Buyer’s Market

Most of us have experience the joy of finding a “bargain” or a better price than expected on a good or service that we desire. Causal conversation, office stories, social media, as well as reality TV all include stories of diligent and savvy shoppers who use their wits, technology, and negotiating skills to find and make an incredible deal. While there may be a variety of reasons for why we feel we have gained the “upper hand” as a buyer, the key element in the availability of deals is simple supply and demand or the gap between how much of something that is available compared to how much it is desired.

When we speak of a “buyer’s market,” we are describing a purchasing environment where the buyer has some type of advantage over the seller that benefits the buyer. For example, when there are more units of a product then what is desired by consumers, then the price of the product tends to fall. Conversely, when one refers to a “seller’s market,” there is less of the product than what is desired by consumers and consumers compete with each other for the limited availability of the desired product.
Labor markets respond to supply and demand shortages in a similar fashion where some periods favor employers, while other times favor candidates. When there is excess demand and limited supply of labor, the price increases and employers have to compete with each other for talent. Similarly, when there is excess supply of labor and slower demand, employers have the upper hand and have a multitude of choices to acquiring new labor with less resources.

Based on the current level of unemployment and economic growth, potential employees occupy a more influential position. As employers deal with increased levels of competition for labor, talent acquisition strategy becomes more important. In other words, how a firm positions itself in the labor market and the effectiveness of its actions determine how successful it will be at attracting the best talent possible. Various factors influence the success of an organization’s strategy, but this post will focus on one of the roots of strategy formulation: perception.

What an employer thinks of its own organization plays a key role in how an employer positions itself vis-à-vis its peers, enacts its talent acquisition strategy, and interacts with potential employees. Put simply, if an organization thinks it has an advantage with candidates and it does not, then it will more than likely adopt the wrong strategy. Organizations, like most of us tend of have a slightly “rosier” view of its actions, image, and strengths.Figure 1: Comparison of Employer and Candidate Perceptions

In order to demonstrate the differences in perception between employer and candidates, the results of a recent survey of 20 employers and 500 candidates in the southeast within the service industry appear in Figure 1. The survey asked candidates to rate their perceptions of the employer’s image as well as posed the same questions to the employer’s hiring managers. All five questions differ between employer and candidate with the largest differentials pertaining to commitment to social and environmental support, total rewards, and work environment. A variety of factors create differences in perception and this small sample is not sufficient to draw strong conclusions. Nevertheless, some areas for consideration include:

• measurable and regularly reported information tends to have more alignment between candidate and employer perceptions;
• social media affords candidates more insight into workplace environment;
• candidate ideas on what is fair and equitable may be different from the employer’s perceptions; and
• social and environmental initiatives may require more than communication as candidates look for ways to not only join an employer with a commitment to supporting the community, but also desire to actively participate in the process.

Some important things to keep in mind based on these results include the following:

• employers have to define who they are to the labor market or someone or something else will;
• positive characteristics should be communicated through a variety of media; and
• intangible characteristics may require more communication.

Employer Branding

A common question in today’s market is “How can I hire the right people when I need them in such a competitive market?” While some organizations have household name recognition or limitless compensation resources, most of us have limited market presence and resources.  This does not mean we are not great places to work or fail to offer a superior work environment or opportunities, it is just we are not known to potential candidates.  In order to counteract the “hidden gem” problem, a growing number of organizations are turning to employer branding.

What is employer branding? In the simplest sense, it is the application of the marketing concepts and tools utilized to gain customers to attract and hire potential employees.  An employer’s brand is the perception that current, past, and potential employees have regarding what it is like to work for your organization.  These perceptions include most major elements of the workplace experience, including culture, work environment, management style, opportunities, and rewards.  Just like with many major products or brands, certain words, phrases, or descriptions will correspond with each employer and the associated workplace.  Moreover, when combining perceptions, a hierarchy develops that current as well as potential employees rank employers. 

While all employers have a brand by design or not, it requires serious and continuous commitment to have a successful brand that attracts and secures the most desirable candidates. A successful branding process typically includes:

  • becoming familiar with the characteristics of your organization;
  • assessing the characteristics and needs of your potential candidates;
  • gaining insight into the brand and approach utilized by your competitors;
  • defining your value proposition or what makes your organization superior to your competitors; and
  • developing and executing your brand and branding strategy.

Your Organization

A first step to launching as well as maintaining your organization’s brand is to conduct a comprehensive and open assessment of what is positive and negative about your organization.  Very few, if any organizations will only have positive traits, so it is important to have a realistic image of the traits present within your organization.

Potential Candidates

If your organization subscribes to the idea that potential employees would be lucky to work here, many strong candidates will opt to look elsewhere.  In the current labor market, organizations have to be selling their workplace and not expecting high quality hires to focus on sell themselves.  Consequently, it is important that employers have a good understanding of the preferences, needs, and interests of the high quality candidates that they are interested in recruiting,

Competitors

Since most employers do not have the luxury of being the sole, desired employer, it is critical to understand what your competition is offering and how you can demonstrate your competitive advantage compared to opportunities in their workplace.

Value Proposition

Based on the strengths of your organization and knowledge of your competitor’s practices, what you offer potential employees that differentiates your organization should be defined and the associated communication materials developed.

Strategy

Defining your competitive advantage provides the basis for your brand, but your strategy puts your brand into practice.   In the most successful organizations, the brand strategy impacts potential candidates as well as current and past employees.