Employer Branding: Managing the challenges of recession

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Employer Branding: Managing the

challenges of recession

Case study: Multinational companies operating in Greece

Master Thesis for

MSc/ MA in International Business and Management

Newcastle University Business School & University of Groningen

By

Vasiliki Nafsika Tampone

Supervisors: Emmalinde Roelofse& Rudi de Vries

December 2013

Student number NUBS: 120425572

Student number RUG: s2438615

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Abstract

Research objectives: This thesis examines the practice of employer branding and its impact by the 2007 financial crisis. The purpose of this research is to gain an overall picture of how the current economic crisis has impacted the practice of employer branding. Six elements of employer branding are under investigation: 1) recruitment and induction, 2) performance appraisals, 3) training and development, 4) reward and recognition, 5) working environment and 6) internal communication. The aim and cost allocation of employer branding activities, under the unique economic environment, are also examined. The case of Greece is a unique one to study; it is an country extremely influenced by the economic crisis and can be used as a model setting for this investigation.

Design/methodology/approach: Qualitative research is used to explore this novel, contemporary issue. The use of multiple case studies was chosen to provide fruitful results in the study. More precisely, the chosen case studies are three Greek subsidiaries of multinational pharmaceutical firms. Empirical evidence were gathered using semi-structured interviews. Nine current or former HR professionals from the three case studies were interviewed, as well as one HR consultant to provide a general picture of the market.

Key findings: The findings highlight that the current economic crisis had a significant impact on employer branding and its practices. Firstly, the aim of employer branding has shifted from attracting and retaining talents to creating an employment experience that increases employee engagement and willingness to work and contribute to the company efforts. Moreover, evidence suggest that cost effectiveness is highly valued when designing employer branding activities. Therefore, organisations seek to introduce creative, novel and cost-efficient practices of employer branding.

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3.2. Data Collection ... 28 3.2.1. Setting selection ... 28 3.2.2. Cases selection ... 29 3.2.3. Interviews ... 31 3.2.4. Additional material ... 32 3.3. Data Analysis ... 33 3.4. Research Quality ... 34 Chapter 4: Results ... 35 4.1. GermanPersonalCare_Pharma Subsidiary ... 35 4.1.1. Overview ... 35

4.1.2. Recruitment and induction ... 37

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4.1.4. Training and Development ... 38

4.1.5. Reward and recognition ... 39

4.1.6. Working environment ... 40

4.1.7. Internal communication ... 40

4.2. SwissPharma Subsidiary ... 42

4.2.1. Overview ... 42

4.2.3. Performance Appraisal ... 45

4.3. USPharma Subsidiary ... 49

4.3.1. Overview ... 49

4.3.3. Performance Appraisal ... 51

4.4. Collective findings: Rethinking employer branding ... 54

4.4.1. Overview ... 54

4.4.3. Performance appraisal ... 56

4.4.4. Learning and development ... 57

Summary of collective, crisis-related changes ... 60

Chapter 5: Discussion ... 62

5.1. Sub-question 1 ... 62

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6.1. Summary of findings ... 66

6.2. Academic and practical implications ... 67

6.3. Limitations and future research ... 69

References ... 70

Appendices ... 76

Appendix A: Unemployment in the Eurozone ... 76

Appendix B: Unemployment by duration in the Euro zone ... 77

Appendix C: Financial information of companies ... 78

Appendix D: Participant Information Sheet ... 80

Appendix E: Participant Overview ... 82

Appendix F: Participants informed consent form ... 83

Appendix G: Interview schedule ... 84

Appendix H: Sample of Interview Transcription. ... 88

Appendix I: Employer Branding Plan of GermanPersonaCare_Pharma subsidiary ... 100

List of Tables and figures:

Figure 2.1.: The employer brand 'mix'

Table 4.1.: Summary of GermanPersonalCare_Pharma Subsidiary Findings

Table 4.2.: Summary of SwissPharma Subsidiary Findings

Table 4.3.: Summary of USPharma Subsidiary Findings

Table 4.4.: Summary of Collective Changes in Employer Branging

List of Abbreviations:

USA: United States of America

NBER: National Bureau of Economic Research

NY New York

HR: Human Resources

CIMA: Chartered Institute of Management Accountants

OECD: Organisation for Economic Co-operation and Development

EB: Employer Branding

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EBM: Employer Branding 'Mix'

CIPD: Chartered Institute of Personnel and Development

EVP: Employer Value Proposition

CSR: Corporate Social Responsibility

PM: Performance Management

IMF: International Monetary Fund

CIA: Central Intelligence Agency

MNE Multinational Enterprise

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Preface

This master thesis is the concluding part of a valuable learning period in the context of my postgraduate studies. My personal interest in the subject of my study motivated me throughout the process. Nonetheless, I was lucky enough to have valuable help and support that I wish to acknowledge at this point.

I would like to sincerely thank all the people that helped me during the process of this research. First of all my supervisors Emmalinde Roelofse and Rudi de Vries for their helpful guidance their insightful feedback and their support. A great thanks also goes to the participants of the interview process; without their assistance this research would not have been possible.

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Chapter 1: Introduction

1.1 Background

The globe is in the middle of a severe financial crisis, which has affected the socio-economic and business environment. This crisis accelerated a recession in the major European economies, the USA and Japan and affected the economic growth rates in emerging markets (Deloitte,2009). The foundation of this recession was identified in the USA in December 2007 and eventually infected and spread to the global economy (NBER, 2010). In Europe the spread of the crisis was visible by the end of 2008 (NY Times, 2008). These are striking facts that prove the severity of the situation across countries around the globe.

In the firm level, this economic situation creates a threat to business organizations. Companies adjust their strategies, restructure their business operations and rethink their cost tactics in order to survive and remain competitive (CIMA, 2010; OECD, 2010). The economic crisis has influenced every industry and profession, with a radical change in the hiring landscape and the talent management process (Crous, 2007).

In line with the purpose of this study, the current report will focus on challenges and adjustments made in the practice of employer branding. Enhancing the understanding of EB, is a rising interest for academia and the point of inspiration for this study. Major layoffs, rising unemployment and cost cuttings were triggered by the recession (NBER, 2013), highlighting the need to rethink human resource planning. New challenges come at front for employers, potentially influencing their talent management techniques and their employer image as an (Collings and Mellahi, 2009;Naithani, 2010).

