Business Student Perceptions of a Preferred Employer: A Study Identifying Determinants of Employer Branding Bhadra J H Arachchige* and Alan Robertson** There is an increasing evidence that employers need to give greater emphasis to attract the right employees to meet their goals of maximizing organizational value and success. The concept of the employer brand, adapted from marketing theory, has increasingly become the focus of organizations towards developing their image as an employer of choice, thereby enabling the recruitment and retention of the best possible workforce. An antecedent to the development of an effective employer brand is the concept of employer attractiveness, the perceived benefits that a potential employee identifies with an organization. The paper identifies the significant factors which attract Sri Lankan university graduates to potential employees, both on a general basis and for specific student segments. Drawing on the research results, eight dimensions of employer attractiveness are posited. These would enable organizations to gain a meaningful understanding as to how to strategically develop their employer brand. The paper also discusses the implications of the findings, identifies the limitations and suggests the directions for future research. Introduction Although a graduate unemployment problem exists in Sri Lanka, there are many fields in which graduates are eagerly sought by employers. Even where graduate availability is plentiful, employers in many cases compete actively to attract the higher quality potential job applicants. As Collins (2001) in his Good to Great study stresses, it s not just a matter of getting people on the bus before you figure out where to drive it. Of greater importance is getting the right people. It is known that firms with better reputations attract more as well as higher quality applicants (Turban and Cable, 2003). Available research on the factors that affect job seekers reputation perceptions of employers is, however, sparse. Of the studies available many are inconclusive, often conflicting significantly with each other (Cable and Graham, 2000). If employers are to be successful in recruiting the best available talent, it is important that they understand their current reputation among job seekers and locate any incorrect beliefs that may be held (Fombrun, 1996). This process is going to be more effective if managers are aware of the factors that are most important in determining the perceptions of job applicants. The principal objective of this study is therefore to identify these factors. * Senior Lecturer, Department of Human Resource Management, Faculty of Management Studies and Commerce, University of Sri Jayawardenepura, Sri Lanka. E-mail: bhadra@sjp.ac.lk ** Australian Programs Director, American National College, Sri Lanka. E-mail: nalalanka@yahoo.com Business 2011 IUP. Student All Rights Perceptions Reserved. of a Preferred Employer: A Study Identifying Determinants of Employer Branding 25
Overview of Past Research Chambers et al. (1998) in The War for Talent explore the difficulty faced by large US companies in attracting the most suitable executive employees. Reasons for this include the aging population which is resulting in a reduction of the proportion of working age people, no increase in the percentage of female workers, a flattening of workforce productivity improvements, stable immigration levels and executives not prolonging their careers. These quantitative factors are further exacerbated by three qualitative challenges which Chambers et al. (1998) identify as: 1. The need of a more complex economy for more sophisticated talent with global business skills, multicultural fluency, technological and entrepreneurial skills, 2. The rise of many small and medium size companies that are increasingly targeting the same people sought by large companies, and 3. The increase in job mobility. While Chambers et al. (1998) published these findings more than a decade ago, their relevance is nonetheless still current. Konig (2008) acknowledges the existence of a talent crisis which he believes will worsen in the years ahead. For every person entering the job market by 2012, four will exit. By 2016 the ratio will be one to six (Konig, 2008, p. 46). In addressing this issue he suggests that businesses should be continually asking the following: a. Are we attracting the right people at all levels of the organization? b. Does our corporate culture enable the identification and development of the right talent? c. Do we offer the incentives which create opportunities for talent to rise within the organization? To bring the right people on board is not simply a matter of placing an advertisement in the newspaper and expecting to be inundated with applications. While advertising and publicity have a role in the recruitment process, many companies now realize that finding people capable of creating organizational success requires the same level of organizational research and planning as does, for example, product development or project management (Kaliprasad, 2006). Organizational success can be measured in a variety of ways; however there is evidence to demonstrate that measuring profit per employee is the key to understanding corporate wealth in the present day. Bryan (2007, p. 60) states that: The real engines of wealth creation today are the knowledge, relationships, reputations and other tangibles created by talented people and represented by investments in such activities as R&D, marketing and training. 26 The IUP Journal of Brand Management, Vol. VIII, No. 3, 2011
