Workforce downsizing has become an everyday fact of working life as most firms struggle to cut costs and adapt to changing market demands in order to survive in the new competitive arena. Extant research has made good progress in better understanding the different issues surrounding downsizing. However, there are still several key issues that have largely been ignored by prior research. One of these issues involves the potential effect downsizing may have on employer branding. This chapter is a preliminary attempt to explore whether there is some kind of relationship between both phenomena. More specifically, the main purpose is to examine how a significant and intentional reduction in the workforce may influence employer branding; while the other way around, an attempt is made to discover whether employer branding practices help to mitigate the negative effects of post-downsizing in the workplace, as well as improve the quality of future recruitment processes. The research setting consists of a small sample of large companies listed in the Merco Talent Ranking in Spain over the period 2007–2017. The results obtained in our study following a preliminary descriptive analysis seem to provide support for the notion that both practices may be closely interrelated in a circular way.
- employer branding
- employee retention
- candidates’ attraction
- Merco talent ranking
Recent technological advances, demographic evolution, and economic changes have affected business operations, and therefore the labor market. Such changes have forced companies to redefine their strategies and adopt new practices, especially in the field of human resources (HR). Over the past few years, two practices related to HR management (HRM) have gained considerable popularity both academically and professionally:
On the one hand,
On the other hand,
This study seeks to provide preliminary empirical evidence on whether there is a bidirectional relationship between
The research setting consists of a small sample of large companies listed in the
This study contributes to the literature as follows. To the best of our knowledge, the link between
This chapter is structured as follows. The second section presents some preliminary ideas on
Downsizing and employer branding: some preliminary ideas
Coined for the first time in the 1990s when applying the brand concept to HRM,
|Employer brand consists of the package of functional, economic and psychological benefits provided by employment, and identified with the employing company .|
|Employer branding is the sum of a company’s efforts to communicate to existing and prospective staff that it is a desirable place to work .|
|Employer branding involves managing a company’s image as seen through the eyes of its associates and potential hires .|
|Employer branding is a targeted, long-term strategy to manage the awareness and perceptions of employees, potential employees, and related stakeholders with regards to a particular firm .|
|Employer branding is the process by which employees internalize the desired brand image and are motivated to project the image to customers and other organizational constituents .|
|Employer branding is the process of building an identifiable and unique employer identity .|
|Employer branding refers to activities where principles from marketing, especially within branding, are used for HR initiatives regarding both existing and potential employees .|
|An employer brand is the image of the organization as a ‘great place to work’ .|
It has now become evident that many organizations have adopted employer branding practices because they have found that when effective it leads to competitive advantage, helps employees internalize company values, and contributes to employee retention. Clarifying and carefully managing “employment experiences” help create value and influence  both inside and outside the organization.
However, despite the potential benefits of good employer branding practices, it stands to reason that employer image can be affected and damaged by disruptive events such as downsizing . The changes in perceptions linked to aspects of the employment brand that are formed inside and outside the organization during and after downsizing are expected to affect the organizational identification and individual attitudes of former employees, current employees, potential employees, and other external stakeholders. In the case of those employees made redundant, negative attitudes and perceptions are caused by the breach of the psychological contract by which they pledged loyalty to the organization in exchange for job security [19, 34]. Uncertainty in the face of structural and organizational changes could undermine job performance and the retention of current talent, as current employees could record lower satisfaction, internal trust, commitment and brand loyalty  and even consider looking for other jobs outside the organization. For potential employees, the deterioration of the brand image or its loss of appeal is a significant predictor of decisions to seek employment elsewhere, with the consequent deterrent effect on attracting talent [36, 37]. Finally, changes in the way external stakeholders (mainly suppliers and customers) view the organization’s attributes as an employee could affect the relations between them and the organization, and deteriorate other company or consumer brands . Jointly, downsizing can diminish the brand value as an employer for those who have left, those who continue, those who may arrive, and those with a link to the company that is unrelated to employment, and may affect the organization’s short- and long-term performance.
3. Impact of
downsizing on employer branding: a descriptive analysis in Spain (2007: 2017)
A descriptive analysis of the potential effect of workforce downsizing on employer branding is conducted with a small sample of large companies operating in Spain between 2007 and 2017. As noted above, this is a period that includes several years related to the recent economic crisis that has caused a major imbalance in the labor market (between 2007 and 2014), as well as others related to the subsequent period of economic recovery (between 2015 and 2017).
