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The International Journal of Human Resource Management , Vol. 22, No. 17, October 2011, 3618–3637

Management , Vol. 22, No. 17, October 2011, 3618–3637 Is there a bigger and better future

Is there a bigger and better future for employer branding? Facing up to innovation, corporate reputations and wicked problems in SHRM

Graeme Martin a *, Paul J. Gollan b and Kerry Grigg c

a Department of Management, University of Glasgow, Glasgow, UK; b Macquarie University, Sydney, Australia; c Monash University, Melbourne, Australia

Employer branding is becoming an increasingly important topic for research and practice in multinational enterprises (MNEs) because it plays directly into their corporate reputation, talent management and employee engagement agendas. In this paper, we argue that the potential effects of employer branding have yet to be fully understood because current theory and practice have failed to connect this internal application of marketing and branding to the key reputational and innovation agendas of MNEs, both of which are at the heart of another strategic agenda – effective corporate governance. However, these agendas are characterised by ‘wicked problems’ in MNEs, which have their origins in competing logics in strategic human resource management (SHRM). These problems need to be articulated and understood before they can be addressed. This paper proceeds by (1) setting out a definition and model of employer branding and how it potentially articulates with corporate governance, innovation and organisational reputations, (2) discussing and analysing the ‘wicked problems’ resulting from the sometimes contradictory logics underpinning innovation and corporate reputations and SHRM in MNEs and (3) evaluating the potential of employer branding as a contribution to the third SHRM approach – HR strategy-in- action – as a way of resolving three particularly wicked problems in MNEs. We conclude with some ideas for research and practice on the future for employer branding.

Keywords: employer branding; innovation; reputations; SHRM; wicked problems

Introduction: connecting employer branding, governance, innovation and organisational reputations

Our aim in this paper is to examine the links between employer branding, innovation and reputational capital to develop a causal model for future research. In the process of doing so, we analyse the tensions between innovation and reputations through the lens of wicked problems (Rittel and Webber 1973) and two dominant strategic human resource management (SHRM) logics and bodies of theory that underpin them, using the UK financial services industry as an example. Finally, we offer some guidelines for research and practice on employer branding based on a strategy-in-action HRM logic, which can help resolve these wicked problems. Our previous research into employer branding and organisational reputations (Martin and Beaumont 2003; Martin 2009a, b; Burke, Martin and Cooper 2011; Martin and Groen-in’t Woud 2011) has led us to our current definition of an employer brand as a generalised recognition for being known among key stakeholders for providing a high- quality employment experience, and a distinctive organisational identity which employees

