Reward Optimisation: The case for employer branding
Orientation In competitive global markets, it is becoming ever-more challenging to attract and retain talented employees that possess scarce skills critical to the sustained success of an organisation. Technological advancement and the changing nature of the work has exponentially increased the demand for highly skilled knowledge workers, often referred to simply as talent. Imitating the products and processes of competitors has become easier to do than ever before and competitive advantage is increasingly being found in intangible assets, such as a reputable/desirable employer brand and having access to scarce intellectual and human capital. Reason for the Study A positive relationship between the level of remuneration and the perceived attractiveness of a job offer has consistently been found and is often the basis of determining reward offerings. The global economic recession of the recent past and the decreasing availability of financial resources has meant that organisations need to identify alternative (non-financial) strategies to attract, motivate and retain employees, colloquially referred to as the war for talent. Developing a desirable and attractive employer brand has become a promising non-financial strategy that has already proven to be effective in talent attraction and retention. In the present study, the notion that talented employees may accept a lower level of remuneration to be employed at an organisation that is perceived to have a reputable/desirable employer brand was investigated, in other words that a reputable/desirable employer brand may represent a remuneration discount for organisations. Given that remuneration or the salary bill is typically the largest expense for any organisation and provided the offers remain attractive to talented employees, any saving will represent a significant amount of money. Attracting talented employees, at a remuneration discount compared to their competitors, would enable organisations to further enhance their competitive advantage and increase their sustainability in an economy characterised by limited financial resources. Research Purpose In a similar manner as consumers are willing to pay a premium or inflated price for a product that has a desirable brand, it was argued in the present study that knowledge workers may accept a lower level of remuneration to be employed at an organisation that is perceived by them to have a reputable/desirable employer brand. The aim of the study was, therefore, to investigate if a reputable/desirable employer brand could result in a remuneration discount for organisations, while still achieving similar levels of job attractiveness amongst prospective employees. Research Design The present study employed a 2x2 or 22 full-factorial experimental design. Two independent variables were manipulated, namely remuneration well-above the industry norm (present or not present) and a reputable/desirable employer brand (present or not present) resulting in four distinct conditions. Perceived job attractiveness (the dependent variable) was measured after a respondent was exposed to one of the four stimulus conditions. The variables were manipulated by offering respondents one of four job advertisements, each being the same other than differing in terms of the manipulations. The job advertisements were used as a stimulus to determine the effect of remuneration and employer brand on perceived job attractiveness, as well as to investigate if any interaction effects were present. Furthermore, respondents were asked to estimate their expected salary per annum for the job advertisement (stimulus condition) they were exposed to. The expected salary that participants estimated when exposed to a job advertisement was considered a measure of brand equity. Respondents were additionally presented with an employer brand survey containing different brand images. Respondents were asked open-ended questions based on the brands they were exposed to. Examples of the questions included “Considering the brands illustrated above, which of them would you consider your dream job?” and “Would you be willing to accept a remuneration discount to work at your dream job?” A non-probability convenience sampling approach was employed to distribute an online survey to different organisations and individuals across South African organisations. Approximately 180 questionnaires were distributed, of which 161 questionnaires were returned. A realised sample (n = 121) was achieved once responses with more than 20% missing data were removed. As a snow-balling approach was further used, one is not able to calculate a response rate. Random assignment of respondents (i.e. randomisation) was achieved by setting the Qualtrics software to randomly assign each respondent to one of the four experimental conditions (i.e. one of the four job advertisements). This was done to ensure that the four sub-samples of respondents, in other words in each of the four conditions were similar and not different in any respect other than the stimulus they were exposed to, so ensuring the validity of the results. Data was analysed using Descriptive Statistics, Principal Components Analysis and a Full-Factorial ANOVA. Main Findings Results indicated that remuneration well-above the industry norm had a statistically significant (p < .05) main effect on job attractiveness. The results further indicated that a reputable/desirable employer brand had a statistically significant (p .05) interaction effects were found between remuneration well-above the industry norm and a reputable/desirable employer brand. In terms of expected salary, without offering remuneration well-above the industry norm, a difference in expected salary for Condition 1 (M=R550,833) and Condition 3 (M=R499,200), the presence of a reputable/desirable employer brand and not, respectively were found. Similarly, when offering remuneration well-above the industry norm, a difference in expected salary for Condition 2 (M=R467,407) and Condition 4 (M=455,840), the presence of a reputable/desirable employer brand and not, respectively was found. It was noted that if remuneration well-above the industry norm was offered, a desirable employer brand generates some brand equity. However, when remuneration well-above the industry norm was not offered (i.e. lower levels of remuneration), a reputable/desirable employer brand offers a sizable quantum of brand equity. These results, albeit in the opposite direction of brand equity were believed to support the notion of a remuneration discount, given the presence of a reputable/desirable employer brand. Respondents were further presented with a slide containing different well-known brand images and asked to indicate if any of them would be their dream job (in terms of working for any of the presented brands). Google was most frequently chosen by respondents as their dream job, followed by Apple, Woolworths, Mercedes-Benz and Coca-Cola (respectively). When asked, innovation and prioritising employee well-being were prominent themes in terms of reasons respondents provided for their choice of a dream job. Additionally, 75% of respondents revealed that they would be willing to accept a remuneration discount (i.e. lower level of remuneration) to be employed at their dream job. Contribution of the study Although the relationship between the level of remuneration and perceived job attractiveness is well established, limited research is available on the influence of a reputable/desirable employer brand on perceived job attractiveness. The results obtained in the present study indicated that a reputable/desirable employer brand has a statistically significant (p < .05) main effect on perceived job attractiveness. Furthermore, no literature could be found that investigated the causal effect of a reputable/desirable employer brand and remuneration wellabove the industry on perceived job attractiveness. The results from the current study showed that even in the absence of remuneration well-above the industry norm, organisations with a reputable/desirable employer brand are likely to have a positive effect on perceived job attractiveness. It was, therefore, established that organisations with reputable/desirable employer brands may remain attractive, even at a remuneration discount. In other words, organisations with reputable/desirable employer brands may not only be able to attract and retain talent, but also save relatively large amounts of money. Managerial Implications The notion of brand equity and the desirable outcomes thereof are well-established in Marketing. Organisations have adopted the same branding principles in an effort to achieve a reputable/desirable employer brand in the belief that it, similarly, will bring about positive outcomes. The findings of the present study positively contribute to this list of reasons and makes for an even more cogent, financially based, argument for organisations to make every effort to ensure they have a reputable/desirable employer brand in the market. The application of an experimental research design allowed for a causal assessment of the effect of remuneration well-above the industry norm and a reputable/desirable employer brand on the perceived attractiveness of a job offer. Given the current economic recession, organisations are under financial pressure and no longer able to offer exorbitant salary offers in an effort to attract the best talent. The results of the present study seem to suggest that organisations that have been able to establish a reputable/desirable employer brand may be able to make equally attractive yet financially more viable job offers when compared to organisations that offer remuneration well-above the industry norm, but do not have employer brands that are considered attractive. Simply put, there seems to be evidence for a remuneration discount for a reputable/desirable employer brand.
Networked Digital Library of Theses and Dissertations