Why your employer brand Return on Investment could be millions, not thousands.

I’d imagine some of you reading this have been through the process of building a business case for employer branding before. In my experience it can be intimidating, with Boards often wanting to see short-term justification for any investment.

I’ve recently written a new resource for The Forum for In-House Recruitment Managers to help their members to write a business case for employer brand investment and it’s made me think carefully about how we measure employer brand Return on Investment (ROI).

I frequently have conversations with Recruiters who understand that they struggle to hire the right talent because people do not get who they are or what they have to offer. So, the logical next step is to ask for funding to support the development of the employer value proposition and employer marketing assets. Simple, right?

And yet I’ve seen many cases of this seemingly “no brainer” conversation hitting the rocks over the thorny issue of ROI. So often, organisational leaders look for a rapid ROI and to counter this, we tend to put forward the metrics that are easiest to directly measure and quickest to achieve – usually savings created against agency spend. In my experience, most bidding Resourcing Managers look to “cover their costs” and present savings on agency fees of tens of thousands of pounds. Which is no bad thing in itself.

But this for me is just the tip of the iceberg and really under-plays the deeper, more profound effects that a strong employer brand can bring to an organisation.

So, let’s look at some researched facts that will help to create a more impressive business case.

Firstly, research by LinkedIn shows that employee turnover can be reduced by 28% through investment in employer brand. The CIPD put the average non-Executive cost-per-hire at £2,000. The latest membership survey from The FIRM shows that on average, their members hire between 100-500 staff per year. Let’s split the difference and say 250. So, if you reduce that 250 figure by 28%, that’s 70 people per year you no longer have to hire at £2,000 per hire. So that’s £140,000 saved for your average organisation through reduced attrition. Good start!

Next, let’s look at the cost of empty seats. Further research from LinkedIn shows that companies that invest in their employer brand can cut time to hire in half. I worked with a client recently to calculate the revenue lost by having an open vacancy. We established that halving the time to hire would reduce revenue loss by around £1,700 per vacancy. From there, we were able to deduce that this would mean a reduction in revenue loss (or to put it another way, a revenue increase) of around £340k per annum. Now we’re talking!

Harvard Business Review claim that companies are overpaying on salaries by 10% if they don’t have a strong employer brand. Again, working with the same client we established that a 10% reduction in payroll would amount to around £3.0 million per annum. Boom!

So pretty soon we were able to confidently build a business case that showed ROI in terms of millions, not tens of thousands. The only caveat being that our period of measurement needed to be longer. We need to be looking for the real value being provided over a 3-5 year period, rather than in the next 12 months.

And these figures don’t take into account the most intangible, but most business-enhancing benefit of all – increased engagement. It stands to reason that hiring the right people and decreasing attrition will create a stronger, more engaged workforce that is more productive. But there are many other factors that will affect employee engagement, so although employer branding undoubtedly plays a major part, it’s very difficult to directly attribute accurate financial benefits.

But even without engagement, the financial benefits of employer branding are still clear and tangible. My advice to anyone putting together a business case would be to “go big or go home”. Think carefully about the longer term benefits. Don’t be tempted to measure against a few short term transactional “quick wins” because employer branding investment will have a far more profound impact. Be brave, passionate and convincing in your arguments and leave your Board feeling that they would be mad not to invest. You can do this!

Members of The FIRM can download my guide to creating an employer brand business case from https://www.thefirm-network.com/resources

If you need support with your employer brand strategy, including writing a business case, contact me at david@peoplebrand.co.uk for a free initial 30 minute consultation.

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