Bryan advocates that measuring corporate performance by financial indexes alone (balance sheets, cash flows, ROIC) does not truly reflect real wealth generation. He points out that from 1995 to 2005 the world s leading corporations increased their profitability fivefold, this being largely generated by a doubling of both profit per employee and the number of employees. Hornung (2010) adds weight to this argument in showing that Fortune magazine s 100 Best Companies to Work for in the US consistently show higher profit per employee than firms not on the list. Over the last decade, companies across the globe have been developing their reputation image through systematic application of marketing principles to the recruitment and retention of employees. Employer branding, as it is known, has been described as the sum of a company s efforts to communicate to existing and prospective staff that it is a desirable place to work (Lloyd, 2002). The 2008-10 global financial crisis, with its impact on all aspects of economic life, made many companies eager to cut costs across the board. The resulting mergers, acquisitions, hiring freezes and layoffs have undoubtedly dented the image of many companies as employers. In arguing that employer branding offers the best way to redefine, and improve the way a company recruits, Johnson and Roberts (2006) cited a study that indicated 40% of job seekers ranked treatment of employees highest in their perceptions of organizations as a place to work (29% ranked quality of products or services as most important). Research by the Chartered Institute of Personnel and Development (CIPD) shows that approximately 75% of companies that use employer branding as a tool for recruitment find it effective (Dyer, 2007). Sri Lankan organizations have similar demands as do their developed nation counterparts in attracting and retaining top talent, especially in the light of a growing post-internal war economy, a shortage of graduate applicants in a number of occupation sectors, and the availability of competitive overseas employment opportunities particularly in the Middle East. A total of 266,450 Sri Lankans were registered by the Foreign Employment Bureau as leaving for overseas work in 2010 out of a total workforce of approximately 8 million. An additional factor affecting the business sector is the local perception that the security, flexibility and less-pressured work environment of the public service offers a more attractive employment proposition. The official unemployment rate in December 2010 stood at 4.9%. Given the importance of attracting the right people to an organization, Lievens and Highhouse (2003) have explored the most important factors in this process. They concluded that a brand symbolic image model, drawn from the marketing literature, provides a company with a framework for auditing their image as an employer and for benchmarking their image to competitors. It can also serve to set it apart from other companies, more so than job and organizational attributes. They also identify the need for further research into how prospective applicants form a global impression of a company, how they make trait inferences and which traits might be more attractive in different types of organizations and industries. Subsequent research supported the importance of Business Student Perceptions of a Preferred Employer: A Study Identifying Determinants of Employer Branding 27
symbolic beliefs as a recruiting tool but was of limited application as it looked at only one organization (Lievens, 2007). There are, however, examples of symbolic traits having a positive impact on recruitment. Greening and Turban (2000) used an experimental approach in which they manipulated the Corporate Social Performance (CSP) image of organizations. They found that prospective job applicants are more likely to pursue jobs from socially responsible firms than from firms with poor social performance reputations. Hieronimus et al. (2005) emphasize the need for companies to determine which attributes are most important to specific types of potential employees. They mention that traditional job recruitment focuses on functional employment benefits rather than intangible and emotional benefits. Moroko and Uncles (2008) also point out that job seekers can be segmented into a range of groups based on demographic, geographic, psychographic and behavioral characteristics and, as with consumer branding, these should be acknowledged in the recruitment process. Having identified the need for effective recruitment practices and the factors that are important to potential recruits, it is also essential to recognize the role played by employer branding in this process. There is little doubt that employer branding is increasingly used to attract employees (Business Day, 2004). It should ideally present a picture of the instrumental and symbolic traits of an organization which permit job seekers to differentiate the organization from its competitors in the recruitment market. During the recruitment process the employer brand messages indicate the nature of the employment, career opportunities, challenges and the unique features of the organization. They may clarify misconceptions and reduce reliance on prior notions (Rousseau, 2001). Backhaus and Tikoo (2004) stress the importance of accuracy of perceptions about the organization. This is supported by Cable et al. (2000) who warn that providing only positive and desirable value-based information can lead to unrealistic expectations on the part of recruits with subsequent disappointment at a later date, in effect representing a violation of the psychological contract which could lead to increased intentions to quit, reduced job satisfaction and trust, and decreased job performance. A more realistic presentation which provides input on both sides of the employment opportunity is considered preferable (Meglino amd Ravlin, 1999) and is purported to reduce unreal expectations which leads to lower employee turnover, increases trust and perceptions of honesty and reduces role ambiguity (Backhaus and Tikoo, 2004). The employer brand is, like the consumer brand, all about perception, as Knox and Freeman (2006) indicate in their recruitment process model which is adapted from Dukerich and Carter (2000). One of the key aspects of this model, also highlighted by Davies et al. (2004), is the significance of internal marketing within an organization. An integrated approach needs to be taken for both internal and external marketing for the recruitment market. Additionally, employer branding strategies should be aligned with a company s overall corporate brand and customer brand strategy (Hieronimus et al., 2005; Wheeler et al., 2006; and Mark and Toelken, 2009). The messages that firms send out to potential recruits should be reinforced by its own employees. An interesting finding of 28 The IUP Journal of Brand Management, Vol. VIII, No. 3, 2011