*Corresponding author. Email: graeme.martin@glasgow.ac.uk

ISSN 0958-5192 print/ISSN 1466-4399 online q 2011 Taylor & Francis

http://dx.doi.org/10.1080/09585192.2011.560880

http://www.tandfonline.com

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value, engage with and feel confident and happy to promote to others . Employer branding refers to the process by which branding concepts and marketing, communications and HR techniques are applied to create an employer brand. Until quite recently, most practitioner- oriented work in the field has focused on the attraction of new talent, largely because of the ‘talent wars’ that were claimed to characterise much of the 1990s and millennium until the onset of the global financial crisis in 2007–2008. Thus, employer branding became associated with the external labour market application of marketing and communications tools (e.g. recruitment advertising, publicity, events) to attract potential employees, though this external branding of the organisation in labour markets always rested on having existing employees ‘live the brand’ because of their potential influence on customers and potential employees (Barrow and Mosley 2005). With the onset of recession in many countries, the focus on employer branding gradually shifted to improving levels of employee engagement (Balain and Sparrow 2009; Chartered Institute of Personnel and Development (CIPD) 2009, June; Sparrow and Balain 2009; Martin and Groen-in’t Woud 2011; Scullion and Collings 2011). While the importance of talent attraction and engagement makes employer branding a serious contender for inclusion in any list of high-performance work practices (HPWPs), we have also proposed that employer branding can play a strategic role in ‘future-proofing’ corporate reputations (Martin 2009a; Burke et al. 2011; CIPD 2010). This corporate reputation agenda has been defined in terms of reconciling organisational needs to create strategic value by being simultaneously different from competitors yet remaining socially legitimate by securing general recognition, approval and esteem for providing high-quality goods and services (Deephouse and Carter 2005; Rindova, Williamson, Petkova and Sever 2005; Martin and Hetrick 2006, 2009; Highhouse, Brooks and Gregarus 2009, 2010; Bergh, Ketchen, Boyd and Bergh 2010). Few would disagree that reputation management has become one of the key long-term issues for organisations, especially for multinational enterprises (MNEs) because of the financial and reputational costs they face in overseas markets – the so-called ‘liability of foreignness’ (Zaheer 1995). Thus, reputational capital is widely seen as a valuable intangible resource with significant effects on firm performance (Roberts and Dowling 2002; Shamsie 2003; Boyd, Bergh and Ketchen 2010). In turn, reputational capital helps organisations compete in global markets for customers, talent, finance, business partners and other resources (Rindova et al. 2005; Collings and Scullion forthcoming). Less positively, the results of damaged corporate reputations can be dramatic. Good illustrations include the perceived failure of Toyota in 2009–2010 to manage its recall process on its recent financial performance (Economist, 12 December 2009), and the impact on BPs share price and worldwide reputation following the Deepwater Horizon oil spill of the east coast of American in 2010. Similarly, the social status and legitimacy of some of the UK’s largest banks, including RBS, HBOS and Northern Rock, suffered markedly as a consequence of risky decision making and a failure to exercise good corporate governance (Economist, 23 January 2010; Burke et al. 2011), again which also has had important spill-over effects on the reputation of the UK financial services industry and its supporting legal and accounting services companies (Economist, 23 January 2010). Our research into reputational capital leads us to conclude that the wealth protection and wealth creation roles of corporate governance (Aguilera, Filatochev, Gospel and Jackson 2008) are the heart of the innovation and reputation agendas (Martin and Hetrick 2006). The examples from the motor vehicles, oil and gas and financial services industries highlight a failure of stakeholders’ wealth protection (Martin and McGoldrick 2009), which has been the focus of recent corporate governance and risk management literature

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since Enron (Clarke 2007) and of HRs lack of impact or negative impact on corporate governance (Spector and Lane 2007; Rajan 2010). However, it should not be forgotten that corporate governance has an equally important wealth creation function. And in a market environment where private sector firms are required to privilege shareholder value (Davis 2009), wealth creation is intimately linked to innovation by building strategic

capabilities to do ‘different things or do things differently’ (Teece 2007; Porter 2008) in both product and labour markets. Using the financial services industry as an example, this

is one reason why global banks have attempted to justify the retention of significant bonus

payments to key employees despite severe pressures from some national governments to limit them. Indeed, this example shows how important an ‘exclusive’ talent management policy is to the banks, despite severe public opprobrium and proposed legislation designed to reduce bonuses to bankers (Financial Times, 1 July 2010). It also illustrates senior banking executives’ perceptions of the direct links between employer branding, innovation and wealth creation (Rajan 2010). Thus, the core thesis of this paper (see Figure 1) is twofold. First, employer branding has a key role to play in creating and protecting reputational capital by facilitating different types of innovation and wealth creation , which we outline in the next section.

Second, however, creating and protecting reputational capital and innovation are based on inherently different SHRM logics, thus leading to potentially difficult in reconciling ‘wicked problems’, which we discuss later in this paper.

A model of employer branding

Strong employer brands are believed to attract, engage and retain high-quality people to build innovation, by which we mean radical and incremental changes in any or all of a focal firms’ financial and business models, products or services, processes and delivery mechanisms (Subramaniam and Youndt 2005; To¨dtling, Lehner and Kaufmann 2009).

