Beruflich Dokumente
Kultur Dokumente
on Productivity-Related Outcomes
of an Organization
Alan Robertson* and Ali Khatibi**
The study aims to identify the significant outcomes of employer branding on organizational productivity
and which organizational factors impact upon the relationship between the two. Data gathered from a
survey of 369 Sri Lankan companies indicates that a well-developed employer branding strategy enables
an organization to achieve significantly higher employee productivity-related outcomes than with a
partially-developed or undeveloped strategy. Identifying the factors instrumental to the process affords an
increased awareness of why this occurs, particularly in respect to the role of senior management in
developing and driving the branding strategy, as well as understanding that its impact is largely ineffective
until the brand image is fully developed and embedded in the internally and externally-focused identity
of the organization. Although data was gathered from companies in one developing country it has
practical implications for those managing employer branding programs through providing a greater
understanding of the importance of organizational factors on brand strategy development in effecting the
improved productivity.
Introduction
Ambler and Barrows (1996) seminal definition of the term employer brand described it
as the package of functional, economic and psychological benefits provided by
employment, and identified with the employing company, while the sum of a companys
efforts to communicate to existing and prospective staff that it is a desirable place to work
(Lloyd, 2002) outlines the employer branding process. In both instances, these definitions
focus on the obligations of the employer to the benefit of the employees without spelling
out any commensurate return in terms of positive outcomes for the organization.
Although up to 20% of businesses in some countries actively practice employer
branding strategies (Minchington, 2011), there appears to be little research data to
document the outcomes that ensue in relation to factors that increase productivity. In
exploring the relationship between the employer brand and the productivity-related
outcomes of an organization, the following question is addressed:
What are the significant outcomes of employer branding that influence
employee productivity?
*
PG Student, Faculty of Business Management and Professional Studies, Management and Science University,
Malaysia. E-mail: nalalanka@yahoo.com
**
Dean, Faculty of Business Management and Professional Studies, Management and Science University,
Malaysia. E-mail: alik@msu.edu.my
17
Literature Review
An examination of the literature related to employer branding indicates that it has
essentially six major potential outcomes for an organization. Two outcomes are directly
related to the external focus of the employer brand: facilitating the recruitment of (1) a
sufficient number; and (2) quality of employees. The objectives of the internal employer
brand are directed towards: (1) improving levels of employee job satisfaction; (2)
increasing staff retention and reducing turnover; (3) enabling higher levels of
productivity as a result of greater employee commitment; and (4) reinforcing the
consumer brand image of the organization.
Externally-Focused Outcomes
Initially, and even in some current literature, employer branding is seen principally as a
recruiting tool for organizations. Chambers et al. (1998) in The War for Talent explore
the difficulty faced by large US companies in attracting the most suitable executive
employees. Reasons for this include the aging population which is resulting in a reduction
of the proportion of working age people, no increase in the percentage of female workers,
a flattening of workforce productivity improvements, stable immigration levels and
executives not prolonging their careers.
Despite the global financial crisis, these findings remain relevant. In arguing that
employer branding offers the best way to redefine and improve the way a company recruits,
Johnson and Roberts (2006) cited a study that indicated 40% of job seekers ranked
treatment of employees highest in their perceptions of organizations as a place to work (29%
ranked quality of products or services as most important). Research by the Chartered
Institute of Personnel and Development (CIPD) shows that approximately 75% of
companies that use employer branding as a tool for recruitment find it effective (Dyer, 2007).
The recruitment process entails development of the appropriate image for an
organization, striking a balance between instrumental and symbolic traits (Greening and
Turban, 2000; Lievens and Highhouse, 2003; and Hieronimus et al., 2005), segmenting the
job seeker market (Moroko and Uncles, 2009), and presenting an accurate and realistic
perception (Meglino and Ravlin, 1999; Cable et al., 2000; and Backhaus and Tikoo, 2004),
closely aligned with other organizational images (Knox and Freeman, 2006; Wheeler
et al., 2006; and Mark and Toelken, 2009) and the internal employer brand (Davies et al.,
2004).
Some research studies have identified a relationship between an organizations
reputation and its success in attracting quality applicants (Fombrun, 1996; and Cable and
Turban, 2001), with Highhouse et al. (1999) suggesting overall perceptions of reputation
are in fact the most significant factor influencing the choice by recruits. Factors that
contribute to an organizations reputation include financial performance, company size,
media exposure, advertising expenditures and type of industry (Cable and Graham, 2000).
