DOES EMPLOYER BRANDING INFLUENCE EMPLOYEE RETENTION?

EVIDENCE
FROM AN EMPIRICAL STUDY IN HYDERABAD

ABSTRACT

Dr. M.Veera Samy,

Lecturer in Commerce,
Loyola Degree & PG College,
Email: vmarri17@gmail.com,
Contact No:9963908009

Purpose:-The purpose of this research paper is to examine the role of employer branding in the
context of retaining the employees.

Design: - Data was collected from 400 employees through personal interviews with the help of
structured questionnaires. This research looks at the IT companies, selected sample companies
are 4 out of which 2 Indian origins and 2 foreign origin Information Technology Companies
which are located in the city of Hyderabad. We used statistical techniques like measures of
central tendency, correlation, regression analysis and ANOVA

Findings:- We find out a few Employer Branding attributes to consider the employee retention
those are People Management Practices, Rewards and Recognition, Leadership, Performance
Appraisal, Career Development and Compensation are significant to the Employee Retention and
other three are excluded since they are in insignificant influenced on Employee Retention.

Limitations: - The study was based on awareness of employees and this may be influenced by
the current employment scenario. Only companies in and around Hyderabad were chosen for the
study. This research is limited to the current setting of the Indian IT Industry.

Implications: - Effective Employer Branding strategy needs to contain and how the concept
should be managed in order to attract, recruit and retain a high potential workforce.

Originality: This is the first study that proposes employer branding as a solution to employee
retention.

Keywords: Employer branding, Employee retention, Image and Reputation

1 INTRODUCTION

The purpose of branding is essential to building the product’s image (Cleary, 1981). This image
will influence the perceived worth of the product and will increase the brand’s value to the
customer, leading to brand loyalty (The Economist, 1988). An employer brand can be used to
help organizations compete effectively in the labor market and drive employee loyalty through
effective recruitment, engagement, and retention practices. All organizations have an employer
brand, regardless of whether they have consciously sought to develop one. Their brand will be
based on the way they are perceived as a ‘place to work’, for example by would-be recruits,
current employees and those are leaving the organization. To be effective, the brand should not
only be evident to candidates at the recruitment stage but should inform the approach to people
management in the organization. For example, the brand can inform how the business tackles:
induction, performance management, and reward.

2 EMPLOYEE RETENTION

Means the organization’ capability to keep its employees to work and continue in the
organization for a long period of time. Normally, people join a company for a long term service.
If they find the place suitable for long time term engagement, they continue to work and remain
in the company. Otherwise, they leave the place for a better alternative.

3 REVIEW OF LITERATURE

3.1 UNDERSTANDING OF EMPLOYER BRANDING

Employer branding has captured considerable attention in recent times. In Researchers and
practitioners have reported evidence of organizations expending considerable resources on the
development of employer brand program indicating its value (Backhaus & Tikoo, 2004).
Employer branding as a concept is an extension of relationship marketing principles
(Christopher, Payne & Ballantyne, 1991; Kotler, 1992; Morgan & Hunt, 1994) which identify
the need to build retention strategies across a number of critical stakeholder markets through
closer relationships. Basic understandings about brand comes from the definition provided by the
American Marketing Association (AMA) which defines a brand as "a name, sign, symbol, or
design, or combination of them which is intended to identify the goods and services of seller
group or group of sellers and to differentiate them from those of competitors" (Backhaus &
Tikoo, 2004). The term employer branding has used for the application of branding principles to
human resource. The concept is being increasingly used for attracting prospective employees
while engaging the present employees to the organization.

There is no single definition of employer branding. Various attempts had been made by several
authors to define employer branding. According to Steve Gilliver (2009), employer brand
identifies an organization in the marketplace and makes it unique. It gives everyone in the
organization a handle on what we are, and everyone interested in joining the organization a clear
picture of what to expect.

