Investing in corporate reputation : can it help earn returns in wage cost savings?

Abstract

This study sets out to investigate the value that perceived corporate reputation brings to organizations. Positive corporate reputation enables organizations to command price premiums for products, yet is this translatable to the labour market? In this study, we examine the value of possessing each of the 7 drivers of corporate reputation: Innovation, Workplace Well-being, Corporate Governance, Corporate Leadership, Organizational Performance, Corporate Citizenship, and Product and Service Quality.

The study aimed to determine whether when an organization was perceived to possess these elements, a potential employee would exhibit willingness to accept a lower mean salary as compared to organizations that are perceived to be without these elements. Additionally, it also tried to further validate that when the RepTrak Model of corporate reputation was used to rate corporate reputation, overall corporate reputation was associated with a willingness to accept lower salaries. Age was also introduced as a moderator to this relationship.

Hypotheses were predicted and investigated using a post-test only control group design experiment, with 1 control group and 7 treatment groups. In order to prove that the survey design was completely randomised and the descriptions within each dimension truly reflected each dimension, a pilot test was carried out as well.

It was found that there are indeed differences in mean salary acceptable to potential employees when there were perceptions that organizations possessed individual drivers of corporate reputation. These mean differences represent potential wage cost savings for the organization. The relationship between corporate reputation and willingness to accept a salary markdown was also found to be moderated by age.

This study also offers insights on managerial implications. In particular, organizations can highlight drivers that they possess when making recruitment advertisements to increase applicants’ willingness to accept salary markdowns. Since age is a moderator in the relationship between corporate reputation and willingness to accept salary markdown, organizations should also customise these advertisements based on the target age group they want to attract.