How Much Does a Company’s Reputation Matter in Recruiting?

When it comes to reputation and the war for talent, there is every indication that one size does not fit all.

McKinsey & Company claims to have coined the term “the war for talent” in 1997.1 The idea still resonates with managers because it reflects the fact that talented people are a critical driver of corporate success. For those involved in this “war,” the search continues for fresh ideas about: (a) how to make a company more attractive to a larger pool of potential employees, (b) how to make the recruiting process more appealing to job candidates, (c) what mix of organizational and job attributes will attract talented people, (d) how to develop more talented managers, and (e) how to design an attractive workplace environment that retains such people. Aspects of a company’s reputation have been shown to positively affect (a), (c) and (e).2 The social aspect of this reputation — one of the many manifestations of corporate social responsibility — is increasingly appearing on the agendas of many senior management teams, specifically because of its perceived role in influencing key stakeholders, particularly employees.3

To better understand these issues, academics and consultants routinely conduct surveys of talented employees.4 For example, in 2008 the public relations consultants Hill & Knowlton published “Reputation and the War for Talent,”5 a survey of 527 MBA students in 12 top business schools in the United States, Europe and Asia. The study found that 96% of these students said that reputation was an important factor in their choice of potential employer. A majority also said that career opportunity; corporate culture; compensation and benefits; the quality of the company’s products and services; its financial performance; growth potential; corporate governance; and ethics were also important.

Recently, the idea has emerged that the key to winning the talent war through recruitment is to place greater emphasis on the reputation of an organization for social responsibility, not just a company’s overall reputation or its reputation as a good employer.

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References

1. E. Michaels, H. Handfield-Jones and B. Axelrod, “The War for Talent” (Boston: Harvard Business School Press, 2001).

2. See for example, D.B. Turban and D. W. Greening, “Corporate Social Performance and Organizational Attractiveness to Prospective Employees,” Academy of Management Journal 40 no. 3 (June 1997): 658-672; H.S. Albinger and S.J. Freeman, “Corporate Social Performance and Attractiveness as an Employer to Different Job Seeking Populations,” Journal of Business Ethics 28, no. 3 (Dec. 2000, part 1): 243-253; D.W. Greening and D.B. Turban, “Corporate Social Performance as a Competitive Advantage in Attracting a Quality Workforce,” Business & Society 39, no. 3 (September 2000): 254-280; D.B. Turban and D.M. Cable, “Firm Reputation and Applicant Pool Characteristics,” Journal of Organizational Behavior 24, no. 6 (September 2003): 733-751; S. Brammer, A. Millington and B. Rayton, “The Contribution of Corporate Social Responsibility to Organizational Commitment,” International Journal of Human Resource Management 18, no. 10 (October 2007): 1701-1719; S. Sen, C.B. Bhattacharya and D. Korschun, “The Role of Corporate Social Responsibility in Strengthening Multiple Stakeholder Relationships: A Field Experiment,” Journal of the Academy of Marketing Science 34, no. 2 (spring 2006): 158-166.

3. See for example, M. Berns et al., “The Business of Sustainability: What It Means to Managers Now,” MIT Sloan Management Review 51, no. 1 (fall 2009): 19-26; M. Tonello, ed., “Sustainability Matters: How and Why Corporate Boards Should Become Involved” (New York: Conference Board, 2011).

4. See for example, R.D. Gatewood, M.A. Gowan and G.J. Lautenschlager, “Corporate Image, Recruitment Image and Initial Job Choice Decisions,” Academy of Management Journal 36, no. 2 (April 1993): 414-427; D.S. Chapman, K.L. Uggerslev, S. A. Carroll, K.A. Piasentin and D.A. Jones, “Applicant Attraction to Organizations and Job Choice: A Meta-Analytic Review of the Correlates of Recruiting Outcomes,” Journal of Applied Psychology 90, no. 5 (September 2005): 928-944.

5. Hill & Knowlton “Reputation and the War for Talent,” Corporate Reputation Watch, (2008). Accessed December 7, 2011.

6. See for example, C.B. Bhattacharya, S. Sen and D. Korschun, “Win the War for Talent,” MIT Sloan Management Review 49, no. 2 (winter 2008): 37-44; L. Brokaw, “Does Sustainability Change the Talent Equation?MIT Sloan Management Review 51, no. 1 (fall 2009): 33-4; M.E. Porter and M.R. Kramer, “Creating Shared Value,” Harvard Business Review 88, no. 1-2 (January-February 2010): 1-17; A. Kemper and R. Martin, “After the Fall: The Global Financial Crisis as a Test of Corporate Social Responsibility,” European Management Review 7, no. 4 (2010): 229-239.

7. Kelly Services, "Social Responsibility Key to Acquiring Top Talent" (October 28, 2009; accessed December 30, 2010).

8. S. Bonini, D. Court and A. Marchi, “Building Corporate Reputations,” The McKinsey Quarterly, June 2009, 75-83.

9. C. Fombrun, “List of Lists: A Compilation of International Corporate Reputation Ratings,” Corporate Reputation Review, 10, no. 2 (2007): 144-153.

10. T.M. Devinney, P. Auger and G.M. Eckhardt, “The Myth of the Ethical Consumer” (Cambridge, United Kingdom: Cambridge University Press, 2010); “What’s in a Name,” The Economist, April 21, 2012: 73.

i. J.J. Louviere, D. A. Hensher and J.D. Swait, “Stated Choice Methods: Analysis and Applications” (Cambridge, United Kingdom: Cambridge University Press, 2000).

ii. Graduate Management Admissions Council, “Global MBA Graduate Survey” (McLean, Virginia: GMAC, 2009).

iii. P. Rossi, G. Allenby and R. McCulloch, “Bayesian Statistics and Marketing” (Hoboken, New Jersey: Wiley, 2005).

Acknowledgments

This research was supported by a Discovery Grant from the Australian Research Council. The authors would also like to thank the many participants at conferences and seminars for comments on this work.

1 Comment On: How Much Does a Company’s Reputation Matter in Recruiting?

  • Christine Kinch | April 30, 2013

    Thankyou for the Great article on recruitment and highly relevant to the IT industry and a software development company such as ours, http://www.vidappt.com, when it is a constant struggle to recruit team members with the right calibre and software development skills.

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