Knox and Freeman s research is that recruiters and potential recruits have statistically different perceptions of an organization s image. Recruiters, it is claimed, have a much rosier picture of how potential recruits see the organization. Perception is closely aligned to the reputation of an organization. Drawing from organizational behavior studies, there is a useful body of research to assist in understanding the role of employer branding in the recruitment process as reputation is formed from the image which in turn is a reflection of the brand. Some research studies have identified a relationship between an organization s reputation and its success in attracting quality applicants (Fombrun, 1996; and Cable and Turban, 2001), with Highhouse et al. (1999) suggesting overall perceptions of reputation are in fact the most significant factor influencing the choice by recruits. Factors that contribute to an organization s reputation include financial performance, company size, media exposure, advertising expenditures and type of industry (Cable and Graham, 2000). Turban and Cable s (2003) study of the impact of a firm s reputation on the characteristics of job applicants can possibly shed some light on the contribution of the employer brand to job recruitment. They conducted two studies which both supported the belief that firms with better reputations attract more applicants as well as higher quality applicants. They did not, however, identify why this occurs but suggested that the social identity and signaling theories may provide an avenue for investigating the causes of the relationship. Subsequent findings by Collins and Han (2004) may indicate that Turban and Cable s study was too simplistic in isolating a single factor, reputation, as a major contributor to recruitment attraction, and that applicant pool quantity and quality are the result of an interaction between numerous practices. The Collins and Han study examined the influence of low-involvement and high-involvement recruitment practices, corporate advertising and firm reputation. While all had some impact, they were nonetheless surprised that firm reputation showed a low level of relationship with applicant pool quantity and quality, although they did find that corporate advertising together with firm reputation did correlate with recruitment outcomes. This tends to suggest that for employer branding to succeed in its aim of making the organization more attractive to potential recruits, any specific information that presents the organization s employment offering is required to be closely linked with a general increase in corporate advertising (Edwards, 2010). Whether it is linked with other factors or not, research has shown that reputation is a significant factor in the recruitment process. Organizations need to recognize the type of image they present to potential employees and endeavour to present themselves clearly to the labor market in order to attract the best match of applicant. As to the nature of the image there is little agreement. In the earlier discussion on brand identity and organizational identity, a range of character dimensions were identified from the available literature. A popular approach has been the personification of the organization, in essence giving it human qualities in order for those both in and outside to understand the corporate Business Student Perceptions of a Preferred Employer: A Study Identifying Determinants of Employer Branding 29
character. This approach does have some criticisms. Firstly, personification essentially is a metaphor. If taken too seriously it can be deceptive as it tends to simplify the complex phenomenon of corporate reputation (Hunt and Menon, 1995). Secondly, organizations are not human beings and do not share their characteristics (Morgeson and Hofmann, 1999). Finally, difficulties arise in comparing the reputations of organizations and in explaining why one firm has a better reputation than another. One example of a corporate character scale which attempts to overcome these deficiencies has been developed by Davies et al. (2004). Some generic scales (scales that can be applied to a wide range of organizations) are used to compare firms in more detail. Fortune s America s Most Admired Companies annual survey evaluates companies on eight criteria: quality of management, quality of products and services, innovativeness, long-term investment value, financial soundness, employee talent, use of corporate assets, social responsibility and overall company results (Davies et al., 2004). Similar measures are used in Europe and Asia. A Sri Lankan equivalent is that of the Nielsen Company s survey of the most respected entities in Sri Lanka (Lanka Monthly Digest, 2010) which selects the top 100 businesses on the basis of financial performance, quality consciousness, management profile, work environment, corporate social responsibility, honesty, innovation, dynamism, vision and nationmindedness. One particularly relevant example of the value of reputation in attracting staff is reported by Cafolla (2008) and relates to the difficulty experienced by mainland Chinese retailers of luxury goods to attract qualified staff capable of providing the high level of service required for the demanding customers in their stores. While salary was once the main incentive, it has been replaced by the lure of working for a well-branded company, that which offers training, especially overseas, career growth, an attractive work environment and social status. Another approach to how a company should brand itself as an employer with the goal of attracting new staff is proposed by Moroko and Uncles (2008) who draw on the product branding strategy of segmentation. They propose that the market for potential employees should be segmented, just as it is done for consumer groups, and outline a strategy for carrying out this based on the five major ways in which marketers think about consumers. Their differences are centered on the profitability consumers bring to a company, the product features they prize, the reference groups they turn to for advice and approval, the ability of consumers to negotiate attractive prices, and the barriers that may prevent them from making purchases. It is suggested that these five segmentation approaches also apply in the context of the employer-employee relationship and can be used as a basis for developing the employer brand as a recruitment tool. As the previous discussion has shown, the employer brand has a range of dimensions and is the product of a variety of influencing factors. Its strength and value, the brand equity, is closely related to the level of employer attractiveness, defined as the envisioned benefits that a potential employee sees in working for a specific organization 30 The IUP Journal of Brand Management, Vol. VIII, No. 3, 2011