18
Retention of Employees
Management theory normally emphasizes the importance of organizations attracting,
developing and keeping talented employees. Retention of employees is seen as a positive
and relevant objective of organizations, and practices, such as employer branding, which
have the potential to enhance retention are considered to be valuable due to their role
in contributing to this outcome.
However, the value of retention as an outcome does need to be qualified in some
respects. Somaya and Williamson (2008) pointed out that companies in general lose
approximately 15% of their human capital every year, yet this should not always be seen
in a negative light. They point out that while some employees are lost to competitors,
others leave to join existing and potential firms with whom linkages can be forged.
The Influence of Employer Branding on Productivity-Related Outcomes of an Organization
19
It is also possible that very low employee turnover may be misleading as an indicator
of employer branding success if staff are loyal to the employer simply to accrue tenurebased rewards and are not sufficiently engaged in the organizations goals (Moroko and
Uncles, 2008).
Drucker (2002) has drawn attention to the growing trend of employing temporary
workers, particularly through temp agencies, often with a view to giving an organization
greater flexibility in the management of its workforce, but also to help minimize the costly
regulatory processes associated with hiring labor. In a situation where a reasonable
proportion of employees are hired, fired and possibly, promoted from outside the
organization, the traditional concept of employer branding is unlikely to hold.
Nonetheless, retention is seen as an important objective in most companies, especially
considering the cost of recruiting, inducting and developing replacement staff.
Productivity
In terms of quantifiable evidence, there is still a large question mark as to whether
employer branding contributes towards helping a firm achieve better performance.
Resolving the issue is a difficult task due to the complexity of linking branding programs
and firm performance. Backhaus and Tikoo (2004) suggested that it would be necessary
to identify the mediators that operate between the employer branding program and the
firms profit margin or profit growth. These may take the form of incremental increases
in individual level productivity, or overall productivity at the aggregate level (Backhaus
and Tikoo, 2004, p. 512). Other strategies entail comparative studies of successful and
unsuccessful employer branding in organizations (Moroko and Uncles, 2008), and
identifying organizations regarded as having higher levels of employee relations and
comparing their performance with other similar organizations in the broader market
(Fulmer et al., 2003; and Read, 2007).
A range of linkages between employee characteristics and organizational outcomes
have been identified in research studies. The alignment of employee identity with
organizational identity has been shown to increase positive work-related attitudes and
behaviors (Olkkonen and Lipponen, 2006). It has been found that higher levels of
employee satisfaction can lead to greater performance levels (Iaffaldano and Muchinsky,
1985) and higher customer satisfaction (Ryan et al., 1996). In addition, employee attitudes
are positively related to customer satisfaction (Morrison, 1995), while Rucci et al. (1998)
have gone one step further by linking employee attitudes and customer satisfaction to
financial growth in their description of the five year process to revamp the ailing Sears
Roebuck Company in the United States.
In terms of assessing performance outcomes, Davies et al. (2010) have focused on the
relationship between employee and customer perceptions of corporate identity, specifically
the variation between the two. Their results showed that where employees have a more
positive view of a companys identity than customers, sales will grow commensurately. On
the other hand, a more negative view of corporate identity by employees than customers
20
will result in a decline in sales. The whole subject of the link between employer branding
and productivity is closely aligned with the concept of psychological contractin an
organizational context the shared understanding of employee obligations toward the
employer and the obligations expected from the organization in return (Edwards, 2010).
The closer the alignment of employee behavior with the values of the employer brand, the
stronger the psychological contract between both parties and presumably, the greater the
employee productivity. However, as Vallaster and de Chernatony (2005) pointed out, this
alignment is very much dependent on the success of the employer branding process. While
there is an inherent logic in all of this, little has been done to substantiate the
relationships, although Punjaisri et al. (2009) have found a positive link between internal
branding to employees within organizations and behavioral aspects of employees in their
delivery of the brand promise.
21
differentiation in the values and goals espoused by its employees with a subsequent
flow-on to differentiation in employee performance which will include consumer brand
supporting behavior.
Conceptual Framework
Figure 1 presents a simplified conceptual model for the employer branding process. The
study focuses on the latter stages of the branding process following the establishment of
the brand itself and examines the relationship between the employer brand (internal and
external) and the organizational outcomes.
Figure 1: Conceptual Employer Branding Model
Organizational
Communication
Employer Value
Proposition
Organizational
Outcomes
Employer Brand
Employer
Branding
Management
Organizational
Factors
Hypotheses
In order to provide answers to the question underpinning this study, the following
hypotheses are addressed:
Hypothesis 1: The strength of the employer brand is positively related to external and internal
organizational productivity outcomes.