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competitors with a distinct employer brand, and consequently enhance their position when competing for skilled employees (Ewing et al., 2002; Mahalingam, 2008).

Inconsistent perceptions exist in the academic literature, on whether employer branding should remain in the center of attention during the financial crisis. The concept of EB was introduced due to a study of McKinsey & Company in 19971, which described a competitive setting for talent recruitment and retention. The so called 'war for talent' originated from demographic changes and a gap between high demand and low supply of qualified professionals (Barrow and Mosley, 2005).

As Farndale, Scullion and Sparrow (2010) argue, it might not be fitting to talk about a 'war' for talent in the current economic climate, as unemployment is rising. Nevertheless, they point out that even with higher labour supply firms might still have trouble finding the right talent. Lane and Pollner (2008), also argue that the demand for talent is still a major concern for business. Overall, the concept of employer branding was developed and flourished in a period of high dependence on human capital (Moroko and Uncles, 2008; Barrow and Mosley, 2005) and of restricted labour markets but its relevance has been questioned in the unique conditions of global recession (Martin, Gollan and Grigg, 2011).

Many companies announce cuts of numerous jobs (The economist, 2009) and evidence of this current situation is the rise of the world unemployment (ILO, 2013). As stated before, recessions are usually connected with layoffs and downsizing which is expected to have many implications for EB strategies. Moreover, as illustrated from The Economist (2009) 'the current recession is revealing how few firms have really thought through their talent strategies'. This study will form a novel investigation, as the implications of the economic downturn in EB practice have not yet been researched.

The present research will focus on a specific country that has greatly suffered in this recessionary period; Greece. Nonetheless, the challenges and implications of the economic crisis in EB practice are not to be restrictive only in this specific context. Greece provides an elaborate setting for this investigation that includes high unemployment, financial insecurity, job losses, firms' restructuring and rethinking

1_{The original study, entitled " The War For Talent" was conducted in 1997. Its authoer later published a}

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strategies. Employer branding is a new idea for the Greek business environment but evidence support its rising use and importance (ALBA, 2013).

1.2 Research Objectives

The concept of employer branding gained popularity in the recent years and is regarded as an important HR aspect in contemporary business. Nevertheless, research on employer branding is rather immature, with many elements and features remaining unexplored (Backhaus and Tikoo, 2004). This research aims to contribute to existing literature of EB with novel insight. Moroko and Uncles (2005) argue that the academic knowledge will benefit from extensive research on employer branding process on a variety of context.

As noticed, there is a clear research gap in the theoretical and practical knowledge of EB in times of economic downturn. Therefore, the present study will contribute to the academic world by initiating the investigation of the linkage between employer branding practice and turbulent economic times. Meaningful results, driven from empirical information may also enlighten firms operating under these unstable settings, into changing their mindsets and following original strategies as employers.

Consequently, the importance of this research lies in advancing the academic knowledge on EB and talent management as well as, providing practical implications on employer practices and employment experience in the context of an economic crisis. It is anticipated that mechanisms will be identified as to how organisations can fight and recover from the recession in employment related issues.

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1.3. Research Questions

Therefore the research question that will guide the current research is:

Research Question: How has the economic recession influenced the practice of

employer branding?

Sub-questions have also been designed to direct the data collection and data analysis process. These sub-questions were shaped according to the expectations for the crisis outcomes and emerged through relevant literature review.

One aspect that is expected to have an impact from the current recession, is the aim and focus of employer branding procedures. EB aim is twofold; attracting talents as well as retaining them (Moroko and Uncles, 2005). As it will be explained in the literature review, (2.2.1.1. Refocusing employer branding) it might be a good idea to focus on retaining current employees, as job openings, that would require attracting new talents, are reduced. As a result of this concern, the first aspect that will be investigated in this research is:

Sub-question 1: Do employers alter the aim of their employer branding activities, in

times of recession and if yes how?

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2.2.1.2. Cost optimization). Cost cuttings that might influence EB include, personnel layoffs, decrease in wages and/or benefits, as well as less investments in training, development and motivation of employees (SHRM Foundation, 2009). Therefore, the second sub-question is:

Sub-question 2: Is employer branding influenced by cost-minimizing strategies and if

yes it what ways?

A more precise investigation of EB activities of firms, prior and after the recession, can present a more comprehensive outcome in this research. Guided by the employer brand mix (2.1.4. Employer branding mix) this research will explore the impact of crisis on the most relevant EBM elements. Therefore the third sub-question is:

Sub-question 3: Has the employer branding mix of firms been altered due to the

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1.4. Structure of the study

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Chapter 2: Literature Review

2.1. Employer Branding

Brand in the context of marketing, is considered among the most valuable assets in an organization; so is brand in the context of human resources management. Edwards (2010) argues that the concept of employer brand can differentiate a company as an employer of choice by utilizing a unique employer value proposition. Firms are making use of EB in order to attract potential employees as well as retain current employees, with the ultimate purpose being to achieve targets. Employer branding is nowadays gaining acceptance by HR practitioners and is slowly becoming a part of the business world (Backhaus and Tikoo, 2004). The plethora of best employer awards1 illustrates the evolvement of EB concept.

Employer branding is defined as the "sum of a company's effort to communicate to existing and prospective staff that it is a desirable place to work" (Berthon, Ewing and Hah, 2005, p.3) or "the package of functional, economic and psychological benefits provided by employment, and identified with the employing company" (Ambler and Barrow, 1996, p.187). Employer branding is also seen as a bridge to customer satisfaction as it is what a firm promises to deliver emotionally to connect employees "so that they in turn deliver the brand promises to customers" (Sartain and Schumann, 2008, p. 38).

As explained by Edwards (2010), it is an activity in which marketing principles, like the 'science of branding', are applied as HR parctices. The brand in marketing, seeks to differentiate the product or service by positioning it as superior to the competitive products/services in one or more attributes. Similarly, EB attempts to distinguish the firm as an employer in the minds of current and potential employees and to position it as a good place to work (Davies, 2007; Minchington, 2010). The product in the context of HR is the whole employment experience (Barrow and Mosley, 2005).

