Your employer brand impacts its attractiveness in the employment market. It strengthens your corporate brand, enhances your reputation, and influences customer opinion and purchase decisions.
But if you think that an employer brand is an intangible idea without any tangible impact on your revenues, profits, and business ROI – then you’re mistaken. A strong employer brand is a powerful indicator of a company’s financial performance, profitability, and ROI.
Let’s see how.
Strong Employer Brand: Impact on Employees, Customers, and Profitability
If your employer brand is strong, your existing employees view the company as a great workplace. They will tell positive stories about their work experiences and express appreciation for the employer value proposition (EVP) that you provide. A strong employer brand gives employees a powerful reason to continue to work for you, which will ultimately translate into a high Employee Lifetime Value (ELTV).
It will also increase your company’s attractiveness as an employer, so more people would want to join and participate in its vision and mission. Your employer brand is positively correlated with employee engagement and satisfaction. And you already know that engaged employees can affect the course of a company’s operations, competitiveness, and financial performance.
Employer brand, customer satisfaction, and financial performance are also intricately linked together. With a strong and well-admired employer brand, you can attract and retain skilled talent, as well as high-value, influential, and loyal customers. A great employer brand tells customers how you do business and treat employees, and what these employees say about you. Customers care about and appreciate strong employer brands and reward them by opening up their wallets and giving them their loyalty. And the more customers that open their wallets to you, the higher your revenues, the greater your profitability, and the more financially stable your organization. You will also be able to retain more customers and increase customer lifetime value (CLV), which will again, drive your profitability and ROI.
Weak Employer Brand: Impact on Customer Loyalty and Company Profitability
If a strong employer brand can bring you more customers and a larger wallet share, can a weak employer brand do the opposite? Yes, it can. In one survey, 64% of people said that they stopped buying from a company after hearing that it treated its employees poorly. A majority of companies believe that the employer brand can positively or negatively impact revenues.
Think about real-world cases. The ride-hailing company Uber is one not-so-shining example of the connection between employee experiences, employer brand, customer loyalty, and financial performance. In 2019, the Equal Employment Opportunity Commission (EEOC), a U.S. federal agency established in 1964, found that for many years, Uber had permitted “a culture of sexual harassment and retaliation against individuals who complained about such harassment.” Simply put, sexual harassment, pervasive sexism, and retaliation went unchecked at Uber, creating a toxic culture that harmed many employees.
Following these findings, Uber agreed to set up a $4.4 million fund to settle a federal investigation into these charges. Around the time it made this announcement, the company also lost a massive $1.4 billion in stock value after new reports emerged of sexual assaults – this time of customers. All these black marks diluted Uber’s employer brand, which has still not recovered several years later. Although it retains a large fleet of independent driver-contractors, Uber has lost millions of customers who still refuse to ride with it, depriving the firm of a huge source of potential revenue and ROI.
Other Ways Employer Brand Impacts Business ROI
Return on Investment is an important business metric that shows how well a company is performing financially. Does it generate more money than it takes in? In other words, does it generate a healthy profit for every dollar, pound, euro, or yen that you put in? If yes, it is profitable and likely has a good ROI (depending on what you define as healthy and good).
There are many ways to improve ROI. One is to improve processes so they run more efficiently and produce more and better output. Another is to cut costs, say, by replacing manual activities with automation, cutting out waste, outsourcing low-value processes to a third party, etc. Strengthening your employer brand can also positively impact your ROI in a number of ways.
Well-known and respected employer brands find it easier to attract 50% more qualified and talented candidates. As a result, their recruitment processes are simpler, faster, and more effective. Their time-to-hire is 1-2X faster and they can reduce their cost-to-hire by 50%, if not more. Furthermore, organizations with great employer brands have also reported a 28% reduction in employee turnover.
And that’s not all. Employees who work for much-admired employer brands willingly act as the company’s spokespeople and brand advocates. Their referrals and word-of-mouth help to attract good candidates who will then go on to become the firm’s new spokespeople and advocates. Thus, a virtuous cycle is created that further reduces the time and cost to recruit, boosts employee retention rates, and strengthens the employer (and corporate) brand. All of this has a substantial and positive impact on the company’s bottom line and ROI.
Over to You
In this article, we showed you how your employer brand generates massive business value for the company. Engaged and satisfied employees, happier and more loyal customers, easier recruitment processes, and positive word-of-mouth are some of the desirable consequences of a strong employer brand. A strong employer brand in turn can improve the company’s profitability and ROI. A weak employer brand will do the exact opposite. Which one will you choose? Over to you!
Ready to correlate your employer’s brand strength with your financial performance? Contact us to get started!