Hypothesis 2: The greater the level of employer branding strategy implementation within an
organization, the greater the level of external and internal organizational productivity outcomes.
Methodology
Information was gathered from a study of employer branding in Sri Lankan companies. A
total of 608 employees of 369 companies of varying sizes, industries and locations within
the Western Province were selected, including the capital city of Colombo and the Greater
Colombo area.
Two types of sample populations were used in the study. The first was made up of a
random sample of 66 companies drawn from the list of the 100 most respected business
22
entities in Sri Lankan as identified in a survey conducted by The Neilson company for
the Lanka Monthly Digest (LMD, 2010), a well-reputed business magazine.
The second, and larger sample of 303 was made up of companies selected randomly
from selected stratified locations within similarly derived geographical areas within the
Western Province.
The principal source of data was a self-completion questionnaire administered to
one or more employees within the selected companies depending on the policy of the
company. In addition, semi-structured interviews were conducted with one employee from
20 Sri Lankan companies of varying sizes, industrial classifications and geographical
locations.
Respondents were asked to indicate on a five-point Likert scale the rating of their
organization in relation to questions on the external employer brand and the internal
employer brand, the productivity-related outcomes and the mediating factors. The
external employer brand is that perceived by potential job applicants while the internal
brand relates to the perception by current employees of the organization as an employer.
For the purpose of this study, companies were classified according to the level of
employer branding strategy that they had implemented. These were grouped into three
levels:
A well-developed employer branding strategy.
A partially-developed employer branding strategy.
No employer branding strategy.
The data was processed using SPSS. Each scale was tested for reliability with the alpha
obtained in all being above 0.80, which is considered as good (Sekaran and Bougie, 2009).
Hypothesis 1
Hypothesis 1 states that the strength of the employer brand is positively related to
external and internal organizational productivity outcomes. Testing these variables for
statistical correlation reveals a moderate level of positive correlation between the external
and internal employer brands and their corresponding productivity variables (Table 2),
thereby supporting the contention of Hypothesis 1.
The Influence of Employer Branding on Productivity-Related Outcomes of an Organization
23
Mean
SD
363
3.34
0.707
366
3.41
0.741
366
3.41
0.758
368
3.11
0.861
368
3.39
0.689
368
3.48
0.729
3.36
0.583
Overall mean
Internal
Employer
Brand
ExternallyFocused
Productivity
InternallyFocused
Productivity
External
Employer
Brand
Pearson
Correlation
0.456**
0.424**
0.421**
Internal
Employer
Brand
Pearson
Correlation
0.456**
0.427**
0.563**
Externally-
Pearson
0.424**
0.427**
0.664**
Focused
Correlation
0.421**
0.563**
0.664**
Productivity
InternallyFocused
Pearson
Correlation
Productivity
Note: ** Correlation is significant at 0.01 level (2-tailed).
Hypothesis 2
Secondly, the level of employer branding strategy development and level of outcomes can
be considered. Tables 3 and 4 indicate, companies with a well-developed employer
branding strategy have a significantly higher level of related productivity outcomes than
do those with a partially-developed or no strategy.
24
Outcomes
Well-Developed
Employer
Branding
Strategy
PartiallyDeveloped
Employer
Branding
Strategy
No Employer
Branding
Strategy
Mean
SD
Mean
SD
Mean
SD
3.78
0.76
3.29
0.70
3.30
0.679
3.89
0.79
3.39
0.71
3.35
0.72
3.96
0.67
3.44
0.69
3.31
0.77
Minimizing voluntary
employee resignations
3.61
0.89
3.10
0.83
3.03
0.84
3.80
0.71
3.42
0.62
3.30
0.70
3.96
0.76
3.56
0.67
3.38
0.72
The ranking of outcome strengths is almost identical across the three strategy levels.
In relation to the externally-focused outcomes, the ability to get the right people was to
a small degree more successful than getting sufficient numbers of employees to fill the
vacancies. Of the internal outcomes, worker satisfaction and commitment was most highly
ranked in companies with a well-developed employer branding strategy, closely followed
by the enabling of employees to provide quality of product and service. The order was
reversed in the other two branding strategy levels. In all groups minimizing resignations
was the least successful outcome.
The one-way ANOVA analysis identifies a significant difference between companies
with a well-developed employer brand strategy and those with a partial or no strategy
(Table 4).