(Berthon et al., 2005). The attractiveness of the employer brand and the organizational reputation will therefore relate to the degree to which the employer brand attracts the number and quality of job applicants. As a result, the dimensions of attractiveness need to be identified if organizations wish to maximize the effectiveness of their recruiting process. It should be noted however that attractiveness is a perception and, as such, will vary between segments of the market for new employees (Moroko and Uncles, 2008). Objectives The objectives of the study are threefold. Firstly, it is aimed to identify the attributes of organizations that are most significant in attracting Sri Lankan graduate students to seek employment, a valuable tool to assist organizational recruitment practices. Students, as with all elements of a population, differ in a variety of ways. Secondly, therefore, the research differentiates the perception factors on the basis of student gender, course of study and academic performance. It is considered important to recognize variations in the perceptions of different student segments. This information can give a more specific focus to the efforts of human resource managers to attract the most suitable recruits for their organizations. Finally, in order to provide a framework for organizational recruitment planning, the research results will be analyzed to identify the key dimensions of organizational attractiveness within the Sri Lankan context. Methodology In order to obtain the information required to meet the objectives of the study, a sample of 221 final year business course students from a Sri Lankan university were surveyed. The students were drawn from the following course streams: human resource management (81 students), marketing management (62 students) and finance (78 students). These students were less than four months away from completing their undergraduate degrees and, as such, actively contemplating their employment prospects. In addition, they had mostly been working for the previous six months as full-time interns in business organizations as a course requirement. This had given them some exposure to work and the characteristics of different types of employers. It is believed that this was an ideal group from which to gain an understanding of the attributes that will attract graduates to seek employment in organizations. Data was gathered from the students through a self-completion questionnaire which was divided into two sections. Part A consisted of 32 items representing factors that the respondents may consider important when considering potential employers. Of these items, 25 were drawn from an Employer Attractiveness (EmpAt) scale developed by Berthon et al. (2005) as a result of focus groups using final year students at a large Australian university. Of the original 32 factors, or employer attributes, that were identified by the focus groups, seven were eliminated as a result of a two-stage purification using Cronbach s Alpha. The alpha for the final 25 item EmpAt scale was 0.96. In the review of literature on this topic, the authors identified further seven factors which were not included in Berthon et al. s scale. These were: profitability, company size, awareness Business Student Perceptions of a Preferred Employer: A Study Identifying Determinants of Employer Branding 31
of the company through advertising and media exposure, type of product and/or service produced, quality of management, honesty and fairness of the organization, and providing greater respect from family and friends. The seven factors were added to the EmpAt scale and tested for consistency before being considered in the overall analysis. Respondents were asked to rate each of the items on a 7-point Likert scale. Part B of the questionnaire contained five questions which enabled segmentation of the students on the basis of gender, course of study and academic success level as reflected by their GPA. Data analysis for the first objective, identification of attributes which attract graduate applicants, was carried out by computing the mean of respondents values for each of the items in Part A of the questionnaire. Once an overall value was obtained, it was further extended by calculating the mean for each of the segmented groups in order to provide the information required for objective two. As a refinement of the information obtained, it was also decided to use Principal Component Analysis (PCA) to attempt to identify the broader dimensions of employer attractiveness. Analysis and Results Overall Preferred Attributes Table 1 indicates the mean scores for the 32 items which were rated on a 7-point Likert scale by the respondents in relation to their importance as an attractor for employment. The first 25 items were used in a trial of the EmpAt scale administered to the final year business students at an Australian university and the results are included as a comparison. It should be noted that the terminology of some questions was changed to make them more easily understood by Sri Lankan university students, many of whom come from a background where English is not used in everyday parlance. The final seven items were, as indicated previously, drawn from the relevant literature and added to the questionnaire as these factors were not included in the EmpAt instrument. The correlation between the two groups on the 25 common items is 0.577. On the t-test this is not recognized as a significant difference. A comparison between the most and least preferred attributes of the two groups based on the common 25 items is summarized in Table 2. There is a greater level of commonality between the least preferred employer attributes (57.14%) than the most preferred (28.57%). In relation to the latter, Sri Lankan students place greatest value on the opportunities for self development and relationship with management and superiors. The greater availability of job opportunities together with a less formal working environment and organizational hierarchical relationship structure is reflected in the Australian students greater interest in socializing (happiness, fun, 32 The IUP Journal of Brand Management, Vol. VIII, No. 3, 2011