However, it is not enough for firms to be innovative; rather they also have to be known for being innovative, which is often an important element in employer brands and branding. This link between employer branding and innovation is not direct but works by creating two different types of capital thought to impact innovation and corporate reputations – human capital and social capital. So, drawing on the literature on intellectual capital (Subramaniam and Youndt 2005), we propose a causal model of the relationships between

a firms employer branding process and investment in these related but distinct forms of

capital inputs. Our model also incorporates organisational capital, which enables the creation of human and social capital, and assists in the employer branding process. These three types of capitals combine to increase stocks and flows of intellectual capital, and through them, different rates of innovation in firms. Although there is some disagreement on definitions of these different types of capital inputs, for the sake of clarity we have chosen to use the following well-established distinctions. We can define human capital as the individual capabilities, knowledge, skills, attitudes and experience of an organisation’s employees and managers, relevant to the task at hand (Dess and Picken 1999; Subramaniam and Youndt 2005). However, investment in human capital by itself does not result in intellectual capital creation. Indeed, it has been shown to have negative effects because human capital effectiveness relies on complementary investment in social, or as it is sometimes called, relational capital (Subramaniam and Youndt 2005). Social capital has been defined as the goodwill displayed by stakeholders towards an organisation and the trust they place in it through internal bonding that ties to produce a strong sense of corporate identity and external bridging social capital , in which individuals and

Figure 1.

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Human capital Wealth creation investment and (through depletion innovation) Intellectual Employer Social capital
Human capital
Wealth creation
investment and
(through
depletion
innovation)
Intellectual
Employer
Social capital
Reputational
capital of
branding
investment
capital
extended firm
Wealth
Organizational
protection
capital
(through social
investment
legitimacy)
Modelling the effects of employer branding on innovation, reputations and corporate governance.

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organisations benefit from wide and dense networks of relations with other individuals and external organisations (Adler and Kwon 2002). Individuals or social units foster social capital through relationships, networks, trust and co-operation, which in turn improves the efficiency and productivity of transactions (Nahapiet and Ghoshal 1998; Lee 2009). We elaborate on these points later in this paper when discussing wicked problems. Both the above types of capital, however, are still human, causing difficulty to some scholars in distinguishing between them. But, when ‘people walk out of the door at night’, the third form of capital – organisational (or structural) capital – remains, which is neither the property of individuals nor of groups (Kong 2008). Instead, it encompasses the institutionalised knowledge and codified experiences residing within organisations in the form of databases, filing cabinets, patents, manuals, organisational structures, routines, processes and culture (Bontis 1998). The principal role of organisational capital is to link the resources of the organisation together into processes that create value for customers and sustainable competitive advantage for the organisation (Dess and Picken 1999; Huiyan and Run-tian 2006). The interactions between its dimensions are important because they provide employees with the motivation and opportunities to develop and use their skills for the collective good (Kulvisaechana 2006), and in doing so, enhance an organisation’s human and social capital (Bontis 1998; Johnson 2002). Certain dimensions of organisational capital are particularly important in the creation of intellectual capital, most notably the signals and effects associated with HPWPs (Martin and Groen-in’t Woud 2011). As the banking industry illustration shows, an organisation’s performance management and incentive structure will influence human capital acquisition and development (Delaney and Huselid 1996), sometimes with marked negative effects. Moreover, our own research has shown how organisations are beginning to invest heavily in organisational capital through different forms of social media, including wikis, blogs, social networking and media sharing sites, to facilitate knowledge creation, organisational learning and employee voice (Martin, Reddington and Kneafsey 2009). Thus, we postulate in Figure 1 that employer branding, through the mediation and interaction of different forms of capital, can have important effects on types of innovation and social legitimacy and, through these dual roles of corporate governance, an impact on the long-term reputational capital of the organisation. Employer branding helps attract and retain talented individuals, and it also helps build trust in leadership and develop stronger bonding ties through its impact on individual, team and organisational engagement (Burke et al. 2011; Gittell, Seidner and Wimbush 2010). In turn, reputational capital feeds back into an organisations’ employer brand and talent management processes. High-performing firms with reputations for quality and prominence attract high-quality people (Rindova et al. 2005; Martin and Hetrick 2006). Nevertheless, as we have already illustrated, wealth creation through innovation and differentiation and wealth protection through social status and legitimacy can be uneasy bedfellows. And, like many problems in MNEs, they are of the ‘wicked’ rather than ‘tame’ variety (Rittel and Webber 1973; Grint 2005).

