In a volatile business environment, it is important that firms are able to harness the value of a defined employer brand to remain competitive. An employer brand is how an organisation markets what it has to offer to existing and potential employees. An effective employer brand can help ensure that an employer’s workforce is not only engaged with their work, which can reduce turnover and increase performance, but can also deliver a more positive customer experience. This is all important as the economy starts to recover and companies strive to position themselves for the upturn.
However, one element underpinning the success of the employer brand is the extent to which it is supported by reward. Integrating the employer brand with a strong reward strategy can enable employers to promote their corporate image, values and behaviours by “putting their reward money where their mouth is”.
To help employees better align their reward strategy with their employer brand, the Chartered Institute of Personnel and Development (CIPD) and Mercer have collaborated on a research project – drawing insight from a survey of 44 organisations, interviews with nine organisations and a panel discussion with reward specialists – in order to determine how this can be achieved.
To try and ensure that their employer brand and reward strategy support one another, companies in our research have been aligning reward with the employee contributions that are essential for success. They are doing this through performance-based reward that gives employees a consolidated or non-consolidated pay for exhibiting the behaviours, attitudes, values and performances that the organisation needs. This is also reflected in the provision of employee benefits that exist to support employer brand objectives. However, there had been little thought given to one of the most significant reward costs – the company pension – and how it works to support the employer brand.
While financial rewards are important, our research highlights that non-financial rewards can also be just as important when ensuring what the firm values is in fact rewarded. Examples of practice include: offering a supported recruitment and induction, investment in career development, and offering flexible working.
The research found that many employers are using a total reward approach to combine the various elements of the reward package to support the employer brand. While the state of the economy had placed constraints on the reward budget, firms demonstrated ingenuity in developing low cost rewards and non-financial benefits to support the brand.
The total reward approach also highlighted the value of communication in raising the profile of existing reward practices and benefits that supported the brand, rather than developing a new reward system. It also reinforced what the organisation valued and, in return, how it was going to reward and recognise staff.
The study also found that for the employer brand to add organisational value it could not be a standalone initiative. Other disciplines and functions need to be involved. An important role that HR can fulfil is to get senior leadership buy-in by communicating why the employer brand is important and how it can add value. HR also has an important role in helping articulate what the employer brand is not.
Finally, our research found that employers are looking for ways to assess the impact of their reward practices on employer branding and business performance. Although the measurement of the links between employer branding and reward is relatively new, companies are innovating by utilising existing business and HR metrics. These can include; employee attitude surveys; performance management data; customer service satisfaction and profitability.
In conclusion, HR needs to help articulate the employer brand and communicate it to existing and potential employees, while reward professionals need to ensure that the employee values, attitudes, behaviours, and performances encapsulated by the employer brand are being supported by their reward strategy. They should be asking how their reward practices support what the organisation needs by examining: how pay levels and grades are determined, the way that people progress along these bands and how bonuses are awarded (including share and option grants).
Similarly, benefits including pensions and non-financial rewards need to be assessed to see how well they are supporting the brand. Where gaps arise between practice and intent, reward professionals need to assess how costly it will be to reduce the gap and deliver on the deal, and identify those stakeholders that need to be engaged in the journey towards organisational and reward authenticity.
Christopher Johnson is a Partner at Mercer and Charles Cotton is a Performance and Reward Adviser for CIPD.
For more information, the research report can be found here.
