Guest Opinion: Malcolm Higgs, director of the leadership, change and HR school and director of research, Henley Management College. Topic: Becoming an employer of choice

The phrases “employer of choice” and “employment brand” are being increasingly used in the HR world. Are these serious and significant concepts or just new rhetoric? A look at those organisations in this year’s Sunday Times’ Top 100 Companies to Work For suggests that there is something more fundamental than simply PR underpinning the employer of choice label.

A detailed review of the top ten companies indicates that the potential benefits of this much-coveted position are substantial, including: higher performance than competitors, lower levels of turnover, reduced recruitment costs, often underpinned by high levels of referral from current employees and higher levels of employee commitment. Benefits of this type are reported extensively in both the UK and the US.

Indeed, across the Atlantic, where the concept of employers of choice has been established for longer, some have estimated that appearing in the higher levels in one of the lists of the best employers can be worth in excess of $10m a year. If the commercial value of becoming a preferred employer is so significant then what does it take to establish such a position?

Once again, analysis of the practices of top organisations in both the UK and US rankings identifies an interesting pattern of practices. Overall, the importance of financial reward levels is not a critical determinant of success in becoming an employer of choice. All of the top organisations in the UK listings pay reasonably well within their sector, but do not attract interest through pay levels.

It is in the area of pay levels that we see the biggest difference between the UK and the US. In the US, organisations that appear consistently as employers of choice tend to pay at a relatively high level in their employment markets. However, while the UK and US may differ in terms of the significance of pay levels among employers of choice, there is a significant degree of convergence when it comes to the benefits they provide.

In reviewing the benefits provisions among these organisations in both the UK and the US, common elements of the package included: a substantial level of benefits compared to competitors, a flexible approach to the implementation of benefits packages, investment in development of employees which is higher than the sector average and programmes which are designed to promote employee involvement in the business and generate a sense of shared ownership, such as share options.

In addition, in the US, the top employers had implemented programmes and actions designed to address issues specifically relating to work-life balance. In the UK, many of the top companies to work for are also reported to have flexible approaches to work. In spite of assessing pay and benefits practices among the key organisations what is evident is that each, in its own way, is a special place to work.

In essence, the core community among the employers of choice was that each had an organisational culture which enabled it to attract and retain people who shared the values of the organisation and bought into its overall purpose. So what can we learn from studying the employers of choice?

The first thing which is clear is that whether explicitly or implicitly they all have an offering which fits into the total reward model. However, within this model one of the key differentiations appears to be the organisational style and culture. This is the segment which is the most difficult to develop and to change quickly. It relates to the way in which people experience the organisation and their immediate management.

It is the corporate glue of the organisation, which notably appears to be emphasising the recognition of employees by both their management and the organisation. It appears to be related to creating an atmosphere in which employees feel valued and engaged in meaningful work.

While we can develop, change and implement pay and benefits programmes relatively quickly it takes far more effort and time to develop a change in organisational culture. However, it is efforts in that area which lead to significant improvements in organisational performance.

In this way, we can see a more comprehensive and expanded view of the role of employee benefits and a need to consider the structuring of the package in a more strategic manner.