Study: ‘Best Places to Work’ awards increase retention rates

September 16, 2015  


 

WEST LAFAYETTE, Ind. — Employers have an easier task of retaining staff at companies that receive a “Best Places to Work” award, according to a new study to be published in the Academy of Management Journal. External recognition also is beneficial to staffing goals, the study suggests.

“Employees may doubt the credibility of internal branding efforts, but third-party   endorsements may be more credible in persuading them that the organization is a great place to work, relative to other non-endorsed organizations” said the study’s co-author, Brian Dineen, associate professor at Purdue University’s Krannert School of Management. “Also, employees who work for an award-winning company may identify more strongly with such a company and be reluctant to consider moving. We find these type of external accolades and certifications associated with lower turnover rates, even after controlling for prior turnover rates.”

The study reviewed over 600 “Best Places to Work” participant surveys. The data, covering a three-year span between 2011-2013, was then used to test hypotheses on collective turnover rates and perceptions of applicant pool quality.

In the area of recruitment, the survey asked employers to rate the quality of employee applications. The study’s authors then compared answers to  “Best Places to Work” certification success. The results showed certifications not only have an impact on attracting job candidates, particularly in smaller companies, but also in retaining current employees.

“We recognize that companies use employment branding to attract talent, but we also consider that companies have at least equal interest in using branding to retain talent,” Dineen said.

The study “Third Party Employment Branding: Human Capital Inflows and Outflows Following ‘Best Places to Work’ Certifications” will be published in the Academy of Management Journal and is available at amj.aom.org. The study was co-authored by David Allen of Rutgers University.

The study suggests future research could offer insights into the monetary value that such awards have on human resources recruitment and retention.

Writer: John Hughey, 765-494-2432, hugheyj@purdue.edu 

Contact: Brian Dineen, 765-496-2022, dineenb@purdue.edu


ABSTRACT

“Third Party Employment Branding: Human Capital Inflows and Outflows
Following ‘Best Places to Work’ Certifications”

Brian Dineen, Purdue University; David Allen, Rutgers University

 “Best Places to Work” (BPTW) and similar competitions are a proliferating form of third-party employment branding. Little is known, however, about how single, or repeated third-party employment branding occurrences relate to key human capital outcomes. Extending signaling theory by considering signal credibility and comparability, we use archival and survey data from 624 BPTW participants in sixteen competitions across a three-year period to develop and test hypotheses linking BPTW certifications to collective turnover rates and key informant perceptions of applicant pool quality. We find that certifications are associated with lower turnover rates and, in addition, propose competing crystallization and celebrity hypotheses that model turnover trajectories with repeated certifications, finding diminishing marginal turnover reductions across multiple certifications. We also examine company size and industry job opening moderators, finding that as certifications increase, applicant pool quality is (1) higher in smaller companies and (2) higher when job openings are scarcer. Finally, beyond being certified or not, we find supplemental evidence for effects of the specific certification level achieved (e.g., 2nd versus 15th). This investigation advances theory related to collective turnover, applicant pool quality, and employment branding, and is relevant to company decisions about seeking or re-seeking third party certifications.


 

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