Ambler & Barrow (1996), make a case for the gains of employer branding. They determine that
branding has relevance within the context of employment. However, Ewing et al, (2002)
emphasize the worth of employer branding in an increasingly knowledge-based economy where
skilled employees are frequently in short supply. While organizations increasingly recognize that
the establishment of the employer-employee relationship and their attractiveness, future
profitability and “license to operate” be contingent on their enthusiasm and capability to
recognize employees and potential employees as significant stakeholders and contributors to the
corporate brand, research specifies that they do not yet approach the issue deliberately, and that
sustainability or social responsibility in human resource management (HRM) is ignored (Preuss
et al, 2009). This also appears to be the case in the arena of employer branding.

3.2 THE IMPACT OF EMPLOYER BRANDING ON EMPLOYEE RETENTION

The determination of branding is fundamental to build the product’s image (Cleary, 1981). This
image will affect the supposed worth of the product and will growth the brand’s value to the
customer, leading to brand loyalty (The Economist, 1988). An employer brand can be used to
help organizations compete effectively in the labor market and drive employee faithfulness
through effective employment, engagement and retention practices. All organizations have an
employer brand, irrespective of whether they have deliberately sought to develop one. Their
brand will be based on the way they are perceived as a ‘place to work’, for example by would-be
recruits, current employees and those leaving the organization. To be effective, the brand should
not only be evident to candidates at the recruitment stage but should inform the approach to
people management in the organization. For example, the brand can inform how the business
tackles: induction, performance management, and reward.

Developing an employer brand is not a small task. Top management support is critical, as is a
structured approach. What are the next steps? Build a Brand Team Developing and maintaining
an employer brand is a far-reaching and constant process that benefits from a team approach. The
team should include staff members responsible for approving strategic direction and creative
within human resources. What are your strengths and weaknesses? What makes your company
unique? Identify the one-of-a-kind characteristics, such as work environment, company history,
and values that interest, inspire and retain high excellence employees. Collins (2006) showed
that the beliefs of job seekers about the company as a potential employer, “employer knowledge
(including familiarity, reputation, and image) strongly expected both interest in applying for a
job and actual application behaviors. Similarly, Chapman et al. (2005) proposes a strong
relationship between organizational attractiveness perceptions and applicant decisions such as
job pursuit, acceptance and choice intentions (Jiang and Iles, 2011).

4 RESEARCH GAP, OBJECTIVES, HYPOTHESIS, SAMPLE AND METHOD

4.1 Research Gap

Several researchers have identified the need and importance of employer branding. Different
researchers have proposed different attributes related to branding. However, the literature
reveals that there is a big gap in terms of clarity about the impact of employer branding on
retention of talented employees.

4.2 Objectives of the Study

 To examine the impact of employer branding on employee retention.

4.3 Hypotheses

 HO1: There is no significant relationship between employer branding and talent retention
4.4 Selection of Sample
The sample is a part of a larger population or universe that is meant to represent the whole. The
sample selection process for this research looks at the IT companies and across the IT industry,
there are similarities in the work environment. Hence selected sample companies are 4 out of
which 2 Indian origins and 2 foreign origin Information Technology Companies which are
located in the city of Hyderabad.

4.4.1 Sample Size

Size is 400 and 100 employees from each company. The variability of the population is
controlled the population is more homogeneous than heterogeneous.

4.4.2 Selection of the sample size

The sample size is done based on article title “Quantitative Methods in Psychology” by Jacob
Cohen, Newyork University.

http://researchsupport.unt.edu/class/mike/5030/articles/Cohen1992.pdf

Table No. 1 Sample Profile

<30 177
30-35 81
35-40 66
40-45 46
Age >45 30
Male 234
Gender Female 166
Accenture 100
Company Cognizant 100
Name TCS 100
Wipro 100
<2 97
2-5 137
Experience 5-7 68
7-9 56
>9 42
Source: Primary Study

4.4.3 Sampling Design: The study use a combination of convenience and snowball sampling or
opportunity sampling is the technique whereby a sample is drawn from the part of the population
that is close to hand, readily available, or convenient. In the absence of clear population, this is
an accepted way of sampling.
4.4.4 Statistical Techniques Method

We used multiple linear regression models (stepwise variant) to test our hypothesis and find out
the influence of independent variables such as employer branding parameters, and demographic
variables such as age, gender, income, experience, on the dependent variable which is employee
retention.

