" is a key issue for HRM employer branding strategy because again employee's attributes will have a driver to achieve employer branding. Unlike another HRM strategy such as 'talent management', the ultimate purpose of employer branding is to enhance an overall organization reputation from inside out. Hence it is necessary to induce current employees to retain and persuade prospective talents to apply and accept employment offers.
To organizations, it is said "people are biggest asset for an organization". However it does not necessarily mean to attract all people. The most important is to specify necessary people for organization and communicate with RIGHT people through a powerful brand.
Therefore poor understanding of organization's brand personality and worker's need in work environment may end up to keep recruiting inappropriate or ill-fitted workers. Furthermore it is likely that wrongly recruited employees will not be motivated, rarely sense oneself as a part of organization and difficult to align their behaviour as an organization requests.
To avoid such fatal mistake, appropriate branding implementation is necessary.
In sum, while product driven brand approach is a concept of customer's awareness of trustable and recognized products and services which are closely linked with organization's name, HRM driven brand approach is a concept to appeal organization attractiveness as a successful career path for current employee as well as potential candidates. In fact, 2001 Maritz pool proved that having a brand is significant advantage in war of talent " almost a half of US workers made a decision to apply for their current job based in part on the company's image, or brand." (JWTinside, 2006)
The result is quite natural result and shows nature of people's mind
"What benefits is provided by an organization when employed? "
Moreover, HRM must understand psychological effect from brand image, such as people are likely affected by opinions of their parents, relatives and close friends when it comes to the judgement of organization they work for. Therefore, it is irremissible to understand its own components of employer branding and how it should be improved in accordance with organization strategy.
Components of Employer Branding
According to Chartered Institute of Personnel and Development (CIPD) and Mercer research (March 2010), there are 2 main factors supporting employer brand stability as shows in figure 3.
(Figure 3: Components of Employer Branding)
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Employee Value Proposition
Employee Value Proposition is a concept that outlines organization identity, its values, what it can offer and promise to employee and how an organization is different from competitors and it is suitable place to work. This is what current and potential employees can recognise and assess alignment between their expectation and their experience.
Reward and Performance Management Framework
According to CIPD and Mercer interviews with companies which applied to employer branding in their research, employer branding is supported by employee rewards.
"The most effective way rewards can support employer branding is through rewarding desired behaviours. Some companies in the research directly link their values within their performance management system as a means to communicate the employer brand and support employees' understanding of the line of sight between their performance, their reward and the company. For such organisations, employer branding becomes part of the deeper culture of the organisation."( CIPD and Mercer research, 2010)
Implementation of Employer Branding
As figure 4 shows, HRM driven branding strategy has an ability to generate potential organization strength.
(Figure 4: Synergy effect from HRM driven branding strategy)
By applying a combination of employer branding and experienced right employees, an organization can expect a synergy effect in organization. The effect could be financial growth, could be enhancement of reputation and market awareness from employees, potentials and customers.
In this section, the essay defines what benefits from employer branding effect, how employer branding is implemented into organization.
Benefit from Employer Branding
According to Simon Hepburn's comment in his article in strategic HR review, there are the following 6 benefits from a good employer reputation.
More effective recruitment
"Developing a positive reputation as an employer gives strong motivation to talented people to work in the company. In a way, this is a reasonable and efficient tool to find the potential employees."
Increased retention and motivation of existing employees
"Stable or even higher level reputation has huge influence on existing employee's behavior, because employees are highly motivated to work and achieve their career in a well-known firm. Hence employee's decision to leave a firm is less likely and cost efficiency for recruitment is achievable."
A more diverse workforce
"Biased recognition of an organization from minority interferes with interests from a wide range of potential hires. By well-managing employer brand and reputation, it allows an organization to expand potential recruiting spectrum. "
Creation of competitive advantage
"A firm can be very competitive with others because its high level reputation keeps encouraging existing talented employees to retain their position in a firm and attracting potential employees to join a firm"
Positive effect on consumer perceptions
"There is positive and high correlation between how organization is perceived as an employer and how its products and services are perceived by the market. Image of bad employer quickly prevails and has a negative impact on products and services."
"High level reputation on a firm's employer receives a stable reliance from the market and is able to keep a resilient positioning even when unexpected incidents such as scandal or decrease in its sales activity or performance happen."
Implement of Employer Branding
A final goal for an organization is to articulate how it wants its brand to be perceived internally and externally.
As figure 4 illustrates, 4 steps are introduced for development of employer branding, originally created from cooperation between Sepracor, a pharmaceuticals providers, and Mercer.
(Figure 4: Workforce branding using Mercer's four-step process)
Source: Sepracor HR and Mercer
In their report, they applied these 4 steps for their actual situation. Though these 4 steps should be thoroughly analysed as it is, this essay summarizes the steps as follows so as to apply them to cases in a more general format.
