Employee EngagementEvidence-Based HR

Reputation Matters

Corporate scandal continues to cost companies

By The Editors

The impact of corporate reputation on employer brand is more significant than ever before and directly affects the cost of hiring, finds the 2017 Cost of a Bad Reputation study from HRO Today and Cielo. This year’s results show that with the U.S. unemployment rate continuing to drop and the economy projected
to expand moderately at 2.2 percent into 2018, organizations have to be more aware than ever of the impact of a bad reputation on their employer brand.

According to findings from this year’s study, 61 percent of currently employed respondents were willing to leave their current employer to work with a company with a bad reputation, about the same as the prior year. Males remain much more likely than females to take the job, at 69 percent versus 52 percent, respectively. The percentage of females willing to take the job has declined for three straight years.

Among those candidates willing to join a company with a bad reputation, a pay increase of 58 percent is needed as enticement. On the other hand, candidates can be tempted to join a company with a good reputation with a significantly lower pay increase of 36 percent. Companies with bad reputations face increased recruiting costs due to the greater difficulty of sourcing and onboarding new hires. This is particularly true when recruiting females and more experienced workers.

And despite what is often reported, the youngest workers are the least concerned with company reputation, with 72 percent of millennials (aged 18 to 34) willing to take a job at a company with a damaged reputation compared to less than 60 percent of Gen X or baby boomers. Companies with such reputations may have fewer obstacles in recruiting this group if their other needs for, such as a positive work environment, flexibility, and advancement opportunities, are met.

A bad reputation affects more than just the cost of recruiting. If a company was involved in a major scandal, nearly three-quarters of its employees would look for a new job, most of them immediately. Additionally, over one-half (52 percent) of all those employed would start looking immediately, defined as less than 30 days. The result is a company-wide talent drain that would severely impact an organization’s ability to compete.

Companies with good reputations enjoy greater consideration among potential candidates, far lower costs to onboard those candidates, and improved retention among employees, and can benefit from a talent pool comprised of disgruntled employees working for companies mired in scandal.

Organizations suffering from a damaged reputation should expect greater costs and increased difficulty in attracting and retaining talent than competitors with strong reputations.

Click here for more information from this year’s Cost of a Bad Reputation study.

Tags: Magazine Article, November-2017, Research Report, Talent Acquisition

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