4.5 Scope of the study

This study is carried out in Hyderabad city, which can be considered to an ideal city to conduct
the present research on Employer Branding, specifically in retaining processes with special focus
on select IT Companies and data has been collected from 2008-2015.

5 DATA ANALYSIS AND FINDINGS

TABLE NO 2. RESULTS OF REGRESSION

Source: Primary Study

Stepwise regression was done with the help of SPSS with the dependent variable being
Employee Retention and 4 independent variables are, Rewards and Recognition, welfare
activities, Gender and Experience are significant to the Employee Retention and rest are
excluded since they are in insignificant influenced on Employee Retention.
 TABLE NO 2.1 RESULTS OF EFFECTS

Source: Primary Study

Table No 3 Results of Coefficients

Source: Primary Study

The above table provides us with the necessary information to predict the Rewards and
Recognition, Leadership, welfare activities, Gender and Experience from employee retention.
Among that 4 Independent variables are Rewards and Recognition has highest positive influence
with the importance of 0.754, welfare activities with the importance of 0.152, Gender 0.070 and
Experience 0.024 have influence respectively. Other Independent variables are negative
influences which are excluded since they are in insignificant influenced on employee retention.

Correlations for Employee Retention vs Employer Branding

Table No 4 Results of Correlations

Employer Branding Employee Retention

Employer Branding Pearson Correlation 1 .657**
Sig. (2-tailed) .000
N 400 400
Employee Retention Pearson Correlation .657** 1
Sig. (2-tailed) .000
N 400 400
Source: Primary data

**. Correlation is significant at the 0.01 level (2-tailed).

From the Pearson Correlation coefficient output table, the correlation reported in the table is .657
for Employee retention and the p-value of .000 is less than 0.05. From these figures, we can
conclude that there is a positive Correlation between Employer branding and Employee
Retention.

5 FINDINGS

1. Four independent variables are Rewards and Recognition, welfare activities, Gender and
Experience are significant to the Employee Retention and rest is excluded since they are in
insignificant influenced on Employee Retention.

2. Rewards and Recognition have highest positive influence with importance of 0.754, welfare
activities with importance of 0.152, Gender 0.070 and Experience 0.024 have influence
respectively

3. There is a strong positive Correlation between Employer branding and Employee Retention.

6 IMPLICATIONS

The biggest benefits of a strong employer brand are higher staff retention, lower recruitment and
training expenses, Increased Productivity, Increased Excellence in the task and Increased
Employee Loyalty which leads to Increase Employees Performance as well as financial
performance and it results in increase overall corporate performance of organizations.

Effective Employer Branding strategy needs to contain and how the concept should be managed
in order to attract, recruit and retain a high potential workforce.

Employer branding which helps in attracting and retaining talent is the key to building high-
performance organizations.

Employees are the people who can best promote the brand, just by sharing their sense of pride in
being part of the organization. An employee effectively communicating brand is a great way to
project the image.

Employer branding helps to land the right talent as well as help the existing employees create a
deep sense of loyalty to the organization.

Social media is a simple and effective way to promote the brand and can reach the target
audience. Analyze followers and measure how deeply and frequently they engage with posts.

7 SCOPE FOR FUTURE RESEARCH

1. Research can be carried specifically for different sectors so that employees in each sector can
be identified. This can be more clarity on employer branding.

2. A comparative study between high employer branding companies and low image companies.
So can be understood the similarities and dissimilarities in employer branding efforts.

8 CONCLUSIONS

Organizations must aim to be employers where potential employees are attracted to work and
existing staff remain loyal and perform for the good of the whole business.

Employer branding is one such strategy that ensures the organization is able to attract, engage
and retain the human capital. Today, an effective employer brand is essential for gaining
competitive advantage. Increasingly, MNCs are becoming intentionally strategic to utilize the
employer brand to retain talent for the expansion and growth. Most importantly, it ensures that
the best employees stay on longer, thus allowing the company to carry on its operations
smoothly. Ultimately, the key to a successful employer brand is to ensure that expectations are
fully aligned with the realities of working for the organization.

This contains a summary of the most important results from the study. It has been shown that the
employer brand can be used as an instrument in the context of retention to make the process
more effective and that internal and external consistency is vital for the success of the Employer
Branding strategy.

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