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Similarities exist between the concept of employer branding and that of brand in marketing. Nevertheless, evidence shows that EB is a distinct and unique concept. Accuracy and truthfulness is more critical in the ongoing employee-employer relationship. Additionally, there is a greater risk associated with job decision as compared with consumption decisions (Moroko and Uncles, 2008).

2.1.1. Strategic significance of Employer Branding

This section will present the objectives and strategic relevance of employer branding actions, as pointed out by academics, demonstrating the significance of EB as a business concept

Establishing a positive employer brand image in the minds of potential recruits is one objective of an employer brand. A company that has an image as an employer of choice, provides a career option able to attract talents (Backhaus and Tikoo, 2004; Chunping and Xi, 2011). The second aim of EB practice is to develop employee retention. (Bach, 2005). A design and communication of a favourable employment experience, has the potential to advance employee engagement and therefore achieve retention of these employees (Backhaus and Tikoo, 2004).

Employee engagement is defined as “the individual's involvement and satisfaction with as well as enthusiasm for work” (Harter, Schmidt, and Hayes, 2002, p. 269). Engaged employees respect the company's mission, understand its business context, are up to date with business developments, are willing to contribute in work-related improvements and eventually remain in the organisation (CIPD, 2008). In total, the main objectives of EB are attracting and retaining the most talented people (Moroko and Uncles, 2005).

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time and cost reductions associated with recruitment, staff turnover and absenteeism of employees (Barrow and Mosley, 2007).

2.1.2. Integrated Employer Branding

There is a wide support for the idea that an effective employer brand approach requires close cooperation between top management, HR, marketing and communications (Barrow and Mosley, 2005). It is a concept that needs to be integrated in the firm's strategic planning as all corporate functions work together in building a successful employer brand (Sartain and Schumann, 2009).

EB is an HR tool based on marketing principles so by nature it requires the alignment of Marketing and HR function ( Moroko and Uncles, 2005). The need for top management and internal communication can be explained by the fact that all corporate communications need to be harmonized to create positive reputation. As Fombrun and Van Riel (2003) suggest, a sustainable corporate story communicated from a common point of view will satisfy the variety of demands of the different stakeholders and organisational members on a long term.

In other words, organisations should be able to align their various brands (customer brand, corporate brand, employer brand) in an integrated process. The various stakeholders of an organisation interact with each other and therefore a common ground in the various brand messages is beneficial. Barrow and Mosley (2005) argue that a successful customer brand can enhance employee engagement. Furthermore, satisfied employees can become your most loyal customers. Consequently, a "holistic approach" of external and internal branding can benefit marketing, HR and corporate activities (Simmons, 2009).

2.1.3. Employer branding process

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corporate values, working environment etc.) as well as the demands of their existing and potential employees (Edwards, 2010).

After the EVP has been identified, it is necessary to communicate this 'offering' to the existing and prospect employees. Therefore, the next two steps consist the communication of this EVP externally (in potential employees, recruiting agencies etc) and internally (in current employees) (Backhaus and Tikoo, 2004). External communication of the EVP aims to increase employer attractiveness in the eyes of recruits (Berthon, Ewing and Hah, 2005),. while internal communication aims to enhance employee retention(Edwards, 2010).

The two aspects of EVP communication are complementary. The 'promise' made in the recruitment period needs to be aligned with the employment 'reality' the recruited employee will experience. Moreover, employers that honour their commitment to employees will further develop their external reputation. (Chunping and Xi, 2011). Satisfied employees are likely to share a positive reflection of their employer with people within and outside of the company (Moroko and Uncles, 2005).

2.1.4. Employer branding mix

Barrow and Mosley (2005) indicate that communicating the EVP is not enough for building an employer brand. An effective EB also requires a careful and consistent management of the different elements that shape employees’ everyday experience of the brand and potential employees perception of the brand. So in order to establish and uphold the EVP, a careful consideration of such elements should be provided (Barrow and Mosley, 2005)

The employer brand mix (Figure 2.1) is a comprehensive illustration of employer branding process. Barrow and Mosley (2005) in their EBM, illustrate the key dimensions that influence the employment experience. It consists of twelve elements which are divided in two categories; the wide organizational policies and the local context and practice.

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This EBM tool was the starting point of the third sub-question (Chapter 1.3.) and will assist in the research process of this study. Six of the twelve elements will be the focus of investigation of this study; namely recruitment and induction, performance appraisal, learning and development, reward and recognition, working environment and finally internal communication.

This focused approach will allow a better understanding of the elements under investigation. Following, all twelve elements of employer branding are presented, with the center of attention being on the ones relevant in achieving the research objectives. The reasoning behind this research decision is also be discussed.

Figure 2.1.: The employer brand 'mix'

Source: (Barrow and Mosley, 2005) The big picture / policies consists of the following six elements:

 External reputation: A firm with a strong, recognizable customer brand and financially success, is expected to be a good employer. Therefore, the employer brand image of a company is strictly connected with the reputation of its goods and services (Barrow and Mosley, 2005).

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 Values and CSR: Corporate social responsibility and corporate values are able to facilitate employee attraction and retention. Studies show that socially responsible companies are more likely to be employers of choice (Barrow and Mosley, 2005).

 Internal measurement systems: Carefully thought and designed measurement systems help employers evaluate and improve employer brand actions (Barrow and Mosley, 2005).

 Service support: In this element lies the efficiency and care that the firm puts on employees requests. It is a cross-functional effort to make the working experience smooth and attentive (Barrow and Mosley, 2005).

 Internal Communication: "All internal communication should be regarded as employer brand communication, as every piece of communication says something about the organisation" (Barrow and Mosley, 2005, p. 151). In practice, the different divisions within a firm often communicate in isolation rather than all internal communications being effectively coordinated. Employer brand management is ought to provide a more coherent and "employee-centric" view of internal communication (Barrow and Mosley, 2005). There is a need to focus on the existing employers rather than potential recruits during the crisis (Smith, 2009), therefore internal communication is expected to play a central role in this study. Moreover communication is considered vital, especially in times of crisis. Firms are advised to focus on building trust relationships during a period of economic crisis, through an enduring listening process and clarity of messages (Mazzei and Ravazzani, 2011).

The local picture / practice consists of the following six elements:

 Team management: This element includes the management skills and management style of line managers as well as the good relationships within working teams (Barrow and Mosley, 2005).