Based on data extracted from the
Secondly, the companies examined are listed in the
The companies analyzed in this study occupy the top 20 positions, with their variations in the ranking over the period studied, as shown in Table 2. On the other hand, Table 3 shows the evolution of the companies that have dropped down the table and fallen out of the top 20, as occurs with
Shortly after its acquisition of
The workforce at
After heavy losses in 2013,
The fall in consumption and the impact of white brands forced
Table 3 also includes those companies that have been involved in industrial action, falling from this list in one or more years. This is the case of
On the other hand, Table 4 shows the companies that have remained within the first 20 positions in the ranking throughout the period. This is the case of
Leading the rankings at the beginning of the period,
Table 4 also shows how
We may conclude by stressing that companies involved in downsizing processes have seen how the negative consequences on employment have affected their brand value as an employer in the eyes of their internal and external stakeholders. In fact, 70% of companies consider that the crisis has affected and restricted their employer branding initiatives (People Matters, 2011). However, the economic recovery is favoring both interest and, above all, investment in employer branding practices.
4. Impact of
employer branding on downsizing: Is talent retention and attraction possible?
The different definitions of employer branding (see Section 2) focus mainly on two target groups: current employees and potential candidates. Employer branding practices therefore have two distinct objectives: on the one hand, to maximize wellbeing and retain the most talented employees, and on the other, to transfer to potential candidates an image of an attractive company in which to develop their professional careers. Yet do both objectives have the same importance? Which one prevails?
A review of definitions and the previous literature reflect a lack of consensus on the priority of retaining current employees or attracting potential candidates. Some studies mainly emphasize the benefits on current talent retention [35, 38], while others analyze the utility of employer branding above all to attract potential candidates in recruitment processes [36, 39, 40]. Nevertheless, the previous literature has not considered what the choice or combination of objectives actually depends on.
We postulate that the priority of one or other objective is undoubtedly influenced by each organization’s context and situation. Depending on the context, it seems logical to assume that the retention of the most talented employees should be the priority objective in times of economic recession and growing unemployment. However, periods of economic recovery and greater demand for employment can equalize or reverse the order of each particular objective’s priority, pursuing the retention of the most valuable employees and attracting talent.
Furthermore, companies resorting to one or several downsizing processes can be expected to prioritize a reduction in uncertainty, the mitigation of employees’ unease, and the retention of the most talented: firstly, because downsizing responds to an excess of employees, and is carried out with the firm intention of optimizing the headcount within the organization, and secondly, because the dissemination of a good brand image as an employer is closely related to that specific image within the organization. After the downsizing process, both objectives can be aligned according to the organization’s needs. This relationship is illustrated in Figure 2.
By contrast, as Figure 3 shows, companies that have not been affected by downsizing processes (either for an optimum level of labor or to expand their employment offer) are likely to focus their employer branding efforts on reinforcing their employees’ job satisfaction, both to retain them and, above all, to attract more talent.
We contend that employer branding efforts in the first case —i.e., firms affected by downsizing processes— should initially revolve around the employees within the organization; in this case, external initiatives have more to do with supporting a global reputation. For the second case, employer branding practices can have a greater impact on potential candidates.
4.1. The impact of
employer branding on current employees
Numerous studies report that the internal actions of employer branding (e.g., investment in social benefits, career opportunities, labor flexibility, reconciliation, training, etc.) help current employees to feel involved and valued, increasing their level of loyalty, commitment and job satisfaction. On the one hand, loyalty to the employer reduces staff turnover and drives greater talent retention [35, 41]. On the other hand, motivation and job satisfaction play a very important role in customer satisfaction [42, 43].
However, could employer branding practices strengthen the employer-employee relationship during and/or after a downsizing process? In view of the negative consequences generated during and after a downsizing process, employer branding practices should aim to temper the perceptions of employees that have survived the restructuring process, and highlight the benefits they still offer as employers . It is about providing employees with a vision of the new organization, stressing that it continues to value the employment relationship. However, the impact of employer branding will differ in the extent to which benefits are provided for a valued employee. Employer branding practices show that the company is committed to improving employees’ welfare, although there is always the possibility that these actions will not be well received by some, or be considered insufficient.
Investment in employer branding may involve reporting policies for reducing uncertainty regarding job security, the management of professional careers, improvement in remuneration and incentive policies, reconciliation measures and the implementation of training and employability plans, among others. This investment can help to mitigate the negative effects of downsizing processes and restore employee confidence in the employer. It has been have found that “high-commitment workplaces are also more likely to implement less harsh layoff strategies (e.g., alternatives and voluntary layoffs) in preference to other workforce-reduction strategies that incorporate the harsher strategy of compulsory layoffs” (44, p. 472). In a similar vein, some researcher has revealed that when firms are more committed to employee job security, the likelihood of employee layoffs is diminished . If downsizing occurs, organizations that have invested in the employability of their human resources are more likely to mitigate the negative effects on their employer brand, because the releases have better chances of finding new jobs .
