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How Compensation Can Make or Break Your Employer Brand

The automatic response when people think of “brand” is to look to marketing, not HR. But, in today’s competitive labor market, a strong employer brand is an invaluable asset to attracting and retaining top talent. And your compensation strategy is a key component.

What is an Employer Brand?

Just as your corporate brand encompasses your reputation in the marketplace,  your employer brand refers to your company’s reputation and image as an employer. Most importantly for this discussion, it encompasses your employee value proposition (EVP). Like your customer value proposition, your EVP consists of the unique benefits and rewards your organization offers to its employees in exchange for their skills and contributions.

A strong employer brand can be a powerful tool for attracting and retaining top talent. When potential employees perceive a company as a great place to work, they are more likely to apply for positions and be motivated to join the team. A strong employer brand can also help to reduce employee turnover and improve engagement, producing better business outcomes.

Elements of an Employer Brand

Brands are sprawling, complex things with a million moving parts. That said, your employer brand has some core components to keep in mind.

1. Culture & Values

Your company's culture and values are the foundation employees-cultureof your employer brand. Employees are increasingly seeking organizations that align with their personal values and provide an inclusive, supportive, and engaging workplace. But saying what your values and culture are isn’t sufficient - these things need to be evident in every business decision and interaction, both with employees and with customers. Stated values that aren’t clearly practiced breathe inauthenticity into both your customer and employer brand. And people can smell that miles off.

2. Employee experience

Employee experience plays a pivotal role in shaping the overall employer brand of an organization. It encompasses all the interactions, perceptions, and emotions an employee goes through during their tenure with a company. A positive employee experience fosters a sense of belonging, purpose, and satisfaction within the workforce. When employees feel supported, valued, and empowered, they become advocates for the company's products or services, attracting top talent and boosting the employer brand reputation.

3. Candidate experience

Similar to employee experience, candidate experience is the sum of all interactions a candidate has with your organization during the hiring process. Think of this as the journey that potential employees take when they interact with your brand. From the moment they discover your company to the final stages of the hiring process, it's crucial to create a smooth and positive experience. Sites like Glassdoor not only review employee experience, but also how the hiring process is for candidates. Be responsive, respectful, and make sure they feel like they're valued from the

4. Employee Value Proposition

Your EVP the value employees receive by working with you. It includes things like name recognition (we’ve all seen the “former COMPANY NAME” info in LinkedIn headlines), career advancement and growth opportunities, perks, benefits, and of course, compensation. Your EVP should align with the type of people who will be successful at your company and who will, in turn, help your company achieve success. 

Employer Brand & Compensation Strategy

Compensation is often the primary factor considered by individuals when evaluating employment opportunities, but it’s also frequently overlooked when considering employer brand. That’s a mistake.

Importance of Compensation for Hiring and Retention

While rumblings of impending recession have been going on for some time and news of mass layoffs seems to hit LinkedIn every other day, the talent market remains highly competitive. The combination of a strong employer brand paired with effective compensation strategy can be a major competitive advantage for recruitment. The rise in pay transparency laws that mandate upfront disclosure of salary range for posted positions make compensation an even larger part of a company’s EVP. 

happy-employee-laptopGetting compensation right is also critical for employee retention. Those same pay transparency laws that require employers to list salary ranges in job postings are uncovering challenges around pay compression for existing employees. The story of the UX writer who, after seeing her position listed for significantly more than her current salary, applied for her own job springs to mind. That may be an unusual case, but ensuring that your current employees are paid fairly relative to the market can go a long way toward keeping them happy with your company. 

Aligning Compensation Strategy and Employer Brand

While some would argue that a strong employer brand allows companies to lower their total compensation and vise-versa, I’d argue that having a compensation strategy that supports your HR goals is a core component to a strong employer brand. Company culture doesn’t pay the rent. That’s why ensuring compensation and employer brand are in lock step matters so much: compensation is a tangible reflection of your EVP.

Define Your Compensation Philosophy

Starting off, you will need to define your compensation philosophy. This is part of an overall total rewards philosophy, which includes perks and benefits. Your compensation philosophy takes your mission, core values, and company goals and uses that information to define the principles you use to make compensation decisions. You will need to be able to clearly communicate this philosophy to all stakeholders - including leadership, HR, employees, and potentially your board of directors. Once you have an idea of what your compensation philosophy should look like, run it past a couple of trusted people within your team and wider organization to make sure everything feels aligned with your employer brand and desired EVP.

Assess Your Current State

Employee-reviewNext analyze how your current compensation and benefits programs compare to the market standards and expectations, as well as how the reality on the ground compares to your defined compensation philosophy. You’ll use that comparison to build out a compensation structure that effectively supports your employer brand and EVP. There are a number of tools and methods you can use, including surveys, focus groups, benchmarking, audits, and gap analysis.

Monitor and Update

Finally, remember that your employer brand, EVP, and compensation philosophy are living things that need to grow and adapt to changing circumstances. Set up systems to monitor your employer brand and compensation structure performance. Many of the tools you used in your initial evaluation will be helpful going forward - particularly as you’ll be able to compare results over time.

More on Employer Brand:

If you want to learn more about employer branding, here are a few great places to start!

What is an employer brand and how can we develop an employment branding strategy?
Read at SHRM

Make your employer brand stand out in the marketplace
Read at HBR

Employee Value Proposition: All You Need to Know
Read at AIHR