In Tables 4 and 5, there is a significant relationship between a strong employer brand
and a well-developed employer branding strategy bringing about higher levels of
productivity-related outcomes. Hypothesis 2, therefore can be partially accepted, however,
it must be remembered that the means in Table 4 support the hypothesis only in relation
to companies with a well-developed strategy. The following two qualifications to the
hypothesis must be noted.
The Influence of Employer Branding on Productivity-Related Outcomes of an Organization
25
Tukey HSDa
No strategy
226
3.2762
Partially-developed strategy
107
3.3657
35
Sig.
3.8341
0.610
1.000
The first relates to the fact that there is little difference between the outcomes of
companies with a partially developed employer branding strategy and those with no
strategy at all. The strength of the employer brand therefore does not appear to increase
Table 5: Comparisons Between Productivity Outcomes
at Different Levels of Employer Brand Strategy
Dependent Variable:
Productivity Output Mean
Tukey
HSD
(I) Level of
Employer
Branding
Strategy
(J) Level of
Employer
Branding
Strategy
Has a welldeveloped
strategy
Partiallydeveloped
strategy
Std.
Error
Sig.
Partiallydeveloped
strategy
0.46847*
0.10936
0.000
No strategy
0.55797*
0.10202
0.000
0.3179
0.7981
Has a welldeveloped
strategy
0.46847* 0.10936
0.000
0.7258
0.2111
0.06591
0.364
0.0656
0.2446
Has a welldeveloped
strategy
0.55797* 0.10202
0.000
0.7981
0.3179
Partiallydeveloped
strategy
0.08950
0.364
0.2446
0.0656
No strategy
No strategy
95% Confidence
Interval
Lower Upper
Bound Bound
0.2111
0.7258
Mean
Difference
(IJ)
0.08950
0.06591
26
at the same rate as the branding strategy builds momentum. It is not until the employer
branding strategy is established and fully functional that a significant growth in
productivity outcomes takes place.
Secondly, while the outcomes may be at a lower level, the employer brand strength can
still have a strong effect in companies with no employer branding strategy (Table 6).
Therefore, a company with a strong employer brand, whether it is achieved by a deliberate
employer branding strategy or not, can receive a commensurate productivity-related
improvement.
Table 6: Linear Regression Effect of No Employer Branding Strategy on
Relationship Between Employer Brand Strength and Productivity Outcomes
Model
Unstandardized Coefficients
B
Std. Error
(Constant)
1.078
0.236
Employer Branding
0.652
0.070
Beta
0.534
Standardized Coefficients
t
Sig.
4.563
0.000
9.359
0.000
Mean
Note: a. Dependent Variable: Productivity Outcome Mean.
b. Selecting only cases for which companies have no employer branding strategy.
27
Conclusion
The data gathered for this research indicates that a well-developed employer branding
strategy enables an organization to achieve significantly higher employee productivityrelated outcomes than with a partially-developed or undeveloped strategy. Identifying the
factors instrumental to the process affords an increased awareness of why this occurs,
particularly in respect the role of senior management in developing and driving the
branding strategy, as well as understanding that its impact is largely ineffective until the
brand image is fully developed and embedded in the internally and externally-focused
identity of the organization.
To be more precise in determining the nature and extent of the outcome improvement
derived from employer branding, a set of quantitative measures are needed. Although the
available literature provides an assortment of approaches, there is little in the way of a
definitive framework. Further, research in this area would be very valuable.
In addition, the process of embedding employer branding within an organization needs
further exploration. Even though employer branding may be practiced, there appears to
be a critical level of implementation at which it becomes effective. Both cross-sectional
and longitudinal studies are needed as well as case studies from a range of industries,
organizational types and sizes and countries.
Limitations of the Study: All the data obtained by questionnaire and interview was drawn
from one country, Sri Lanka, and therefore the findings may not be applicable in other
national settings.
In relation to the sampling of respondents two points need to be mentioned.
Firstly, as employer branding is still largely in its early stages of development in
Sri Lanka, the number of companies surveyed which had a well-developed employer
branding strategy was considerably smaller than those with a partially-developed strategy
and those with no perceived strategy at all.
In addition, the sample was made up of companies not individuals. It was not possible
to control who the participants from each company were. This depended on the policy
of the company and the identity of the original contact person in each. While company
directors, CEOs and senior managers were among the respondents, the majority were from
middle and lower level management.
28
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32
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