1st step: Project strategy and Research
It is needed that information about inside and outside organization should be well analysed. Business strategy and direction as well as employee vision should be clearly identified by reviews from organization executives and employee survey. In addition, understanding outside organization such as competitors and labor market situation is necessary to define themes in 2nd step.
2nd step: Discovery: use research to define themes
Given the result of research, an organization needs to uncover its strength to attract people, weakness to miss opportunities to hire people and its differentiation from others. Furthermore specific improvement and awareness of competitiveness should be taken into account.
3rd step: Develop and test the brand
Alignment of employee goal with organization goals is essential. After internal and external researches are tested for credibility of brand concept, the outcome of research that aligns with organization strategy ensures HRM to facilitate employer branding development.
4th step: Implement to internal and external audience
The core branding message has been embedded into communications across all stages of the employment lifecycle, capturing consistent messages about the value of the employment relationship. It translates those messages into communication points for attracting talent, performance management, benefits /compensation, on-boarding and training.
Royal Philips is one of the best organizations that have efficient practitioner of employer branding. The company distinguishes itself from the other competitors in its corporate positioning "touch lives every day. People inside and outside the company feel Philips could do better at celebrating its achievements in improving people's lives through its technologies and products. Through working for Philips, the employees touch lives every day" (Leeuwen. B et al, 2005).The concept "touch every day" appeal essence of Philips to people directly and promise to prospective hires and current staff regarding opportunities Philips gives.ã€€Figure 5 is the chart used within Philips to stress that "employer branding is not only about recruitment, its also about "keeping up the promise" (Leeuwen. B et al, 2005)
(Figure 5: Philips Employment Lifecycle)
Philips has successfully gone through most of the strategies discussed in previous sections. By sending the message "touch lives" people are aware of their quality and culture as organization theme. From use of Figure 5 employees' lifecycle, they focus on promise with employees. Such strong brand management is a locomotive for Philips to establish a compelling image in public.
Challenge for HRM as a Bellwether
Theoretically speaking, the attempt to obtain employer branding may lead possible receipt of impacts on organization strategy. However to establish employer branding successfully is not as easy as it sounds. In the course of application and procedure of employer branding, HRM must hold a responsible ownership of employer branding and the following challenges are necessary to generally take into account.
"It is imperative that HRM needs to understand the strategic direction of the company and then help the marketing leaders understand what kind of people can best execute the strategy."(Gorman, 2005) because marketing department is likely not to be aware that the organization brand is communicated not only via its product and service, but also via people. Deep understanding of organization strategy among key departments never leads to hire wrong people and train them, which cost it a huge loss of time and money.
" HRM must proactively well-communicate with other strategic core members such as marketing department and necessary to develop in advanced discussion at early stage as decisions are being made." (Gorman, 2005)
because it is still highly likely that HR department is out of core strategic members in a firm. In the most of cases, marketing department have an initiative in strategic decisions and report to HR about them afterwards. Creating such environment among different departments will stimulate cross functional discussion and collaboration that jointly addresses the issues and opportunities, that are ranked as high level priority for firm's strategy.
"HRM must be aware that employer branding is not only about recruitment, it's also about "keeping up the promise" once someone joins." (Crawford T, 2005)
As explained in Philips case, it is necessary to repeatedly point out this is crucial point. Employee Value Proposition and Reward system are mutually supportive to maintain stable employer brand image. Hence HRM is required that the employer brand may affect staff expectation either in positive form or negative form at each stage from 'their first interest to work for an organization' to employment and resignation. But even after they leave, employer brand will potentially have an influence on ex-employees' mind whether to act as a supportive speaker of an organization for potential staff and customers.
According to Mercer's report, "at McDonald's, to prevent its employer branding proposition from becoming an empty marketing campaign, it is supported by their reward practices"
To accomplish employer branding, continuum of investment and awareness is inevitable.
A HRM strategy used to be simply reactionary and not proactive, and targets just functional problems within the company without looking at the wider picture. However many people has started acknowledging that success from the input will be very limited. Hence demand of sophisticated HRM strategic role and thinking in employer brand should and will be more focused to pursue to maximize shareholder value as an ultimate mission.
Mclaughlin (2010) supported my view in her research that "a leadership brand will extend the concept of employer brand. It defines an organization's leadership philosophy and standards relevant not only to employees but to all stakeholders. This is where HR professionals' unique perspective is critical; they not only see the effect of leadership on employees throughout the organization, but they also have a voice in how leaders are selected, moved throughout the organization and developed. This seat of influence can raise the level of focus from individual leaders to the idea of ''leadership brand'" (McLaughlin. V et al, 2010)
The essay proved that HRM is needed for employer branding strategy as an organization management. But after tomorrow, nobody can see what is needed. One thing for sure is that an organization always needs dynamic actions which should be placed in right timing to survive in the competitive market, and HRM should always be under high level awareness in terms of organization strategy and prepare for forthcoming stages. In that sense, evolution of strategic HRM will never end.