Tables 2 and 3 show that those companies affected by more severe downsizing processes have simultaneously or subsequently launched sundry internal actions of employer branding to mitigate the possible negative consequences. All of them, through different channels (corporate website, social networks, press reports, etc.) have claimed to “pamper” their employees in these years. For example,
The impact of a company’s negative internal image as an employer caused by downsizing has thus been softened. The
4.2. The impact of
employer branding on potential candidates
The other side of employer branding is the one that markets the company’s value proposition as an employer abroad, which involves the transmission of the company’s attributes to the market and the generation of expectations of what it means to work in a certain place (People Matters, 2011). Much of the success of external employer branding is undoubtedly associated with the existence of a strong brand value as an internal employer. This favors the employees themselves, who become
Numerous studies confirm that a strong (external) employer brand critically influences the attraction of candidates [36, 47, 48]. It is argued that the employer’s image affects job search decisions and the intentions of choice [49, 50, 51]. Accordingly, companies with strong brand identities would be preferable to those with weak or negative ones . According to some researcher, the greater the employer’s appeal, the greater the attraction of talent is . A good brand image as an employer therefore facilitates recruitment processes, reducing the cost and time involved, and increasing the number of applicants . On the one hand, the effectiveness of recruitment processes helps to improve hiring decisions, as more applications give the organization more options, allowing it to be more selective. On the other hand, organizations can reduce the cost of hiring by up to 50% and shorten the time required for filling vacancies . As a result, an employer that can attract more suitable talent enjoys greater benefits from its workforce and gains a competitive advantage out of it .
Could employer branding practices attract talent to organizations that have undergone downsizing processes? As mentioned above, these organizations should first focus their efforts on improving the internal work environment. This would contribute to improving the external image through the opinions of current employees. A posteriori, they could also direct their external practices toward redressing the unease among potential candidates that downsizing processes could happen again, noting that the organization has managed to recover stability after fluctuations and restructuring processes. The difficulty lies in conveying a congruent and credible message, creating a “brand promise” that meets candidates’ expectations once they have joined the organization. Nevertheless, we do believe that companies affected by downsizing processes may have more difficulty attracting talent and skills. Potential recruits may have negative associations with the company, and therefore be reluctant to consider working for the organization. We also argue that the most talented and skilled employees have higher employability rates; therefore, if they are employed, they will be more likely to be retained by their current employers. Recent reports have warned of a shortage of qualified employees (e.g.,
Good examples of this are the many initiatives that companies have launched to attract talent, with an emphasis on young candidates. For a long time now, job security has been top of the list of best policies for attracting and managing talented employees . However, salary, career opportunities, work environment and reconciliation are increasingly gaining weight in making a company “the most attractive”. Companies that compete to attract talent must therefore tailor what they offer to employees’ expectations.
Most of the companies in the
During the recent period of economic crisis, the headlines reported massive layoffs at most companies around the world. Those companies undergoing severe economic downturns and/or large-scale reorganization initiatives during this period may therefore have witnessed a reduction in brand value as an employer. However, nurturing the employer brand during the downsizing process could also help improve the retention and attraction of talent.
This study has set out to investigate whether there is a
The analysis carried out in the largest companies operating in Spain and appearing in the top 20 of the
As a result, investment in employer branding continues to rise in companies that seek to remain competitive, increase employee wellbeing and productivity, and win the
These conclusions reveal the importance of employer branding, especially for companies that have downsized, although the complexity of their management is highlighted. Our results may have important theoretical and managerial implications. Regarding the implications for scholars, this work highlights the existence of a potential bidirectional relationship (or, to put it another way, a potential circular relationship) between these two HRM practices that have not been previously studied. This study paves the way for a similar descriptive analysis in another country (the ranking used here is also published in many other countries around the world) and/or lays the theoretical foundations for further studies that empirically analyze the impact that one has on the other. For HR practitioners, it boosts their understanding of how certain marketing tools can contribute to an improvement in employee management and talent retention and attraction policies. In this sense, the digital context is providing a wide range of practices and initiatives through corporate websites, social networks such as
This research has been financially supported by the Spanish Ministry of Economy and Competitiveness (Reference: ECO2015-67434-R).
Conflict of interest
The authors declare no potential conflicts of interest with respect to the research, authorship, and/or publication of this research.
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- There are currently four monitors, rankings or prestigious certifications that annually evaluate the employer brand worldwide and by countries: Great Place to Work, Top Employer, Universum and MERCO. The Merco Talent Ranking has been selected for this analysis because it is the most complete and unique monitor of verified employer attractiveness in the world. For example, to establish the monitor’s results for the last available year (i.e., 2017), the opinion has been sought of around 19,240 employees, including those of the one hundred companies that appear in the ranking), 9070 university students in their last year, 777 business school students, 1200 members of the public, 130 HR managers, and 43 experts and headhunters, with an analysis of corporate talent management policies.