How To Measure Employer Brand Value
Updated: Jan 21
What would be the value of your employer brand? We have been wrapping our thoughts about this topic at CareerCentar and hopefully we have some interesing insights to share with the world.
We will try to describe our model of Employer Brand Value (here in after "EBV") for the purposes of making investment decisions at your company and for the purposes of explaining should you be investing in employer branding. We are focusing on understanding what is the value of activities and their outcomes (results) which can be related to EBV.
Employer Brand Value (EBV)
What is it, what is it not?
Corporate brand value is the financial worth of the brand. To determine brand value, businesses need to estimate how much the brand is worth on the market – in other words, how much would someone purchasing the brand pay only for that brand. There are many methods to evaluate brands, one of them is applying Cost Based approach - this approach is primarily concerned with the cost in creating or replacing the brand.
The concept of branding is here to stay. Most in business support the idea of branding. Branding allows companies to create an identity and establish themselves in the marketplace.
The field of valuation of employer brands is completely new. We might be the first to propose some valuation method (let us know if some other articles arise). Our approach is considering the value of your employer brand activities and their impact on business performance. This valuation, as any other valuation method, can not be the same for every company, but we will provide a framework where you can adjust your features of the model based on your specific attributes and activities. This valuation approach is to be used for decision making purposes, not M&A or similar EBV analysis.
Important note: Employer brand value is NOT the same as employer brand equity.
Picture 1: Employer brand value model and it's main attributes
Employer brand value model consists of 4 main segment, let's dive a bit deeper into each.
Hiring segment represents all activities which are relevant for ensuring productive hiring process. To calculate financial value of the hiring process, you should include:
Costs of hiring per each hire (or total) for each relevant business department
Time to hire for each relevant business department
Cost of vacancy based on estimated value of vacant days in each department
Quality of hire - rank each hire and score each deparment or figure out other metrics to track quality of hires
Costs of all other resources related to hiring (like IT, software licences, agency fees, etc).
We recommend to include several other methods and metrics:
NPS or net promoter score (how many job applicants would recommend your company to their friends)
Channels of hire - efficiency and quality of each channel
Strenght of your referral program (your referral program is rather weak if less than 5% of hires come via referrals)
Quality of job applicants
Satisfaction of job applicants with the hiring process
Metrics relevant for your job application process and/or career site.
How is hiring related to employer brand value?
Hiring is one of the most important activities for any company, large or small. Due to business complexity, we often overlook all the effects the hiring has on achieving business results and employee satisfaction. Hiring is important for employer brand value due to 4 segments:
it creates a perception on the market about your organization based on experiences you create to job applicants
it gives you valuable metrics and insights about the efficiency of your employer branding strategy
it strongly affects productivity and goal achievement (positively and negatively)
it strongly affects your culture and employee loyalty.
Productivity is a broad concept in which we are measuring investments relevant for employee produtivity, such as: compensation and benefits, training and development costs; we are calculating financial value of absenteeism and goal achievement (or underachievement).
Metrics which you should have to calculate productivity:
Revenues/FTE index (change y-o-y)
Revenues growth (% change)
Training cost/FTE per department
Absenteeism days per department
Average value of working day per department
Goal achievement/performance measurement - if not possible to quantify via business KPI's (like average value of customer), use calculation based on salary/hour worked.
How is productivity related to employer brand value?
Employer branding is the solution to some of the problems which occured on the market in the last 10 years. Those problems are directly related to attraction and retention of strong performers which lead to several challenges to every organization:
lower goal achievement,
slower revenue growth or even revenue decline,
less innovations, new products, less process improvements,
higher costs of attracting and keeping employees,
lower customer satisfaction,
lower engagement and collaboration.
Financial value of loyalty is visible on these four performance drivers for your business:
customer loyalty and
Figure out what loyalty means for your managers and employees. Ask them what they perceive as loyalty, what matters to their feeling and perception of being loyal. Try to implement some objective measures like NPS (are your employees promoters, distractors or neutral when it comes to sharing their experiences), monthly pulse surveys or strong feedback mechanisms on managers impact on loyalty.
How is loyalty related to employer brand value?
Loyalty can be a broad concept but in terms of employee turnover it represents direct financial loss and decreases company's know-how. Employer branding should lead to improved employee experience, stronger connection between employer and employees, better collaboration and overall satisfaction with work. Achieving this would decrease turnover costs which are significant as they dive: replacement costs (hiring process), productivity costs (lower producitivity of new employee), cost of vacancy (estimated costs of having less employees until you hire them). Based on global research, turnover costs are usually estimated as 50% to 150% of employee's yearly salary.
What are culture relevant investments? If you try to Google it.. you'll find... not much.
Organizational culture is defined as the underlying beliefs, assumptions, values and ways of interacting that contribute to the unique social and psychological environment of an organization.
Organizational culture affects the way people and groups interact with each other, with clients, and with stakeholders. Also, organizational culture may influence how much employees identify with their organization (Schrodt, 2002).
Culture relevant investments are all those expenses you make for enabling and promoting desired behaviours and values, they include:
recognition programs (in line with corporate values),
connecting your work with purpose,
company programs like: sports, bands, plays.
EMBRACE THE RESPONSIBILITY TO DRIVE POSITIVE BUSINESS OUTCOMES
The purpose of employer branding and increase in EBV should be based on the value of impact these activities have on your business results. In a proposed model od EBV on Picture 2., we have given a sample of decision variables which should improve productivity and goal achievement (however you measure it) and serve as a foundation for similar model which will work for your organization. Based on this model, you can be much more confident in designing your employer branding strategy and selecting main objectives. There is still a lot of work to be done in figuring out how will your inputs (activities) have an impact on outputs (goals defined for each activitiy).
Picture 2: Decision variables in Employer Brand Value model
One of the most important investments are the ones to be made in the skills and resources of your Human resources department. There are so many new areas and activities which are demanded from HR and the skills to excell at those activities are usually missing. We propose that you make thourough assessment of skills gap in your HR and start by attracting new employees or developing existing employees in at least these areas:
business model and process understanding,
customer experience / employee experience,
research and analytics,
Picture 3: Employer Brand Value snapshot estimation on a sample company (FTE= 585, Revenues FY=450 m USD)
This is a simplified version of calculated effects of each pillar which contribute to employer brand value. We have estimated that EBV might be worth of around 60 millions USD based on a 1 year period and financial value of each pillar. Some segments are easier to calculate, some a bit harder, but this is something which every company can calculate and analyse.
We recommend each calculation should be done on a department level (like IT, marketing, sales, HR, finance, ...) and then summarized. The value of this is you will easily determine where are the priorities if you have doubts about where your people investments should be made. It is important to note that employer branding has the power to strongly impact financial performance.
We have done simulation analysis if we make some investments in training, culture, employer brand activities and achieve impact on goal achievement and optimize turnover in sales and IT, the effects of employer brand investments would be above 7 m USD.
The purpose of this method is to figure out - how much should we invest in employer brand and in which areas?
I have launched this online course about employer branding. Learn more about this learning and mentoring opportunity.