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The actions which a firm uses to attract and recruit new employees is a vital aspect to this study. It is an element likely to change in recession, as unemployment rises and new recruitment strategies might be introduced. Collins and Stevens (2002), argue that it remains a key tool for HR professionals despite the economic crisis. This opinion will be investigated using empirical evidence.

 Performance Appraisals: Performance management is highly important for an employer of choice (Barrow and Mosley, 2005). The values of the company must lead towards a fair and accurate performance management system. Rewarding people according to their performance enhances productivity and at the same time improves employee satisfaction and engagement. Performance appraisals and evaluation is at the core of PM (Cardy, 2004). Employee engagement is a key competitive advantage for employers and performance management is vital for having engaged employees (Gruman and Saks, 2011). As suggested by Buchner (2007), current economic challenges have led organizations to increase their attention on PM in their effort to improve results. This study will focus on PM used in the employer brand context.

 Learning and development: Learning and development are critical elements of an employment experience. Their importance lies in the ability to increase the firm's attractiveness to recruits and to preserve high levels of employee engagement. Carrying out these activities, therefore, present a great opportunity for organisations to differentiate as employers and increase employee commitment (Barrow and Mosley, 2005). Development opportunities are of great importance for employees and, given the fact that cost-cuttings are in action during a recession, it is vital to include that element in the current investigation. Cost cutting on training might be a fast an easy way to reduce costs, but the long term sustainability of such a choice has been questioned (Appelbaum, Everard and Hung, 1999). Empirical data will provide an initial understanding of the challenges and changes on the development offerings of employers.

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employees feeling valued is a key for keeping your human resources motivated (Barrow and Mosley, 2005). Non-financial motivators are the key to employee engagement. Firms tend to cut on wages when facing and benefits financial problems. The financial downturn might oblige employers to rethink their package of financial and non financial rewards by shifting the focus on motivational incentives (Dewhurs, Guthridge and Mohr, 2009). In the context of this study, thus, reward and recognition is a key element of EBM.

 Working environment: The quality of employees working environment is a significant factor influencing their satisfaction and engagement. "Employees working in modern, well-furnished offices tend to be far more positive than those working in some of their older, less well-appointed sites."(Barrow and Mosley, 2005, p.160). The above is a demonstration of the importance for tangible working environment qualities. Firms in recessionary economies might need to relocate their offices or invest less in this direction. Working environment also includes intangible elements -or else called behavioural components- that create a positive atmosphere in the workplace, such as climate, strong team spirit and work-life balance initiatives. Delivering these intangible assets creates employees that are satisfied to work in the specific organisation and that tend to be more productive (Leblebici, 2012).

2.2. The Economic recession

The recent economic recession, that originated in the USA and spread to other advanced countries (Bagliano and Morana, 2011), is considered the deepest financial crisis in the post–World War II period. It is not the first time that financial markets have experienced such a downturn but the current downturn contains many unique and unanticipated aspects (IMF, 2009). The IMF (2009) uses the following definition for a financial crisis "episodes during which there is widespread disruption to financial institutions and the functioning of financial markets" (p.103).

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youth population1. Millions of new jobs need to be created before global employment can recover. At the current speed of recovery, this would take at least five years (United Nations, 2011). Global job insecurity is growing, with significant variations along countries, depending on the duration and the extent of the economic crisis impact. (Chowdhury, Islam and Lee, 2013).

2.2.1. Employment issues

In a turbulent economy, companies experience several difficulties, that are ought to affect revenues and profitability. To be able to survive and overcome these financial challenges firms usually proceed in cost cuttings. The employment experience cannot stay untouched in this cost optimization process. In this section, we discuss a series of recessionary challenges in employment issues. This is necessary before performing the current exploratory research on real business cases. Comprehensive research on the EB during the economic crisis has not yet been conducted. Nevertheless, few authors have discussed issues that are expected to be relevant in the context of the current investigation.

2.2.1.1. Refocusing employer branding

Some of the challenges that firms are facing at the moment include "rising disengagement, reduced trust in leaders and managers and the need for greater cost efficiencies" (Smith, 2009, p. 22). Smith (2009) illustrates that employers need to refocus their efforts on the existing employees (internal communication of the EVP) rather than having as their first priority to attract new talents (external communication of the EVP).

Until recently, the 'war for talent' was a distinct characteristic of the labour world leading employers to focus on attracting talent. The arrival of the economic downturn created a new reality; improving levels of engagement is nowadays more pressing (Martin, Gollan and Grigg, 2011; Balain and Sparrow, 2009). Finally, Naithani (2010) suggests that firms during an economic crisis, when they depend on reduced number of employees, need to retain their key talent within the organization.

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2.2.1.2. Cost optimization

Cost optimization is a central business practice during an economic downturn and this ought to have a twofold result in the employer branding concept. On the one hand, firms might decide to invest less in people management and EB activities, as the bargaining power of employers, in the recruitment procedure is rising (Naithani, 2010). As unemployment rises and wages go down, employers bargaining power is rising, which can allow employers to put their employer branding communications on hold.

Furthermore, many organizations are now reducing their workforce, which might deepen the work pressure, increase the incidence of unpaid overtime and decrease job vacancies. At the same time employees will be expected to deliver better performance and accomplish harder tasks (Brough et al. 2008). Intensified work-load, results in emotional and physical subsidence that comes together with lack of trust or commitment to the organization. Rising insecurity, uncertainty and distrust leads to loss of productivity, risk avoidance and reduced moral; a situation defined as the "survivor syndrome"(Wolfe, 2004).

Restructuring activities must be dealt with caution seeing that they negatively influence employees with job losses, uncertainty, insecurity and anxiety (Cartwright and Holmes, 2006). Consequently, a current challenge of employers is how they can proceed in cost cutting and downsizing activities, without harming their competitiveness and their employee relations (The Economist, 2009). They could benefit from using the EB tool to preserve their employment attractiveness. As Naithani (2010) suggests, short term solutions on cost cuttings will lower employee engagement and employer brand attraction in the long run.

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The importance of this investigation lies in identifying how these opposing force have come to shape employer branding in practice.

