Issue link: http://www.e-digitaleditions.com/i/94708
CEO's Corner The Reputation- Recruitment Equation I was told by my parents after one of my adolescent escapades that I could damage my reputation at school with teachers, administration, and the like. I was pretty confident that I could also become a folk hero to other students. It was a standard beat down by parents of teenagers, and they finished with the admonition that a "good reputation is hard won and easily lost." Like most wisdom we get as children, it takes a lifetime of learning to return to the point where you realise they were right. This admonition is nowhere more apparent than in the case of how corporate "reputation" impacts the ability to hire and retain a workforce. In HR we already know this, but do we know how big the impact is? We do, and we have data to prove it. SharedXpertise Media, the parent company of HRO Today Global, also has the privilege of publishing Corporate Responsibility Magazine. In CR Magazine, we publish such influential research as the annual "100 Best Corporate Citizens List." Fortune 500 CEOs rank that list as the third most important ranking they would most like to achieve. So, as part of our ongoing coverage of the crossover between CR and HR, we undertook a study of the impact of corporate citizenship and reputation on hiring and retention. We surveyed more than 1,032 employed and unemployed U.S. workers. The survey was sponsored by Allegis/Talent2, a company with a great commitment to corporate social issues in the conduct of its business. The results I believe not only represent the sentiment of U.S. workers but any developed country with evolved social consciousness. I believe the results might actually be higher in Europe and Asia, depending on the country. This data reveals the depth to which HR must be involved in the corporate responsibility practises of its organisation and can also be used to show why HR should own the issue of corporate ethics in a holistic sense. Why? Because HR is where the battle, a potentially losing one, will be fought after a major reputation-damaging scandal. Of the workers surveyed, 75 per cent stated that they would not accept a job with a company with a reputation for bad citizenship, even if they were unemployed. This response was higher among women at 83 per cent versus men at 66 per cent. It was highest amongst the income category of up to $35,000 per year at 82 per cent, but it was consistent across most categories until the $100,000-plus, where the answer dropped to 63 per cent. Asked what level of raise would be required to lure them to a company with a bad corporate responsibility history or reputation if they were employed, 58 per cent said they would take a job with a company that had a bad reputation if it offered more money. However, on average, these individuals would only consider the job if offered double their current salary. Now, would someone who is unemployed really decline a job from a company with a bad reputation? Yes, some percentage of the respondents would. I am not sure that 75 per cent would, but if they had another competing opportunity, the company with the bad reputation would surely lose, if other things were close to equal. This means that the effect of a scandal is a higher decline rate for the best talent and, therefore, higher recruiting costs. Recruiting costs are not often thought of as the cost of a tarnished reputation, but they should be. In addition, the salary ranges available to companies with a bad reputation would have to be at the upper end of the market to compete for top talent. Therefore, reputation damage means much higher labour costs and, over time, this impacts competitiveness. That macro issue aside, the HR department will have to look at the salary ranges well beyond average benchmarks and inform the operating departments that salary budgets for new hires will need to be on average higher than in previous years. To get talent, companies with reputational damage will have to pay at the top end of the range they may see in the salary surveys they receive each year for their respective industries. What can HR do? Not much unless it can be empowered from the C-suite to manage ethical culture and have a hand in programming the corporate responsibility agenda. Otherwise, it needs to get more budget for recruiting and manage expectations about salary levels or surely fail in its talent management role. Elliot H. Clark, CEO [4] HRO TODAY GLOBAL | FALL 2012