Table 1: Mean Scores of Employer Attractiveness Items How Important are the Following to You When Considering Potential Employers? Item Sri Lankan Mean (7-Point Likert Scale) Australian Mean (7-Point Likert Scale) Recognition/appreciation from management 6.11 5.58 A fun working environment 5.20 5.75 Provides opportunity for better jobs in the future 6.38 5.62 Feeling good about yourself as a result of working 6.26 5.69 for the organization Feeling more self-confident as a result of 6.22 5.72 working for the organization Gaining experience that will help your career 6.48 5.83 Having a good relationship with your superiors 6.09 5.66 Having a good relationship with your colleagues 6.07 5.92 Supportive and encouraging colleagues 5.87 5.65 Working in an exciting environment 4.84 5.37 Innovative employer new work practices and ideas 5.89 5.31 The organization values and makes use 5.99 5.45 of your creativity The organization produces high quality 5.57 5.41 products and services The organization produces innovative 5.32 5.22 products and services Good promotion opportunities 5.92 5.82 within the organization Socially responsible organization 5.75 5.00 Opportunity to apply what was learned at university 5.80 5.19 Opportunity to teach others what 5.24 4.85 you have learned at university Acceptance and belonging 5.67 5.63 The organization is customer-oriented 5.23 5.24 Job security within the organization 6.23 5.75 Can gain experience in a range of departments 5.69 5.43 Happy work environment 6.23 6.01 An above average basic salary 6.00 5.97 An attractive overall compensation package 5.93 5.94 Business Student Perceptions of a Preferred Employer: A Study Identifying Determinants of Employer Branding 33
Table 1 (Cont.) How Important are the Following to you when Considering Potential Employers? Item Sri Lankan Mean (7-Point Likert Scale) Australian Mean (7-Point Likert Scale) A very profitable organization 5.41 N/A A large company 4.64 N/A Company is well-known through advertising 4.57 N/A and media exposure The type of product and/or service produced 4.94 N/A by the organization The quality of the management 5.86 N/A The organization is known for its honesty 5.85 N/A and fairness Giving you greater respect from family and friends 5.45 N/A Table 2: Most-Preferred and Least-Preferred Employer Attributes (25 EmpAt Items) Preferred Employer Attributes Most Preferred Attributes (in descending order) Least Preferred Attributes (in ascending order) Note: * Item occurs for both groups. Sri Lankan Graduating Students Gaining experience to help career* Future opportunities Promotes self-esteem Develops confidence Appreciation from management Good relationship with superiors Good relationship with colleagues* Exciting environment* Fun working environment Customer-oriented* Opportunity to teach others* Innovative products* High quality products and services Acceptance and belonging Australian Graduating Students Happy environment Above average salary Attractive compensation package Good relationship with colleagues* Gaining experience to help career* Opportunities for promotion Fun working environment Job security Opportunity to teach thers* Socially responsible Applying university learning Innovative products* Customer-oriented Innovative employer Exciting environment* 34 The IUP Journal of Brand Management, Vol. VIII, No. 3, 2011
collegial relationships) and compensation factors. The cultural and economic differences between the two cohorts are less evident in the least preferred attributes. However, both groups tend to display lack of interest in the actual products and services of the organizations they wish to work for. This observation needs to be further investigated but it should nonetheless be of concern to recruitment personnel if they are to select the type of newly graduated employees who will most effectively deliver the outcomes required to maximize their organization s success. Inclusion of the additional seven items on the questionnaire administered to the Sri Lankan graduating students was prompted by the results of studies including Cable and Graham (2000), Davies et al. (2004) and Edwards (2010). Three of these items (company size, exposure and type of product/service) were in fact rated as the lowest of the employer attributes appealing to Sri Lankan graduating business students which contradict the findings of the overseas studies. As with the Sri Lankan/Australian student comparison, cultural and economic factors may be significant in explaining this result. The most and least preferred of the 32 items on the extended list is summarized in Table 3. It is also noteworthy that while the alpha for the original 25 items used in the Australian survey was reported to be 0.95, it was a lower 0.888 on the same items in the Sri Lankan study. This is still well above the minimal acceptable level of 0.7. With the additional seven items added, the alpha coefficient was 0.903. Table 3: Most-Preferred and Least-Preferred Employer Attributes (32 Items) Preferred Employer Attributes Sri Lankan Graduating Students Most Preferred Attributes (in descending order) Least Preferred Attributes (in ascending order) Gaining experience to help career Future opportunities Promotes self-esteem Develops confidence Appreciation from management Good relationship with superiors Good relationship with colleagues Well-known company Size of company Exciting environment Type of product or service Fun working environment Customer-oriented Opportunity to teach others Innovative products High quality products and services Business Student Perceptions of a Preferred Employer: A Study Identifying Determinants of Employer Branding 35