Wicked problems, MNEs and SHRM

Wicked problems

According to Grint (2005), leadership and people management problems in organisations are often treated as tame (read rational) ones to be solved through the application of previous knowledge, experience and by following more or less sequential but known procedures. This notion is often (mis) used to distinguish between the problems that

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managers (characterised by a focus on control) and leaders (characterised by a focus on change) have to address (Bolden, Petrov and Gosling 2003). By way of illustration, elements of the UK (and American) financial services industry crisis can be analysed as a result of defining talent management as a tame rather than wicked problem. As Davis (2009) has argued, an era of shareholder capitalism beginning in the 1980s, brought about by the rise of pension and mutual funds, was justified by a new set of technical economic and financial theories privileging markets, shareholders, self-interest and egoist ethics, restrained only by a moral and legal requirement to ‘do no harm’. This gave rise to bull markets throughout the 1990s, forcing financial services firms to compete for high value-adding employees such as investment analysts, traders, product innovators and entrepreneurial leaders with connections – the so-called ‘rainmakers’. So senior executives in investment banking turned to financial incentives to ensure that their key ‘stars’, on whom a disproportionate amount of value creation rested, remained with them. As a result, these individuals began to recognise their worth, demand and receive ever-greater levels of financial incentives and were willing to move to the highest bidder (Rajan 2010), remarkably similar to professional soccer stars. However, what began as a practice in the investment banking sector gradually spread to other sectors of financial services, especially among the sales and marketing functions in sectors such as retail banking, corporate banking, mortgages and insurance. Thus, the received people management wisdom in the industry was reduced to a rational calculation based on the level of individual incentives paid to key staff (Martin and Hetrick 2006). Yet, as early as 1988, prominent groups were warning of the problems associated with such a strategy in encouraging excessive risk taking (Martin and Hetrick 2006). However, as Rajan (2010) has argued, British financial services industry executives were unable, unwilling or both to face up to the complex problems that the regulatory body had identified. Instead, they continued to liken the problems of innovation and ‘increasing wallet share’ to puzzles, for which there was a clear and rational management answer in the form of ratcheted targets and increasing incentives to develop new products for new customers. As became obvious during the global financial crisis, many of these securitised products were inherently risky. Moreover, gaining new customers was privileged at the expense of retaining existing ones, and much of the selling in sub-sectors such as insurance, pensions and mortgages fell into the category of being misleaded (Martin and Hetrick 2006). Sir Brian Pitman, a former industry leader in the UK banking industry, captured these sentiments well when he raised important questions over collective wisdom of the financial services over incentives in his evidence to the UK Future of Banking Commission:

Can you imagine giving incentives to staff for selling loans? It’s crazy, but it’s happening.

And it’s unnecessary

(Scotsman Newspaper, 13 March 2010).

If you give people targets, you are encouraging them to increase risk

So, in reality, the problems facing the financial services industry were of the wicked variety. Rittel and Webber (1973) argued that the main problem of wicked problems was defining the problem. Moreover, wicked problems could not be removed from their environment, solved and returned to it without affecting the environment, in part because they were characterised by a ‘no-stopping’ rule with chain consequences resulting from previous attempts to solve the problem. Finally, there were few opportunities to learn from mistakes since wicked problems are relatively unique and solutions cannot be easily defined and measured. In effect, they argued that resolution and not solutions were all that could be achieved, and such resolutions tended to be of the ‘good or bad’ variety rather than being ‘true or false’.

