How A Company’s Reputation Impacts Its Ability to Attract and Retain Top Talent


Coca Cola.  Google.  IBM.  Apple.  Starbucks.  Microsoft.  Mercedes Benz.  Zappos.  Amazon.  What do all of these companies have in common?  Besides having a global market following and a very healthy balance sheet, these companies have at least one other thing in common:  the ability to attract top talent just based on reputation.  Companies that attract top talent are likely to stay at the top of the Fortune 500 list because human potential is the one thing that cannot be forged, copied, imitated, duplicated or easily replaced.  So attracting top talent breeds success and success attracts top talent.

reputational compliance

Indeed, human resources are probably the most important asset of any company.  Employees are responsible for the quality, quantity and consistency of its products and service.  Employees bring creativity to bear on behalf of employers.  Employees do all the heavy lifting that keeps a business running.  And ultimately it is the workers who interact with, win and retain customers.  It is their ingenuity, skills, effort, passion, work ethic, and attitude which largely determine the success, mediocrity or failure of an organization.

That is why, every day, companies are not only competing to generate sales and win customers, they are also in a race to attract and retain the most talented workers.  From entry level employees to C-suite executives, every company wants – or should we say needs – to employ the best and brightest.  When the economy was in a tailspin, the most talented, skilled and experienced employees hunkered down and stayed put even in companies where they were no longer satisfied, appreciated and/or challenged.  The best and brightest kept from changing jobs even when they were overworked, underpaid or both.  But with the economy ‘turning a corner’ and the unemployment rate slowly dropping, companies will soon – if they aren’t already – need to compete to attract the best workers.  The most qualified candidates are likely to look first to companies with a solid reputation.  So just how much does a company’s reputation impact its ability to attract top talent?

A Great Reputation Lures Top Talent

A company is only as good as the reputation that precedes it.  An organization’s reputation does not just affect its stock price and sales.  It also affects the company’s ability to attract and retain the best employees.  When a company is reputed to be ‘a great place to work’ or ‘a cutting-edge organization,’ its reputation acts like a high-powered magnet attracting the ‘best and brightest’ minds.

In the world of computer programming, for example, the best and brightest are drawn to companies like Google and Apple in the last decade because that is where the most cutting-edge technology is born and where the employees are given the best compensation and perk packages.  But long before resumes are sent or compensation packages are discussed, it is the reputation of those organizations that causes top talent to consider them in the first place.

Why are talented people attracted to companies with top reputations?  Let’s start by understanding the difference between talent, skills and experience.  Talent is a superior ability.  It is not something that is learned or acquired.  A person is either born with it or not.  However, skill is acquired through learning and exposure.  And experience is the enhancement of skills over time due to many varied opportunities.  People can build and hone their skills and gain experience, but not talent.

Because talent is innate and rare, talented people are attracted to other talented people and talent follows talent.  That may explain why ivy league schools, such as Harvard and Yale, consistently attract among the most talented students including 14 of the past 43 U.S. Presidents and 57 of the 109 U.S. Supreme Court Justices.  Talent follows talent.  In business, a company must show its value and commitment to individuals with superior abilities and have a reputation for attracting and nurturing talent.

So how does a company attract talent in the first place?  Contrary to what many people think, salary is not the main reason why the best and brightest go to work for a company.  A recent survey by NES Global Talent of over 800 oil and gas contractors focused on the package of attributes and benefits that denoted an organization’s reputation as an employer.  The majority of the respondents had 20 years+ experience.  Of the respondents, 82% had a university degree and 90% had at least one professional qualification.   So the group surveyed had talent, skills and experience.  NES Global Talent noted that 40% of respondents said that the top five international oil companies were the most appealing places to work in their industry.  Those companies’ reputation for nurturing talent was seen as a more significant factor than rate of pay.  Indeed, company reputation ranked as the primary driver of appeal with over 40% of the respondents ranking reputation as their key driver of attraction.  Teamwork, a “can-do” attitude, honesty and good communications skills were listed as the most important ‘soft skills’ for companies to possess.  They also valued a culture where employees were handled well by their managers.  They also place great importance on clear and effective communication. Culture and style of communication were seen as more important than reward and remuneration.  It is important for a company to demonstrate that it opens new opportunities when a talented candidate is available.

A Bad Reputation Repels Top Talent

Losing talent – also known as employee turnover – is a costly problem for companies. In addition to the cost and hassle of recruiting and hiring a replacement, employee turnover can damage the morale and productivity of existing employees. Despite management’s best efforts, remaining workers may be negatively affected by the departure of a company’s most talented employees.  Remember that talent follows talent, and when one talented individual leaves, others may follow.  The departure of top talent can cause a chain reaction leading to more departures.

Also, the departure of top talent can have a negative impact on a company’s ability to recruit new talent.  Within industry circles, a disgruntled employee can spread negative rumors about the company that can cause top talent to avoid working there.  In turn, a company’s inability to recruit top talent can have serious consequences on the company’s long-term success.

Indeed, a study done by Corporate Responsibility Magazine and Allegis Talent2 found that reputation has a big impact on a company’s ability to recruit and retain talent.  Based on surveys of more than 1,000 adults over the age of 19 in the U.S., 75% said they would not take a job with a company that had a bad reputation, even if they were unemployed.  Most people would rather continue their search for employment than work for a company that had questionable business practices or ethics.  Also, nearly 90% of employees would consider leaving their current job if offered another role with a company that had an excellent corporate reputation.  And, of those willing to work for a company with a bad reputation, on average, it would take doubling the employee’s salary for them to make such a jump.  Thus, the cost of having a bad corporate reputation is in having more difficulty in attracting and retaining talent and paying higher price for new talent.

Case in point.  When Borders Bookstores started losing money, which it did every year from 2006 to 2011, the company decided to change its leadership and management, not just its vision and strategy.  Firings began in January 2009 shortly after Borders’ 2008 holiday sales dropped 11.7%.  The first to go was CEO George Jones who was replaced by Wildridge Capital Management founder Ron Marshall as President and CEO. Marshall had no talent, skills or experience with book sales, e-commerce or technology.  Marshall was paid a hefty salary and stock options to take the job.  Then, Mark Bierley was hired to replace 15-year Borders veteran Ed Wilhelm as CFO.  Borders also replaced its Chairman of the Board.  At that point, Borders launched its own e-commerce website.  With no time to ramp up, Borders’ new leadership was forced to develop a completely new online vision and strategy.   Within six months, Borders also replaced over half of its Board of Directors.  Throughout 2009, Marshall pushed out many other seasoned executives who had been with Borders for decades.  At the end of 2009, Borders’ holiday sales declined 14.7% over 2008.  In January 2010, Marshall resigned.  Another new CEO was appointed.  The ongoing turnover in leadership made the company seem shaky.  Perception became reality.  The departure of talent caused other talent to depart.  Such conditions repelled top talent from joining the company.  By July 2011, Borders filed for bankruptcy protection.  Borders’ treatment of its top talent and long-term employees created such a bad reputation that people who might have been able to help right the course were repelled by the company.

Ultimately, it is important for companies to maintain a positive reputation and keep a positive relationship with employees during and after the employment relationship.  Not only will 90% of unhappy employees leave when a new opportunity presents, but other top talent from the company may follow.  And if the company develops a reputation for not nurturing talent, then new talent may be reluctant to join such a company.  Any company that is unable to attract and retain top talent will certainly be hindered in competing effectively in today’s ever more challenging marketplace.

This article originally appeared on mondaymornings.madisoncres


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