Instrumental and Symbolic Attributes There is a considerable amount of research demonstrating that applicants are attracted to organizations on the basis of instrumental dimensions (for example, Highhouse et al., 1999; and Cable and Graham, 2000). Instrumental factors include job and organizational characteristics such as salary, promotional opportunities, career development and organizational structure. Further studies have, however, revealed that while instrumental factors are important in attracting applicants to a particular category of organization, it is the symbolic perspective that differentiates a company from its competitors (Lievens and Highhouse, 2003). The symbolic dimension is related to perceived traits such as innovativeness, excitement, sincerity and competence. In terms of employer attributes preferred by the Sri Lankan students it can be seen that although instrumental factors predominate (career experience, future opportunities, recognition from management and internal relationships), symbolic attributes also influence student perceptions (esteem, confidence and happiness). Where competition for particular types of graduate employees is tight, HR managers may find that these are the attributes which can prove most effective in attracting the applicants they require. Preferred Attributes of Student Segments The need to recognize that newly graduated applicants vary in terms of personal and academic attributes and employment interests has been emphasized by Moroko and Uncles (2008). Recruitment practices, therefore, need to be tailored to the specific requirements of the employees that are sought rather than the one-size-fits-all approach. For this reason the factors affecting graduate perceptions need to be considered for different student segments. In this respect, we have examined the variations in preferred attributes on the basis of gender, academic course and level of academic achievement. The means of the responses for each of the 32 test items of the groupings were measured for correlation in order to identify whether any significant differences could be identified. The results are summarized in Tables 4, 5 and 6. The very high correlation coefficient (0.947) between the attribute ratings of males and females indicates little difference in preference on the basis of gender using the expanded EmpAt test (Table 4). Table 4: Comparison of Mean Attribute Ratings by Gender Gender Male Female Mean 5.6512 5.7384 Standard Deviation 0.49850 0.51026 Correlation 0.947 36 The IUP Journal of Brand Management, Vol. VIII, No. 3, 2011
Similar to the gender ratings, there is little differentiation in the job attribute preferences of students from the three course streams. All are highly correlated (Table 5). Table 5: Correlation of Mean Attribute Ratings by Course Human Resource Management Marketing Management Finance Human Resource 1 0.935 0.940 Management Marketing 0.935 1 0.891 Management Finance 0.940 0.891 1 As indicated in Tables 4 and 5, segmentation has little significance in relation to gender and course type. Table 6, however, indicates two counteracting relationships in preferred employer attribute selection: firstly, a progressive reduction in the correlation between the highest level of achievers through to the lowest level, and secondly, a progressive increase in the correlation between the lowest level of achievers through to the highest level. In other words, high achievers correlate more highly with upper-middle and lower-middle achievers than with low achievers (a top-down relationship), while low achievers correlate more highly with high and upper-middle achievers than with lowermiddle achievers (again a top-down relationship). Table 6: Correlation of Mean Attribute Ratings by Academic Achievement Level of Student Academic Achievement Low Achievers Lower-Middle Achievers Upper-Middle Achievers High Achievers Low Achievers 1 0.565 0.640 0.677 (GPA = 2.0-2.39 Lower-Middle Achievers 0.565 1 0.846 0.856 (GPA = 2.4-2.79) Upper-Middle Achievers 0.640 0.846 1 0.962 (GPA = 2.8-3.19) High Achievers 0.677 0.856 0.962 1 (GPA = 3.2+ While statistically there is a significant correlation between all achievement level groups, a noticeable difference nonetheless appears as the achievement gap widens, as can be observed from Table 7. Business Student Perceptions of a Preferred Employer: A Study Identifying Determinants of Employer Branding 37
Table 7: Most-Preferred and Least-Preferred Employer Attributes of Highest and Lowest Levels of Academic Achieving Students Level of Student Academic Achievement Highest Achieving Students Most-Preferred Employer Attributes Gaining career experience Develops confidence Promotes self-esteem Future opportunities Happy environment Job security Least-Preferred Employer Attributes Large company Well-known company Product or service type Exciting environment Fun environment Profitable company Lowest Achieving Students Good relationship with superiors Develops confidence Values creativity Future opportunities Promotes self-esteem Good relationship with superiors Good relationship with colleagues Exciting environment Product or service type Fun environment Can teach others university knowledge Good promotion opportunities Innovative products Attractive compensation package Factor Analysis In order to provide a more concise view of the types of factors that impact upon graduating students perception of employers, data reduction using factor analysis was used. In their original paper introducing the employer branding concept, Ambler and Barrow (1996) identified three dimensions that defined employer identity, namely psychological, functional and economic. Berthon et al. using the EmpAt scale extended this perspective to five dimensions: social, development, application, interest and economic. As noted earlier, cultural and economic factors appear to have resulted in some variation in the results between Australian and Sri Lankan students. This combined with the addition of seven further items to the employer attractiveness questionnaire were, we believed, reasons to further explore the main dimensions of employer attractiveness. The student data from the questionnaire was therefore analyzed using PCA with Varimax rotation and an extraction of all factors with an eigenvalue greater than 1. The results are reported in Tables 8 and 9, while Table 10 summarizes the component variables which constitute each identified factor. 38 The IUP Journal of Brand Management, Vol. VIII, No. 3, 2011
