SHRM Foundation Research Best Places to Work: How “Making the List” Impacts the Strength and Sustainability of Subsequent Recruitment and Turnover Outcomes Funded: March 2011 Completed: October 2013 Brian R. Dineen, Ph.D., Purdue University David Allen Ph.D., University of Memphis Executive Summary The evolution of employer-employee relations from a transactional to relational model has received widespread attention, and has led employers to strive to make workplaces more engaging, developmental, and employee-centered. Perhaps most representative of this movement is the proliferation over the last decade of “Best Places to Work,” or similar evaluative forms of recognition bestowed by third parties on companies with superlative employee relations practices. Despite the obvious appeal and marketing benefits for companies recognized as BPTW, researchers have conducted few rigorous empirical investigations to demonstrate the direction and strength of third party employment branding initiatives such as these. Thus, companies entering these competitions – or, perhaps more importantly, continuing to enter year after year – do so without a clear understanding of the implications of being named to these lists one or multiple times. Drawing on established research to identify competing theoretical predictions, we sought to ascertain the effects of one or multiple BPTW rankings on employee turnover and applicant pool quality outcomes, subsequent to receiving rankings. We obtained archival employee and employer survey data submitted as part of the BPTW entry process from 4,343 companies for a period of up to four years for turnover and two years for applicant pool quality to test these predictions. Data comprised sixteen different state- or industry-based BPTW competitions and two international competitions. KEY FINDINGS • Employee turnover decreased over a four-year period as a function of the number of rankings achieved in BPTW competitions during that period. • The decreased turnover was primarily evident among companies with younger overall workforces, as evidenced by aggregate reports of employee ages. • The decreased turnover effect was also more evident among companies categorized as small or small/medium in BPTW competitions, as compared to companies categorized as medium or large. • The decreased turnover effect was also more evident among companies that had a higher level of initial satisfaction among employees, as compared to companies that had lower initial satisfaction among employees. • Over the four-year period under study, a “celebrity effect” was detected, such that a first-time ranking was associated with the sharpest subsequent decrease in turnover the following year. This decrease leveled out following a second consecutive ranking. Then, following a third consecutive ranking, turnover returned to previous levels. This trend was different than that evident among companies that were not ranked during this same period. In these unranked companies, turnover remained relatively the same across years, and consistently higher than in ranked companies. • Applicant pool quality, when reported by the same respondent in two consecutive years, does not increase from one year to the next following receipt of a ranking. However, if this ranking was a first-time ranking, applicant pool quality does increase the following year. • This latter finding occurred irrespective of company size. IMPLICATIONS FOR PRACTICE Our findings have several practical applications for HR professionals. Regarding employee turnover, we generated predictions suggesting that turnover might either decrease following BPTW ranking success (e.g., “employees identifying with their winning company”) or increase (e.g., “employees using the company’s newfound recognition to their own job-seeking advantage”). First, results suggest that HR professionals can argue that entering and succeeding in BPTW competitions might yield benefits both in the short and long term, although those benefits might have diminishing returns over several consecutive years. For example, results suggest that employee turnover is likely to decrease following receipt of a BPTW ranking, remain lower the second year a company is ranked, and then begin to return to previous levels thereafter. Second, HR professionals in smaller companies, and companies with younger workforces, might argue for even greater benefits of entering and being ranked in these competitions. Third, however, results suggest that companies might be mistaken to use a BPTW entry as a way of assuaging a dissatisfied workforce. Rather, results show that the effects of BPTW rankings, in terms of decreased turnover, were stronger among companies that had workforces that already had higher initial levels of employee satisfaction. Regarding the quality of applications received for job openings, we generated predictions suggesting that applicant pool quality might either decrease following BPTW ranking success (e.g., “job seekers using the ranking as a cue or short-cut, leading to substandard application decisions”) or increase (e.g., “job seekers viewing the company as more selective”). Results initially did not suggest either of these patterns. However, based on results analyzed only among companies using the same respondent to submit survey data in consecutive years, HR professionals might argue that a first-time BPTW ranking is associated with increased applicant pool quality in the year subsequent to that ranking. Finally, this latter result did not vary by company size, so HR professionals in any size company might expect to reap this particular applicant pool quality benefit. Study Methods We received data submitted by employers as part of the application process for state- or industry-based BPTW competitions, as well as from a subset of employees in those companies. In total, 4,343 companies provided data from between one and four years. We conducted regression analysis and random coefficient modeling to test our predictions. Download the Full Report. View the full list of SHRM Foundation funded research. 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