It seemed like there was a reorg and a rebrand every six months.
This was my experience back in the late 1990s when I managed marketing product and services launches for a variety of Silicon Valley company accounts. Thousands of hours and millions of dollars spent developing new and refreshed brands. Business units combined with others to develop new and innovative products and services, moving people internally, laying some off, and hiring new people into new and existing roles. Even more invested in customer marketing, sales, and implementations. This was impacted further when a merger or acquisition was involved.
However, I always wondered about the impact of these activities on the employees and the candidates themselves, their experiences, how they would rate their experiences, their perception of fairness, and how it all impacts the business and brand over time. Because it does. Good and bad.
Companies can spend 5% to 25%+ of their annual revenue on marketing their brand. Larger companies can also spend hundreds of thousands of dollars on employer branding initiatives. The business and employer brands are inextricably linked; it’s what attracts people to apply and stay, or repels them to stay away.
Employer Brand Is All-Encompassing
Employer brand — how candidates and employees perceive wanting to work somewhere and actually working there — is a big business. An important business, one where companies develop marketing stories of why their employees work there and why they stay. It’s exactly the things that prospective candidates want to know — and what current employees need to be constantly reminded of (and asked about).
Employer brand permeates the entire recruiting, hiring, and retention process, not just at the point of attraction but from pre-application to onboarding and beyond as an employee. Improving your employer brand may decrease your cost of hire and increase retention in the short-term, but it will not negate an ongoing poor candidate or employee experience.
The Impact on Referrals
Plus, companies depend on referrals. Referrals can account for 20%+ of hires each year, but that hasn’t been easy due to the continued upside-down bonkers world we’re in with the pandemic, employees quitting, candidates ghosting, the tight labor market, and the list goes on. The current cost per hire and cost of vacancy rates are soaring for many industries, as well. Which is precisely why referrals are so critical.
Brand perception impacts referrals. Perceived fairness impacts referrals. Candidate experience impacts the willingness (or not) to refer. Not having the referrals you need that turn into hires will cost you. Let me give you some impact examples from our CandE benchmark research and possible real-world scenarios.
For candidates in our 2021 benchmark research who were not current employees:
- 29% said they would be extremely likely to refer others based on their candidate experience (positive).
- 15% said they’d actively discourage others from applying based on their candidate experience (negative).
This means that out of 100 interviewed but rejected candidates, 15 won’t refer, and 29 will.
Now we’ll weave in cost-of-vacancy and focus on those who won’t refer. Let’s say you have multiple $130K positions that take 65 days to fill on average in this current market. And based on your average employee-generated revenue per day of $430 based on your annual company revenue (again, just for this example), you’re down $84K for each one unfilled. After you calculate the pay and benefits savings of $42,705 for the 65 days each position is open, you’re still down $41,295 in lost revenue per position.
Yes, there are so many factors that can impact these numbers across varied job types and salaries, but the business leadership should know that losing 20% of hires from these lost referrals above could equate to nearly $124K.
Then multiply that across all the jobs that are missing out on your referrals based on the hundreds or thousands of candidates your company may interview over the year, and now we’re in the potential millions of lost revenue.
What About Current Employees?
You’re probably asking, “What about current employees? Those are really the ones more likely to refer, right?”
Well, for candidates in our 2021 benchmark research who were current employees:
- 36% said they would be extremely likely to refer others based on their candidate experience (positive).
- 6% said they’d actively discourage others from applying based on their candidate experience (negative).
This means that out of 100 interviewed but rejected candidates, 6 won’t refer, and 36 will.
Again, if we use the same example as above, you’re still down $41,295 in lost revenue per position that you don’t fill. Losing 20% of hires from these lost referrals above could equate to nearly $50K.
And just like above, multiply that across all the jobs that are missing out on your referrals based on the hundreds or thousands of candidates your company may interview over the year, and we’re still in the potential millions of lost revenue.
In both examples, if you ran the numbers the other way with those willing to refer, you could reap the benefits of preventable loss. Never any guarantees in this crazy market, but the potential is there.
Considering the Whole Candidate Journey
Investing in employer branding is vital to differentiate your company, your jobs, your culture, your people, especially today, but it will never negate poor communication and feedback loops and other awkward interactions when applying for a job; when being screened, assessed, and interviewed for a job; when made offers and prior to Day One if hired.
Investing in making improvements throughout your candidate experience journey — from pre-application to onboarding — is vital to maintaining all your employer branding investments. Recruiting and hiring are more difficult than ever these days, so sustaining these improvements year after year can ensure your employer brand equity pays out in referrals and revenue.