2.2.1.3. Other Challenges

Additional challenges exist, that employers are facing during recession. Marchington and Kynighou (2012) argue that the recession has an impact in employee engagement and participation. It is recommended that firms can benefit from employee retention, loyalty and engagement that will in turn foster productivity (Naithani, 2010).

Furthermore, several organisations are using flexible work arrangements to cope with the current economic crisis. This, sometimes, happens in the expense of full-time working and in exchange of pay reductions. Flexible working is defined as ‘any policies and practices, formal or informal, which permit people to vary when and where work is carried out’ (Maxwell et al., 2007, p.138). It is worth noting that flexible work arrangement occurrence vary around Europe and are lees widespread in Greece (Giannikis and Mihail, 2011).

2.3. The Greek environment

This study takes evidence from companies operating in Greece and therefore it is necessary to summarize the current situation in the Greek business and labour market. Greece is struggling to survive and escape this severe economic recession. With the third largest public dept worldwide - 156% of the national GDP in 2012 (CIA, 2012)- and with several rounds of austerity measures being introduced, the road to recovery is yet to come. The focus of this study is on employer-employee relationship and therefore it is essential to consider the impact of the economic crisis in the Greek employment environment.

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(Eurostat, 2013).1 Young people find a way out of unemployment either by moving abroad (The Economist, 2013) or through youth entrepreneurship (BBC, 2012).

To make things worse, unemployment is a phenomenon that many Greek people are experiencing in high duration. Long term unemployment in Greece is more than 14 percent, which is the highest percentage in the EU region (Appendix B: Unemployment by duration in the Euro zone). Long-term unemployment has serious social and economic consequences. The more people stay out of the labour market the lower is their chance of employment and future earnings. Moreover the country runs the risk of deficiency on skilled employees in the future.

Another element that is essential for employment quality is job security. According to the EWCO (2013a) there is an increasing job insecurity during the crisis in Europe. The economic recession also lead to new employment legislations. In 2010, new legislations in Greece permit employers to have a shorter notice period on contract terminations, to reduce their redundancy payments and to decline the minimum wage. These changes result in a reduced cost of laying off employees and had an influence in employees job security.

Finally, there has been a marked decline in wage and a lack of salary increases. The economic crisis has affected payment in most European countries resulting in wage delays, pay freezes as well as pay cuts. Vulnerable groups, such as younger, low-skilled or low-paid employees, appear to have a greater impact to their income. The average wage growth in Greece was found negative in 2010, presenting evidence of wage cuts in the Greek business environment (EWCO, 2013b).

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2.4. Summary of literature review

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Chapter 3: Methodological Issues

3.1. Research Methodology and Justification

When conducting any type of study, the researcher must make several decisions in line with the research objectives and research questions. An important direction, guiding the present study, is the use of a case study approach. This research strategy -and not research method, as pointed by Cassell -and Symon (2004) was considered to be the most efficient way to examine the current subject.

For contemporary issue with an interest on a "how" question, an exploratory case study is a resourceful strategy to be followed and is able to provide an in depth understanding of a real life phenomenon (Yin, 2009). The research question leading this study is "How has the economic recession influenced the practice of employer branding?" and is a novel investigation.

Moreover the research methodology needs to be discussed. Every researcher can choose a qualitative or a quantitative research approach, or apply a "mixed method" combining the two fore mentioned. (Yin, 2009; Cassell and Symon, 2004). The distinction between qualitative and quantitative research refers to the collection of so called "hard data" where numerical values are analyzed through diagrams and statistics and of "soft data" where the researcher interprets abstract facts such as interviews.

By nature an exploratory research seeks new insights and depicts the reality of the phenomenon under study. This sort of request calls for the use of qualitative research in order to attain original insight of a current situation (Anderson, 2004). The purpose of this study is to investigate an inadequately researched topic, so qualitative research is the main approach that was followed.

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3.2. Data Collection

In this section the data collection process and related decisions are presented. Data in a qualitative study include words, attitudes, feelings, vocal and facial expressions. To find an answer to the research question, empirical research will be conducted using an exploratory case study approach. There are multiple definitions and understandings of what a case study is.

According to Bromley (1990), it is a “systematic inquiry into an event or a set of related events which aims to describe and explain the phenomenon of interest” (p. 302). This study will attempt to understand and present how employer branding has been shaped due to the recession.

3.2.1. Setting selection

The first decision regarding the data collection process, is the context in which the research was conducted. Many countries are affected by the economic crisis and could be used as a set for this research. The decision was made to focus on one country; namely Greece. A fruitful and interesting study is expected to be the outcome of such a decision. According to a speech of the European commissioner Andor L. (2013) "Greece has been a country of extremes in this crisis" with the highest dept and the worst influence in unemployment and GDP.

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3.2.2. Cases selection

Next, the unit of analysis must be identified and described. Firms that are actively using employer branding strategies, were chosen as case study units, investigating their current methods as well as the methods used prior the recession. Additionally, it will be a great added value that the case studies chosen in this research have been honoured with an employer brand award. Two of the investigated firms have obtained employer awards the last years.

Another way to identify companies that use employer branding practices was through their recruitment activities, employer brand advertising as well as from inside contact within a company. The third case study, is a firm that implemented a formal EB plan and participated in many advertising events such as workshops in Universities and job fairs.

Yin’s (2009) recommends the use of multiple case studies in order to create a stronger perspective for predictions. This study follows that recommendation, applying a multiple case study approach. Three multinational corporations with presence in Greece were chosen investigation. The choice of this number was made not only due to time and practical options but also to allow an in depth analysis and comparison of the cases.

The level of access that was achieved in the targeted firms also restricted a larger number of cases. Generalizing the findings might be restricted with the choice of case studies. However, "the richness of case studies is related to the amount of detail and contextualization that is possible when only one or a small number of focal cases and issues analysed" (Brown, 1987). In each case study, two distinct enquiries were observed; the situation prior the recession and the current, recessionary situation.

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Table 3.1: Case studies overview

GermanPersonaCare_Pharma

Subsidiary SwissPharma Subsidiary USPharma Subsidiary

Prior the Crisis1 Today

Prior the Crisis2 Today Prior the Crisis3 Today Revenues €45.790.729 €39.140.225 €98.116.514 €110058563 €10.476.894 €6.054.539 Employee

Number 200 80 590 570 N/A N/A

Source: Statbank (2012), Express (2012) GermanPersonaCare_Pharma subsidiary is a Greek subsidiary of a MNE, originating from Germany. It is a personal care firm with over 150 affiliates and around 16,500 employees worldwide. The company was established in Greece in 1968 and is responsible for the commercialization of branded consumer goods, distributing them at various retail outlets, from super market and stands up cosmetics stores and pharmacies. It is included in the cosmetics and pharmaceuticals industry.