Table 8: Variance of Extracted Factors Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings Component Cumulative % % of Variance Total Cumulative % % of Variance Total Cumulative % % of Variance Total 1 8.518 26.620 26.620 8.518 26.620 26.620 3.282 10.256 10.256 2 2.773 8.667 35.287 2.773 8.667 35.287 3.194 9.981 20.237 3 2.287 7.147 42.434 2.287 7.147 42.434 2.880 9.001 29.238 4 1.615 5.047 47.482 1.615 5.047 47.482 2.432 7.600 36.838 5 1.475 4.610 52.092 1.475 4.610 52.092 2.370 7.406 44.244 6 1.278 3.995 56.087 1.278 3.995 56.087 2.363 7.385 51.629 7 1.209 3.777 59.864 1.209 3.777 59.864 2.315 7.233 58.862 8 1.032 3.224 63.088 1.032 3.224 63.088 1.352 4.225 63.088 On the basis of this analysis, we have classified the eight factors as follows: Factor 1 Corporate environment Factor 2 Job structure Factor 3 Social commitment Factor 4 Social environment Factor 5 Relationships Factor 6 Personal growth Factor 7 Organizational dynamism Factor 8 Enjoyment Relating these to the highest and lowest preferred employer attributes of the Sri Lankan graduating business students, it can be seen that the personal growth and relationship factors are most important while the corporate environment and enjoyment are of least interest. Discussion of Findings Preferred Attributes The EmpAt scale, developed in Australia by Berthon et al. (2005), has, with some modifications, proven effective in identifying the graduating business students perceptions of preferred employer Business Student Perceptions of a Preferred Employer: A Study Identifying Determinants of Employer Branding 39
Table 9: Rotated Component Matrix a Component 1 2 3 4 5 6 7 8 Large Company 0.840 0.067 0.134 0.048 0.071 0.065 0.104 0.068 Well-Known 0.805 0.122 0.013 0.084 0.011 0.055 0.016 0.154 Company Product or 0.699 0.129 0.239 0.229 0.097 0.007 0.046 0.112 Service Type Profitable 0.563 0.352 0.040 0.350 0.161 0.010 0.143 0.144 Company High Quality 0.511 0.088 0.101 0.289 0.057 0.115 0.346 0.134 Products Quality 0.444 0.270 0.372 0.411 0.085 0.012 0.050 0.031 Management Above 0.101 0.826 0.047 0.145 0.104 0.194 0.068 0.040 Average Salary Attractive 0.124 0.823 0.149 0.099 0.066 0.127 0.133 0.014 Compensation Package Job Security 0.134 0.647 0.281 0.262 0.005 0.220 0.128 0.027 Future 0.095 0.467 0.010 0.195 0.086 0.432 0.076 0.060 Opportunities Good Promotion 0.146 0.456 0.409 0.032 0.007 0.398 0.025 0.190 Opportunities Can Use Univ. 0.124 0.088 0.819 0.043 0.197 0.061 0.171 0.041 Knowledge Can Teach Others 0.047 0.167 0.697 0.023 0.142 0.034 0.117 0.061 Univ. Knowledge Socially Responsible 0.263 0.002 0.550 0.314 0.005 0.280 0.204 0.149 Acceptance and 0.081 0.180 0.402 0.398 0.298 0.268 0.043 0.135 Belonging Happy 0.025 0.420 0.071 0.580 0.131 0.170 0.096 0.036 Environment Appreciation 0.107 0.293 0.007 0.569 0.072 0.275 0.055 0.042 from Management Honest and Fair 0.284 0.132 0.458 0.513 0.199 0.016 0.087 0.002 Customer-Oriented 0.338 0.001 0.375 0.411 0.005 0.066 0.167 0.205 Good Relationship 0.030 0.141 0.111 0.023 0.864 0.045 0.100 0.111 with Colleagues 40 The IUP Journal of Brand Management, Vol. VIII, No. 3, 2011
Table 9 (Cont.) Component 1 2 3 4 5 6 7 8 Good Relationship 0.132 0.028 0.134 0.124 0.798 0.066 0.088 0.056 with Superiors Supportive 0.137 0.142 0.140 0.135 0.638 0.135 0.236 0.162 Colleagues Develops 0.091 0.188 0.068 0.147 0.015 0.757 0.159 0.021 Confidence Promotes 0.083 0.214 0.065 0.278 0.070 0.744 0.042 0.028 Self-Esteem Gaining 0.001 0.114 0.138 0.290 0.296 0.562 0.265 0.081 Career Experience Innovative 0.030 0.041 0.073 0.030 0.092 0.158 0.815 0.106 Values Creativity 0.081 0.071 0.117 0.068 0.263 0.295 0.658 0.003 Innovative Products 0.279 0.093 0.347 0.093 0.020 0.078 0.574 0.078 Offers Range 0.016 0.402 0.042 0.089 0.209 0.132 0.573 0.074 of Experience Exciting 0.015 0.027 0.139 0.033 0.268 0.043 0.123 0.759 Environment Fun Environment 0.131 0.124 0.092 0.514 0.054 0.157 0.092 0.555 Gives Personal 0.368 0.275 0.401 0.029 0.086 0.032 0.180 0.427 Respect Note: Extraction Method: Principal Component Analysis; Rotation Method: Varimax with Kaiser Normalization; a Rotation converged in 9 iterations. attributes. While there is an overall correlation between the views of the Sri Lankan and Australian students, the most preferred attributes reflect the impact of cultural and economic differences between the two student cohorts. The seven additional items which we added for the survey of Sri Lankan students, as a result of their considered importance in the relevant academic literature, were in fact largely among the least-preferred attributes. These factors included organizational characteristics such as size, public image, profitability, quality of management and nature of product and/or services. This does not necessarily mean that they should be discarded at this point as they may be of greater significance to either students of other academic disciplines or to more experienced workers. As a result of employment experience and position within an organization, current employees are likely to have a greater understanding of the relevance and impact of these factors in the workplace. They may therefore be rated quite differently by these groups. It should also be noted that the inclusion of the additional items did improve the internal consistency of the test items in this exercise. The original EmpAt scale tends to Business Student Perceptions of a Preferred Employer: A Study Identifying Determinants of Employer Branding 41
Table 10: Summary of Component Variables Factor 1 Factor 2 Factor 3 Factor 4 Factor 5 Factor 6 Factor 7 Factor 8 Large Company Well- Known Company Product or Service Type Profitable Company High Quality Products Quality Management Above Average Salary Attractive Compensation Package Job Security Future Opportunities Good Promotion Opportunities Can Use University Knowledge Can Teach Others University Knowledge Socially Responsible Acceptance and Belonging Happy Environment Appreciation from Management Honest and Fair Customer- Oriented Good Relationship with Colleagues Good Relationship with Superiors Supportive Colleagues Develops Confidence Promotes Self- Esteem Gaining Career Experience Innovative Values Creativity Innovative Products Offers Range of Experience Exciting Environment Fun Environment Gives Personal Respect be mostly directed towards student respondents. The additional items, we believe, give it more relevance to the existing workforce. Instrumental and Symbolic Factors The relevance of both instrumental and symbolic factors to students perceptions of preferred employer attributes was supported by this study, with instrumental being of greater significance to the student group (71.4% of the seven most preferred attributes). This supports the findings of Lievens and Highhouse (2003) in that the job applicants are initially drawn to an industry or type of organization by instrumental factors whereas symbolic attributes will have a greater role in differentiating firms from their competitors. Our survey did not ask for particular organizations to be evaluated, therefore, symbolic factors are less likely to be considered at this stage of employer selection. Segmentation The commonality of the academic background of the students resulted in the lack of differentiating segments within the student cohort, apart from the level of academic achievement. Recruitment managers may find the preferred attributes of the highest academic achieving group useful in considering their strategies for attracting this type of potential employee. Factor Analysis The identification of eight student preference factors has the potential to allow organizations to more carefully match their recruitment strategies with the job-seeking 42 The IUP Journal of Brand Management, Vol. VIII, No. 3, 2011
