Dr Graham Dietz, lecturer in Human Resource Management, Durham Business School, takes a look at how ‘employer branding’ can both work for and against the ‘psychological contract’ that exists between employer and employee, and addresses why promising and delivering employee engagement is so vital
In the past decade, the competition for talent has seen organisations spend enormous amounts of time, energy and financial resources in promoting their ‘employer brand’. Using principles and techniques drawn from marketing, employers create and maintain a series of images and impressions (a ‘brand image’) of themselves as an employer, to talk up their attractiveness to potential recruits. The aim is to be perceived as an ‘employer of choice’. Glossy brochures and media ads, interactive recruitment portals on the corporate website, college visits and open days, even CD-ROM games, all form part of these corporate employer branding campaigns. It is important to distinguish between these actions, and employee branding which involves encouraging employees to ‘live the brand’. However, the two are closely intertwined.
Expensive employer branding exercises are often justified by the intense competition among firms to recruit that apparently rare breed, the talented and committed worker. For many firms, having an enticing employer brand is seen as only a ‘table stake’; the bare minimum needed to even have a chance of attracting the brightest and the best. Without one, they argue, they are not even noticed.
The problem with this is that as the war for talent intensifies, the table stake seems to be getting higher and higher. Employers must offer more to differentiate themselves from their rivals. So the employer brands get glossier, the promises they make bolder and, of course, the expectations they raise become ever greater – and, logic dictates, harder to fulfil. Employer branding may have become the HR department’s equivalent of the old joke: Marketing promises what operations cannot deliver.
If employer branding is a table stake, how can employers build upon it as an investment, rather than write it off as wasted unavoidable cost? The psychological contract model offers employers a framework for getting the best out of their employer branding. At Durham Business School we have been using this model to help our executive education clients do just that.
Here’s how it works.
Let’s start with what we mean by ‘the psychological contract’. Put simply, it is about the sets of expectations held by employer and employee about each party’s mutual obligations toward each other, and about the conduct of the relationship between them. It is ‘psychological’ in that it consists of everything that is not part of the legal contract, but which may nevertheless be part of an implicit agreement between the two parties. For employees, it covers their expectations on fair treatment, training and development, career progression, the organisation’s ethical standards and such like. For the employer, it encompasses expectations on effort and commitment.
Managing these mutual expectations into an attractive and sustainable contract makes sense for both parties. Research has shown how employees whose expectations are met by their employer are happier at work and they reciprocate in kind. They demonstrate higher levels of commitment, they are more willing to ‘go the extra mile’ in their work and less likely to be tempted away by rivals. Should this mutually beneficial state of affairs last, employees can form an emotional bond with their employer based on trust. This can have a profound effect on levels of engagement, motivation and loyalty. In other words, employees start to ‘live the brand’ in a genuine, rather than compliant, fashion. This is the employee branding project.
Organisations with engaged employees serving customers well and winning their loyalty can expect higher sales and repeat sales, and hence higher profits. In this respect, employer branding and employee branding are interdependent projects: if the promises of the former are not realised, the credibility of the latter effort will
By contrast, get the psychological contract wrong and the costs can be huge. Studies have found that violations of the psychological contract (broken promises and confounded expectations, especially if these expectations were deliberately fostered by the employer) can lead to withdrawal of co-operation, lower performance levels and commitment, absenteeism and employee turnover, even sabotage. Not only can this render any investment in a branding campaign a waste, but firms can face high, unwanted employee turnover as disillusioned new recruits leave early. Reputation may suffer, too, as many will badmouth the offending organisation to their friends and colleagues. Meanwhile, cynicism and low commitment festers among those who remain.
Employer branding is the earliest opportunity employers have within their full control to create the differentiating first impressions that might initially attract potential recruits. But, looked at through the lens of the psychological contract model, these first impressions also form the vital foundational expectations of the psychological contract. Meet them and the relationship can flourish; fail to meet them or – worse – deliberately create false expectations in the first place, and contract violation becomes almost inevitable, with all the negative repercussions detailed above.
So, let’s look at what expectations are created in these branding exercises. Potential employees need to know what employers will offer them in terms of basics such as pay, location, main tasks and duties, support and career progression. Yet even these simple details can go wayward in employer branding efforts. One multinational’s recruitment campaign included a picture of four recent graduate recruits with a tag-line hinting that they, like other graduates, would have been nurtured to go into senior management. When they checked a couple of
years later, only one of those pictured had made it; the other three had left – for rivals.