SwissPharma subsidiary is a Greek subsidiary of a MNE created in 1996 through the merger of two pharmaceutical companies. It is originating and based in Switzerland and is a leading global pharmaceutical company. It is among the three top pharmaceutical companies in terms of its market share. It is active in 140 countries employing more than 120.000 people, providing a wide range of healthcare products through their sectors of pharmaceuticals, vaccines and diagnostics of generic drugs and the consumer healthcare products.

USPharma subsidiary is also a pharmaceutical company. It has a presence in more than 170 countries and has around 21.000 employees. The empirical data gathered, concern the Greek subsidiary of this multinational cooperation. USPharma subsidiary is a result of a split between different sectors within an American multinational pharmaceutical firm (USPharma_ProSplit subsidiary.) This separation reflected the

1

The financial crisis is considered to have initiated in Greece around 2008. So 2007 is the year observed for investigating the-before the crisis situation.

2

The financial crisis is considered to have initiated in Greece around 2008. So 2007 is the year observed for investigating the-before the crisis situation.

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realization that the evolving healthcare market requires focused solutions and approaches.

The case studies involve companies from the pharmaceutical industry. This choice provides a setting to examine the impact of the crisis, as it is an industry highly suffering from the recession (Imerisia1, 2012)

3.2.3. Interviews

Data in qualitative methodology usually comes from a variety of sources such as documentation, archival records, interviews, direct observations, participant observation and physical evidence (Yin, 1994). To examine the chosen case studies, semi-structured interviews were the primary data source. Interviewing is a constructive research method for accessing individuals’ attitudes, experiences and interpretation of events, while using flexible questions enhances the accessibility of this method (Silverman, 2006). Theory points the interviewer in the right direction whereas flexibility allows for an in-depth exploration of the phenomenon (Galletta, 2013).

From September until November 2013, ten participants were interviewed (one was contacted via e-mail). This interviewee number was found sufficient and provided genuine data to be analyzed. After all "authenticity rather than sample size is the issue in qualitative research" (Silverman, 2006, p. 19). All the interviewees were selected through a purposive method with the inclusion criteria being: people working in the Greek market, being related to any of the case companies and being experienced in the human resources profession. Prior to the interview, sufficient information about the purpose of the research, the degree of their involvement and the research resign were provided to all participants (Appendix D: Participant Information Sheet)

HR managers and key employees of the HR departments of the three firms, were interviewed. Multiple interviews were conducted in each case to ensure data accuracy. Former employees were also interviewed, elaborating practices used prior to the recession. Moreover, one HR consultant was interviewed, providing an overall picture on employer practices currently used in Greece. Further information on participants can be accessed in

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It is now essential to clarify how interviews were conducted and individual viewpoints were approached. A conversational interviewing style was adopted and questions were guided by an interview schedule (Appendix G: Interview schedule). In semi-structured interviews, the interview schedule is used as a guideline rather that a complete set of steps and questions that ought to be followed. (Silverman, 2000).

Participants talked about a wide variety of topics. Questions investigated the aim and focus of employer branding as well as how employer branding practices were used. Participants were asked about their work experiences within the case study firms before and after the recession. Their views, on challenges from and reaction to the recession were reached.

Three of the interviews were conducted in English and the rest were conducted in Greek, as most participants did not feel comfortable expressing themselves in English. Translation of the quotes, used in this report, was made with careful consideration of the actual meaning of what was said. All interviews were tape-recorded and are their length varied from 30 minutes to 70 minutes.

According to Galletta (2013) a researcher should always ensure the protection of human subjects. All the necessary precautions were made in this direction. Participants' personal information remain confidential, informed consent was given to and signed by all participants ( Appendix E: Participant Overview) and safety of data was ensured throughout the data analysis procedure. Information on the case study companies also remain confidential. Some dimensions of the company operations (industry, size, practices) are communicated in this report but without revealing the identity of the organisations. This allows the reader to focus on the results without any preconception about the case studies under investigation (Galletta, 2013).

3.2.4. Additional material

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Additional material in this study include field notes, archival records, written or electronic documentation from company reports (employee engagement surveys, meeting notes, payroll data, company presentations etc.) and other materials in electronic format (company website, job search websites etc). Follow-up of interviews was provided enhancing the understanding of the interview data. Direct observations is another way of acquiring qualitative information (Anderson, 2004). The researcher was able to use direct observation of SwissPharma subsidiary, being a former employee as well as working in this firm, during the data gathering period.

3.3. Data Analysis

Three processes are blended throughout a qualitative research: collection, coding, and analysis of data (Galletta, 2013). Flexibility is highly important for the researcher providing new directions, as more data and better understanding are acquired. However, it is necessary to develop and follow a set data analysis plan.

Several steps were used in order to analyze the collected data. First, interview records were transcribed. During the transcribing process, anonymity was applied in order to protect the privacy of the respondents by using coded names. A sample of the transcribed interviews can be seen in Appendix H: Sample of Interview Transcription. Thorough examination of the transcripts was used to drawing meaning from the interviews. Patterns were identified according to the different issues under discussion and were further analyzed, as suggested by (Braun and Clarke, 2006).

These different themes included: downsizing challenges, cost-saving challenges, insecurity, EB image, training, rewards, motivation, optimization strategies etc. The analysis, through this theme categorization, should lead to a separate description of each theme, case study and time frame. Additional material, such as field notes and company files were similarly analyzed. They were mostly in line with the interview reflections and provided further support to the interview data.

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participants give to their described situation (Wolcott, 1994).The final step in the study was writing up the findings, presenting clarity of reasoning and reflecting the literature and research questions used in the research process.

3.4. Research Quality

For a rigor research product it is necessary to consider the pitfalls of the chosen research study. This process is integrated in this report but here a brief consideration of the research quality will be made. Although it has gained increasing acceptance, qualitative research still has significant limitations. In particular, qualitative research can present challenges in terms of generalizable results, validity, and reliability.

