5 Ways Employer Branding Reduces Your Cost Per Hire

Employer branding is often swept under the rug of 'HR functions' in many companies. While your core business functions are understandably irreplaceable, a little attention to employer branding boosts the company’s image in the job market. And if you thought employer branding was just a cosmetic exercise, let us tell you that it has tangible benefits (and these include saving company money). Employer branding has a huge impact on workers across generations, but it especially matters to Millennials and Gen Z, who are image-conscious and place huge emphasis on job satisfaction.

An effective employer branding exercise has many benefits for a company, one among them being the reduction in cost-per-hire (CPH).

First, let's quickly see what cost-per-hire is.

Cost-per-hire is the average amount of money a company spends to hire one employee.

So if a company spends ₹10,00,000 to hire 20 people, the cost-per-hire is ₹10,00,000/ 20 = ₹50,000

A LinkedIn Talent Solutions report found that effective employer branding can bring down cost-per-hire by up to 50 per cent! That’s quite some money!

Here are five ways employer branding can bring down your company's cost-per-hire:

1. Effective employer branding attracts good candidates and reduces advertising spend

With effective employer branding, your company is seen as a great place to work – with a clear purpose, inclusive culture, and growth opportunities.

This means good candidates are drawn to your company organically, even if you spend less on advertising vacancies. Remember, advertising costs add to the cost-per-hire. Less advertising cost means lower cost-per-hire.

2. With good reputation comes fewer 'persuasion costs'

Employer branding builds the brand of your company as a workplace. This is likely to make candidates readily accept your job offers.

This improves offer-to-join ratios, saving effort and money on prolonged negotiations. Hiring cycles are shortened.

3. Better brand = Quality applicants = Reduced screening costs

Since you took efforts to project your company as a great place to work, you attract quality applicants who already 'fit' into your company culture. This reduces screening costs, which are normally clubbed with cost-per-hire.

4. Investing in employer branding brings 'free marketing'

If you create a healthy workplace and take steps to project it as such through employer branding, jobseekers who come onboard themselves recommend your company to people in their networks. This forms a referral-driven talent pipeline. This means your advertising spend to attract new, quality candidates goes down – taking cost-per-hire with it.

5. Long-term ROI on retention

Strong employer branding improves engagement and retention. As attrition goes down, the need for replacement hires decreases. This reduces total annual recruitment costs and thereby cost-per-hire.

Companies across industries are slowly but surely waking up to the concept of employer branding. Shifting attitudes now see employer branding move from ‘may’ to ‘must’ column in corporate strategies.

Want to get this right?

Explore our guide on managing a multi-generational workforce: The Complete Guide to Managing 4 Generations in One Workplace

FAQs

• What is employer branding in the context of hiring?

  Employer branding in this respect refers to the real reputation that a company holds in the talent market. This may further depend on how employees talk about working with you and how jobseekers perceive your culture. This goes much deeper than the meaning conveyed by just a tagline on your company website.

• How does strong employer branding reduce cost-per-hire?

  A workplace with a trusted employer brand organically attracts candidates. Advertising spends go down, offer acceptance rates increase and hiring cycles are shortened. All of these factors directly lower cost-per-hire.

• Is there data proving employer branding lowers hiring costs?

  Yes. As reported by LinkedIn Talent Solutions, companies with strong employer brands can reduce cost-per-hire by nearly 50 per cent, thanks to faster recruitment and better applicant quality.

• Why does hiring cost rise when employer branding is weak?

  If the workplace has a poor reputation, it gets a lesser number of applicants. Advertising costs go up, the screening process lengthens, there are higher persuasion costs and increased dependence on agencies. All of this pushes cost-per-hire up.

• How can a company tell if its employer branding is working?

  The company gets a greater number of unsolicited applications. Higher offer-acceptance rates and faster hiring are some more indicators. Lower attrition and better online reviews follow.