Nowadays, potential candidates have more and more opportunities to check employers’ reputations. Potential candidates can use their social networks to glean information about employers. They can also rely on rating websites that are specifically designed to inform people about the attractiveness of various workplaces. For employers, this raises the question of how important it is to maintain a good reputation, and a good online reputation, in particular. Research yields some key lessons about the value of a good reputation.
- A good reputation attracts more candidates
My colleague Aaron Sojourner and his co-authors Alan Benson and Akhmed Umyarov have created fake employer profiles online on Amazon Mechanical Turk. In their study, they randomly endowed some employers with good reputation, others with bad reputation and others with no reputation. Employers with good reputation attract roughly twice as many candidates as employers with bad reputation, and 50% more candidates as employers with no reputation. If you don’t yet have an online reputation, it’s time to get one, and ideally a good one!
- A good reputation does not always attract better candidates
Even though employers with a better reputation attract more candidates, they don’t necessarily attract better candidates. In the study I just mentioned, they found that people who worked for employers with a good reputation did not perform any better or worse than people who worked for bad reputation employers.
- A good reputation is worth its weight in gold
How much is your reputation worth? My own work with Ronald Wolthoff using CareerBuilder.com data shows that a 10 percent increase in compensation increases the number of applicants by 7 percent. This means that the number of candidates increases less than one for one with compensation. Taken literally, this implies that an employer with a bad reputation would need to pay more than twice as much as an employer with a good reputation to get the same number of candidates! In other words, a good reputation is worth its weight in gold.