Effort was made to minimize these limitations. To increase the reliability and validity, all steps of the data collection and analysis process were thoroughly presented and the data results are grounded in evidence from the interviewee. This steps allow the reader to evaluate the interpretations of the researcher (Thomas, 2004). The generalizability of the results can be enhanced with a call for future research (Silverman, 2005) and with the use of exemplary case studies.

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Chapter 4: Results

4.1. GermanPersonalCare_Pharma Subsidiary 4.1.1. Overview

As elaborated by the interviewees, this subsidiary is small in comparison to the competitors. That has both positive and negative correlations with the employer brand image. On the one hand, payment and employment offer is on the average or lower than the industry's labour market. On the other hand people are mostly attracted by the company's human climate and less competitive atmosphere. Moreover it is a highly reputable organisation with successful product brands that employees respect and are happy to work for.

A formal EB plan was introduced globally in 2008. HR country managers were centrally introduced in this plan and they could decide on their own 'personalized' actions, according to specific country needs. The formal employer branding plan consisted of six categories: attraction, selection & recruitment, on boarding, career development, compensation & benefits, and separation. Each category included sub-categories and varied objectives (see Appendix I: Employer Branding Plan of).

From the input of current employees it was shown that at the moment such a formal employer branding plan does not exist. However, many actions are in place, for attracting and retaining employees. Moreover, the headquarters of the firm are currently working on an EVP and are building a new global employer branding plan. It can be anticipated that, unique challenges forced the company to rethink their employer branding practices.

The company reacted to the environmental change with downsizing activities, numerous employee dismissals, structural changes, new region organisational approach and several cost optimization processes. It first initiated the cost cuttings with relative fixed costs like general expenses, maintenance costs etc. and dismissals were the final alternative.

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Working in these conditions had a negative impact in the emotional distress of people and in employee commitment and engagement.

"...you must perform better and better and the competition is very tough. They are inside a negative loop and it is very difficult for them to come out. This impacts on their performance and they become less satisfied and committed." [Regional_HR_Generalist]

Corrective measures were taken to avoid a direct influence on productivity. With intensified communication and fair system in dismissals (dismiss bad performers, people close to retirement or people who are not talented enough to help the company), the firm tried to enhance employees empathy. Moreover being sensitive in family and social issues of the people that will be dismissed, also succeeded in a reduced negative effect of downsizing.

On the positive side, the firm was able to increase cost effectiveness and benefit business-wise. The human capital was crucial in this process and strategic actions were focused in this element.

"The whole process of HR took a more active role. And there was much pressure to run the change processes and become a contributor of this change. Either if it means reorganizing people, reforming issues of benefits, cost savings..to find ways, despite the change, to find ways to help our people in the new situation." [HR_Payroll_Manager]1

Moreover, a new organizational matrix, divided in regions, was the result of structural and headcount changes. The decision making process was different as many decisions were made in a regional basis. That also meant more communication with international markets and more best-practices sharing.

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4.1.2. Recruitment and induction

It is an element highly transformed in the GermanPersonalCare_Pharma subsidiary. The decrease in job vacancies becomes apparent from all the conducted interviews.

As observed by the HR Generalist: "The truth is that over the last 2-3 years there was no growth in the number of our permanent staff, so we had no job openings." 1

What is more, recruitment of new employees created confusion to current employees, as the company is following downsizing actions. Employees expressed their puzzlement with a fair question:

"...why you recruit new people and at the same time you dismiss?" [Former_HR_Manager1]

Internal recruitment was a more reasonable option when a job opening was in place. In that way, current employees got the chance to preserve their position and develop internally. Due to the large number of employee dismissals the firm had lost employee trust. Giving them the opportunity to develop internally instead of hiring new employees was vital in the process of retrieving their trust.

In the rare occasion that the company advertised a job opening externally a unique situation was under place. The applicants are great in number, highly qualified and hard to deal with. Apart from relevant candidates the firm also received several irrelevant applications.

GermanPersonalCare_Pharma subsidiary uses a new tool named assessment centre, that aims to identify talents through a multistep, demanding process. Online tests and strict assessment criteria are also used to reduce the number of applicants. In some cases, candidates are seen to be less selective as they are desperate for an income.

Specific job positions call for the use of recruitment agencies, according to the level and need. In this case the applicant pool consists of people already active in the job market. The current trend in this group of candidates is a reduced mobility due to fear and risk avoidance.

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Although the recruitment process has become less central, the current organisation is active in EB advertising and processes (such as cooperation with universities, workshops, career days etc.). These procedures however need to be in-line with the regional action plan. Finally, EB activities in recruitment are, sometimes, scrutinized by cost deficiencies and central control. For instance, structural changes in the firm lead to increased central control in recruitment. Regional HR Managers were asked to proceed in new recruitments only if vacancies are approved by the headquarters. 4.1.3. Performance Appraisal

Performance management was enhanced in GermanPersonalCare_Pharma subsidiary and related payment was given for high performers, in the shape of a bonus scheme. In this firm, although many cost cutting actions were employed, a strategic choice was made to strengthen performance based payments. However the performance of employees had to be exceptionally superior to be entitled to a bonus payment. The interviewees from this firm support that, PM provides an alternative way to deal with downsizing and to support the moral of the employees.

"We made some tries to improve. we also introduced performance management... payment, for the high performers, so it was ..it turned the moral of the high performers on." [Former_HR_Manager1]

4.1.4. Training and Development

Training budget is strictly connected with firm sales and profitability and were therefore negatively influenced during recession. GermanPersonalCare_Pharma subsidiary was struggling to maintain its profitability and therefore all business activities had to be cost effective. The firm in some cases reduced external trainings or indentified competitive but less expensive options. Greek trainers were found to provide lower cost and, mostly, ensure the same quality with international trainers.

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"A large part of training has asked the company to be on the job training. To stop being the standard group training in a meeting room...Moreover, training firms have become more flexible, in a sense, in the prices they provide." [HR_Generalist]1

The HR department itself received additional training in order to enhance their coaching skills and were able to motivate the workforce and assist the change management procedure.