Increasingly, employees are believed to also be looking for clarity around the values that lie at the heart of the organisation’s moral framework and culture, and in recent years employer branding campaigns have changed content to reflect this. Yet this is one manifestation of how what I call the ‘employer branding treadmill’ seems to be compelling organisations to push their promises further and further. Many large firms’ recruitment ads now give the impression that their entire business proposition is built on an inviolable core of ethical purity, and/or a paramount concern for their employees’ every need. Clearly, both are formidably difficult to realise in practice.
The content of the psychological contract’s foundational expectations, as generated by the employer branding, is important. So too is their strength. Consider the huge differences in expectations that even apparently innocuous phrases can make in recruitment advertising: ‘You will have the chance to go on international assignments’ (an impression/possibility) versus ‘All graduate recruits are sent abroad on international assignments in their first 12 months’ (a promise/certainty). Clearly, promises are more attractive to a new recruit than mere possibilities. But promises also create much stronger expectations of their actually happening. They may even amount to a perceived obligation on the part of the employer to deliver. At the same time, only hinting at likelihoods and possibilities – while easier to manage – is dismissed as failing to differentiate the brand. These are multiple dilemmas: Do firms’ branding exercises set them up to renege on the terms of their own psychological contract with their people?
A deliverable and accurate psychological contract is critical if new recruits are not to join under false pretences and then leave when their expectations are dashed in the first few months
It follows that if the effort invested in such campaigns is not to be wasted, an essential quality of the brand is that, first, it must genuinely reflect the reality of working inside the organisation. It certainly should not present a willfully distorted image – yet, again, the employer branding treadmill seems to require just that, ratcheting up the promise quotient to unsustainable levels.
A second implication is that a deliverable and accurate psychological contract is critical if new recruits are not to join under false pretences and then leave, disillusioned and bitter, when their carefully created expectations are dashed in the first few months. In the US, ‘job shock’ is endemic, with about a quarter of all new hires not making it through their first year and almost half of new employees leaving within the first 18 months.
In short, employer branding may solve the recruitment problem – getting people to apply – but as it does it can sow troublesome seeds for later. A paradox of HR professionals’ predilection for making wildly improbable employer branding promises to attract new hires is that they should also know realistic job previews, setting reasonable and achievable expectations, tend to be very good predictors of higher employee job satisfaction and low intention to quit.
Just as important, and often neglected, are the existing employees. They need to endorse the branding effort and believe in it, rather than see it as a cynical or even manipulative distortion of what they face day-in and day-out, lest the consequences of this disconnect be seen and felt by an organisation’s customers, or detailed in excruciating detail in employees’ blogs.
What is to be done?
As we have seen, the trend (fad?) for extravagant employer branding can prove counter-productive – unless it delivers. This is its redemption. The psychological contract model is helpful in depicting this process. As can be seen, the contract begins when a potential new recruit first engages with the company’s recruitment/employer branding materials and continues to be shaped during the selection process. But it is dynamic; it is constantly revised and updated throughout an individual’s time with that organisation.
It follows that employers need to examine what expectations they are raising as they project their employer brand image, how firm these expectations are, and whether and how they are fulfilled. It is joined-up thinking to look not only at the brand, but also at the old-fashioned but essential aspects of jobs that form the delivery end of the deal: workload, training and development, career progression and, especially, supervisory style.
This is where HRM plays a valuable role, not only in providing the back-up policies for fulfilling employees’ carefully generated expectations, but also in providing support to line managers in their role as the closest custodians of the psychological contract held by each of their team members. The old adage – that people join organisations but leave managers – remains apt. Many new recruits have found that an expensive employer branding campaign can be rendered worthless by the contradictory actions of an off-message line manager. Monitoring the health of the psychological contract is also necessary. An effective appraisal system can help at the individual and manager-subordinate levels, while use of employee attitude surveys and joint management/workforce forums can provide feedback at the level of the organisation as an employer.
This year managers from a high street retail bank taking the Business School’s Executive Education programme took the psychological contract model as a template to examine the expectations raised by their employer branding, following them through to see whether and how they were met. Through interviews with new hires from the previous six months they found inaccuracies on the corporate website on salary scales and a less than enticing tag-line to their recruitment ads (‘We work our socks off here!’). They also found inconsistencies in what new recruits were promised in interviews (from nothing to a guaranteed career path). Using the model the managers identified problem areas, and have presented practical recommendations to senior management to align the branding with its delivery on the ground.
The psychological contract model can be used from both angles: not just to rein in the branding to a sustainable proposition, but to take organisations down the alternative route, where they look at the promises made by the brand and change existing practices and policies so that working reality falls in line. This, research suggests, might be the optimal solution: over-promise – and deliver.