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The right brandwidth

In 1998, McKinsey & Co., after a year-long probe into recruitment practices, brought under the spotlight the shadow war being fought for talent.

india Updated: Jan 02, 2006 13:27 IST
PTI

In 1998, McKinsey & Co., after a year-long probe into recruitment practices, brought under the spotlight the shadow war being fought for talent.

The report predicted that talent would become the single most critical resource for a company over the next two decades. Based on the responses from 6,000 employees at 77 companies, the study indicated a sharp decline in the supply of talent (due to a combination of factors) even as the demand mounted.

In the years to come, this ‘war for talent’ had companies hiring help to work out innovative recruitment strategies. Employer branding, already defined as a concept in the early 90s, slowly gained ground to become the peg around which recruitment advertisement began to be strucutred. It was not enough selling the job, you had to sell yourself as one of the best employers around.

And it is not only that, soon employer branding began to be redefined as Employer Brand Management that basically postulates that recruiting the right person is fine, but what works better is to create ‘engagement drivers’ that would make him/her stick to the company.

Talent retention

In the early 90s, a Tata steel corporate advertisement showed happy customers, smiling families, health care services, wrapping up with a beaming group of workers. The advert ended with the line — “We also make steel”. The underlying proposition was to build up the company as a brand.

These days, corporate taglines such as Infosys’ “Powered by intellect, driven by values,” or Microsoft’s “Your Potential, Our Passion” appeals broadly not only to its customers but also to their potential employees. Says Monisha Advani, CEO, EmmayHR Services Pvt. Ltd., “Employer branding is critical to the function of talent acquisition and retention.” She adds, “People are very conscious of the identity that they embrace when they align with an employer. It adds to their individual credibility and capability.”

Cost versus value-add

In 2002-2003, Infosys became a part of a rare breed of international players, by terming its employees as a capital asset. The company’s Annual Report (2002-2003) declared its human resources as part of its definition of intangible assets.

“The profitability of a knowledge firm depends on its ability to leverage the learnability of its professionals, and to enhance the reusability of their knowledge and expertise … the intangible assets of a company include its brand, its ability to attract, develop and nurture a cadre of competent professionals…” For the fiscal year 2004-2005, Infosys, by adopting the Lev & Schwartz model for calculating the value of human resources, placed a value of Rs. 28,334 crore for its human capital of 36,570 employees.

The debate on whether an employee is a cost or an investment depends on which hat you wear. “For a finance director,” quips Richard Mosley, Managing Director, People in Business, “everything pretty much is a cost, including the CEO, but it’s usually a bit of both.

If you take on a new employee — it’s cost but its also an investment if you want to grow as a business, if you want to deliver better customer service; the cost of re-training needs to be there. There is always cost value equation and companies very quickly fail if they see employees as merely a cost; for, they are not making any investment in the future.”

The Employer Brand philosophy says that though a campaign, which involves several engagement drivers, necessitates a certain degree of investment, the returns are usually high. “Undoubtedly, if invested in with a long-term perspective, rather than a short-term result-oriented approach, a company’s retention or attrition record is a good report card.

A decline in hiring cost is another way to gauge the ROI. And in the case of more progressive companies, the ‘win-back’ of good talent lost can also be a measure of improved employer brand perception. Myopic budget controllers, however, will see this as an unnecessary expense and unfortunately cut this as a cost with no visible return,” agrees Advani.

Mohanea Doss, a Hyderabad-based HR consultant, brings in another aspect of recruitment. “Branding ensures that you can find people at less than 20 per cent of the market rate. However, the problem is that most HR people do not understand the importance of branding the company and thus, they lack the strategy to do it.” Mosley agrees that it’s much more a focus issue than one of cost.

The process does take time, says Mosley, citing the example of Tesco. The company had realised that while 85 per cent of the employees felt that the company really valued its customers, only 42 per cent of them believed that the company valued the employees.

It took the company six to seven years of sustained investment, focusing on training managers, and the issues that drive engagement, not only financial ones, not raising the wages necessarily. Instead, the company succeeded in its effort by focusing on creating a better work environment which has paid off in the form of a much more engaged workforce, much more customer services and a continued record of growth in which their own CEO felt that that would not have happened if they had not put in that kind of an investment.

Money or climate

A November 2005 survey among 1,000 respondents, conducted by EmmayHR Services, throughout the branches that experience a heavy, daily footfall of walk-in candidates, revealed that the criteria of seeking the ‘right’ employer was ranked as

• Growth opportunity/ career development and progression

• Management/ transparency and style

• Compensation

• Employer brand

• Work place environment/ infrastructure

• Benefits (transport and food featured at the top)

“These are, of course, conscious rankings by individuals who participated in the survey. Our practice actually shows that people are inclined to change jobs based on employer branding perception and compensation,” comments Advani.

First Published: Jan 02, 2006 13:27 IST