In a different line of change, in GermanPersonalCare_Pharma subsidiary the organisational changes lead to fewer development opportunities. The Greek subsidiary is now, due to the recession, a flat organisation with most top management operating in a regional basis. Therefore while employees advance their expertise, they reach a ceiling in hierarchy and are unable to develop in a higher level, unless they move to a subsidiary in another country.

4.1.5. Reward and recognition

In GermanPersonalCare_Pharma subsidiary salaries remained stable. However, there is an occasion that employees still receive a payment increase during the crisis period. The so called salary adjustments, are offered to talented employees that were found to have a below the market average salary. The company annually participates in 'salary level surveys' in order to ensure that payment remain above the average. It is considered essential that employees feel satisfied with their payment.

Another key decision is that the firm did not take advantage of the freedom the government measures gave to employers (in payments, reimbursements etc.) gave them. The fact that plenty of companies in Greece followed this path (of pay reductions), directly and positively influenced the employer image of GermanPersonalCare_Pharma subsidiary.

"It also helps that the company does not want to follow this path. The path of taking advantage of that happens in the labour market, but wants to give credence to some basic things ..such as salary and wage stability." 1 [HR_Payroll_Manager]

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Several benefits were also transformed to fit the cost-reduction strategy. For instance, the company car policy has changed (less 'status cars' to top management). The negative climate within the firm - due to downsizing activities - was previously explained. This situation called for a greater focus in motivation, non-financial rewards. Interdepartmental moral team were introduced to deal with employee disengagement. Engagement surveys were not accessible, but HR_Generalist comments that there is room for improvement in this area.

4.1.6. Working environment

Prior to the crisis, the GermanPersonaCare_Pharma Subsidiary employed numerous loyal staff that worked in the specific firm for decades. That stability is not feasible in today's labour and business environment and therefore the number of such employees is greatly reduced.

The company considered improvements in the working space to be beneficial for restoring a calm and productive working climate. However, financial difficulties pushed the firm in moderate cost investments in this direction. Also, the employee dismissals left the company with younger average age of employees. An additional effort was to integrate this youth climate in the company atmosphere.

Flexible working arrangements were in primitive development. Employees had the option to work from home but only for specific time and reason and under approval. Former_HR_Manager1 argues that it is necessary to put more effort in improving work-life balance. She also illustrates in her interview that part-time work is a practice not widespread in Greece and is even less effective in current times, due to low levels of compensation.

4.1.7. Internal communication

GermanPersonalCare_Pharma subsidiary was faced with severe organisational changes resulting in great insecurity. HR department was responsible for the change management process in which, on-time and open communication played and major role. The firm continuously informed employees of the current situation, explained to

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them the problems which the company is facing and thoroughly justified the changes in action.

The restructuring of company A also had one positive outcome in the communication process as the new, flat structure meant easier, faster and more effective communication.

Moreover, employees need to feel respected in this uncertain environment. Respect is, according to Former_HR_Manager1, a foremost lesson of the economic crisis, as experienced in the employment environment:

"A BIG lesson as a professional is that even in times of crisis you need to continue to respect people, and to treat them as humans and to support them under the difficult circumstances"

Table 4.1: Summary of GermanPersonalCare_Pharma Subsidiary Findings Prior the recession Recessionary Period

General employment situation

-Dismissing employees only for performance-related reasons

-Decentralized/independent subsidiary

-Dismissing employees due to downsizing strategies

-Increased centralization, Regional structure, Greek subsidiary under supervision of the Italian subsidiary (responsible for South Europe region)

- Reduced headcount

-Growing insecurity

Recruitment & induction

-Many job openings

-Job openings as a source of company growth

-Main assessment method: One-to-one interviews

- Job openings in rare occasions

-Job opening as a source of conflict (when current employees are being dismissed)

-Increased number of job candidates

-Alternative assessment methods: online tests, assessment centers, group tests, fixed/strict qualification list

Performance Appraisals

- Performance management highly valued

- Enhanced Performance Pay

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performance

-Performance management as a way to increase employee moral

Training & development

- High budget on training

-Plenty of external / international training

-Hierarchical organisation: more room to development

-Reduced budget

-Cost effective solutions

-Local trainers preferred

-On-the-job training

-Training HR department in coaching skills

-Flat organisation: less development opportunities

Reward & recognition

-Salary increases: yearly

- Many benefits and financial incentives

- Salary adjustments: only if salaries are below market average

-Fit benefit schemes to cost-reduction strategy

-More focus on motivational incentives

Working environment

-Loyal staff: remained for decades

-Working space improvements

-No flexible working arrangements

-No part-time job

-Reduced employment stability

-Working space improvement but with small investment

-Primitive use of flexible working arrangement

-No part-time job

Internal

Communication

- Communications highly valued

- Hierarchical organisation: Harder to communicate

- Great insecurity

- Focus more on open and timely communication

-Flat structure: easier communication

Own Illustration from the case-study obtained data 4.2. SwissPharma Subsidiary

4.2.1. Overview

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illustrates this fact1. Employees describe their employer as a demanding, result-oriented firm that gives freedom for creative actions, involves constant change and most importantly, promotes learning and development of its employees. Being a leading company and having external reputation is considered by the participants to have enhanced the employability of the firm.

A new HR system was introduced in 2010 that increases the strategic importance of the function. HR managers are now business partners and are responsible for the complete employment experience of a specific business unit of the firm. It is a more efficient system and it increased the importance and inclusion of HR in business related decisions.

Overall this new structure allows for the employer brand to be promoted in everyday activities as well as in strategic decisions. No formal employer branding plan exists in the company, although in practice HR department is involved in many employee attraction and engagement activities.

Engagement activities increased due to the economic crisis. There was a rising insecurity that mostly originated from the external environment and less from internal changes.

"There was intense insecurity when the whole industry got influenced. There was a lot of noise throughout the market..( ). negative messages reached our employees such as 'Your company is next'." 2 [HR_Business_Partner1]

However, HR_Business_Partner2 supports that employee retention is more easily achieved, highly due to the instable external situation.

Also, as a result of the recession the firm carried out a restructuring process of one sales team; twenty-six people were dismissed. Dismissals were in this case restricted in one business team.

1_{Such as: Best places to work in Greece 2013, Fortunes world's most admired companies 2013, part of}

the ICAP list of Leading employers/Business leaders.

2

Employer Branding: Managing the challenges of recession