motives and preferences of graduate students. Business students, for example, have indicated personal growth and relationship factors as being most important while the corporate environment and enjoyment are of least interest. Higher achieving students are more concerned with personal growth and job structure. The range of factors is of sufficient breadth to be applied to many types of employee categories. Conclusion This study has thrown light on the preferred employer attributes of graduating business degree students within the Sri Lankan context through the use of a modified version of the Australian-developed EmpAt scale. In addition, factors that may influence the job seekers perceptions such as reputation variables, personal characteristics and academic background have been considered. Finally, analysis of the survey results has indicated eight dimensions of employer attractiveness. These can enable organizations to gain a meaningful understanding of how to strategically develop their employer brand both for the recruitment and retention of employees. Increasingly, organizational wealth is being generated by converting the intangible products created by talented employees into institutional skills, patents, brands, software, customer bases, intellectual capital and networks that raise profit per employee and return on invested capital (Bryan, 2007). The imperative to understand the motives of job-seekers is becoming increasingly evident if companies wish to gain a competitive advantage through attracting the best available human capital. Limitations of the Study: As this is an exploratory study, it was confined to the students of one academic faculty at one university, although students were drawn from three different specializations. Generalizing from these findings in relation to students from other disciplines could be misleading as other factors such as academic and employment skills, job opportunities and employer characteristics may vary from those relevant to business studies. The influence of cultural and economic factors on Sri Lankan business students was also observed when comparing the results with those of Australian business students. Care would therefore be required in relating the results to other national entities. A majority of job seekers are current or former employees who, as pointed out previously, are likely to have quite different perceptions of employer attributes. The student outcomes may therefore not be applicable to more experienced workers. Implications and Further Research: Demographic changes in many countries together with an ever-increasing competitive business environment will necessitate greater attention by companies of all types towards attracting the most suitable employees required for organizational success. A greater understanding of what factors influence the employment preferences of job applicants is a fundamental and necessary prerequisite for both a recruitment strategy and the development of an employer Business Student Perceptions of a Preferred Employer: A Study Identifying Determinants of Employer Branding 43
brand. There is little academic research to support either function at a global level or within Sri Lanka. This study has presented a profile of the employer attributes that attract business graduate students from a Sri Lankan university. A viable measurement mechanism has been identified and tested, and relevant influencing factors and segmentation variables investigated. The development of an eight-component structure to explain the broad dimensions of employer attractiveness can enable human resource management departments to find a focus for recruitment strategies by gaining an awareness of the factors that influence graduating students choice of employers. From this basis, it should now be possible to extend the research based on the following four sectors: 1. Students from a wider range of courses and universities; 2. Experienced employees; 3. Middle- and upper-level managers and executives; and 4. Human resource management personnel, in relation to what attributes they believe their organization has, to attract new employees. This could be compared with the perceptions of job seekers. In all instances some modification to the questionnaire items would be required. A longitudinal study of changing perceptions of job seekers in relation to their preferred employer attributes, both general and related to specific industries and organizations, may also reveal trends at both a macro and micro level. References 1. Ambler T and Barrow S (1996), The Employer Brand, The Journal of Brand Management, Vol. 4, No. 3, pp. 185-206. 2. Backhaus K and Tikoo S (2004), Conceptualising and Researching Employer Branding, Career Development International, Vol. 4, No. 5, pp. 501-517. 3. Berthon P, Ewing M and Hah L L (2005), Captivating Company: Dimensions of Attractiveness in Employer Branding, International Journal of Advertising, Vol. 24, No. 2, pp. 151-172. 4. Bryan L (2007), The New Metrics of Corporate Performance: Profit per Employee, McKinsey Quarterly, No. 1, pp. 56-65. 5. Cable D B and Turban D M (2001), Establishing the Dimensions, Sources and Value of Job Seekers Employer Knowledge During Recruitment, Research in Personnel and Human Resource Management, Vol. 20, pp. 115-163. 6. Cable D M and Graham M (2000), The Determinants of Organizational Reputation: A Job Search Perspective, Journal of Organisational Behaviour, Vol. 21, No. 8, pp. 929-947. 44 The IUP Journal of Brand Management, Vol. VIII, No. 3, 2011