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Again, the case of financial services in the UK and the furore over executive bonuses illustrates some of these points well. The impact of paying out what are generally regarded as excessive bonuses, especially among those firms that were rescued by the government, revealed the wicked nature of the problems faced by these banks, which still have to compete in an increasingly global market for talent against those less affected by the crisis. Following widespread public and government outcry, the boards of these banks collectively followed a course of action in 2010 of publically recognising the tensions inherent in the situation, communicating their understanding of the views of the public (witness the new CEO of RBS, Stephen Hester’s attempts to communicate that even his mother did not understand why he was paid so much) but simultaneously stressing the need for individual firms to compete in the exclusive market for rainmakers. This resulted in an attempt to resolve the problem by senior managers’ role modelling their sympathy with the public view and to placate governments’ desires for banking executives to take some action to limit bonuses by announcing taking pay cuts or forgoing bonuses for themselves. However, at the time of writing they are still paying out large bonuses to key staff they regarded as creating disproportionate value. So, one can argue that little had changed in terms of problem definition, except bankers’ perceived needs to explain their predicament and to educate the public of their plight in global labour markets for high value-adding staff, which maybe more effective than the ‘collective yawn’ senior leaders used to give when previously challenged over bonuses. At the time of writing, we do not know the consequences of their resolution but predict with some certainty that there will be a no-stopping rule for this problem. EU legislation to regulate bonuses was expected to be passed in July 2010, but to what extent this will curb the impact of markets and the ingrained bonus culture in financial services is still open to question. So, unlike the implications of Figure 1, there is often no clear relationship between cause and effect in the sense that we can build causal models and apply these logics in a linear fashion. Instead, such problems are often intractable and indeed irresolvable. To follow this analysis of wicked problems, we simply cannot manage complex organisations and HR problems such as those evident in financial services on the basis of rational calculation and simplified models of HR and people management used in the UK financial services industry to drive financial performance and innovation through employee attraction, engagement and retention. Instead, we have to recognise the whole range of variables in our model and their potential for creating wicked problems.

The underpinning theories of wicked problems in SHRM in MNEs

Contradictory logics underpinning SHRM

The theoretical underpinnings of these wicked problems are the potentially contradictory logics of the resource-based view (RBV) of strategy and institutional theory. These two perspectives underpin organisational reputation research (Boyd et al. 2010) and the integration-responsiveness problem in MNEs (Rosenzweig 2006), which is a more helpful way of discussing the ‘think-global-act local’ tension. Turning first to logic of the RBV, this is based on the VRIO framework, which states that for a strategic resource to be consistently valuable (V), it must be rare (R), incapable of easy imitation (I) and facilitated by sufficient organisational resources and opportunity (O) to exploit the strategic resource in question (Barney and Hesterly 2005). These underlying assumptions guide some of the new prescriptions of SHRM and exclusive versions of talent management (Boudreau and Ramstad 2007; Becker, Huselid and Beatty 2009; Huselid and Becker 2010). Strategic capabilities and talent have to be rare so that they create a capability to be different from

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other organisations which do not possess them. Similarly, the strategic capability and the necessary talent attributes to deliver it must be inimitable. Finally, sufficient organisational capital as defined earlier needs to be in place. However, value creation through internal resources is not easily achieved, especially inimitability, because resources have to be specific to firms and under their control, at least on a semi-permanent basis (Lockett, Thompson and Morgenstern 2009). So, if a capability or talent is socially constructed by others outside the organisation, which is the case with organisational and personal reputations (Bergh et al. 2010), or else is highly mobile, organisations may try but certainly do not have ultimate control over these resources. The reputational decline of companies such as Enron and RBS, the personal reputations of their former leaders, Ken Lay and Sir Fred Goodwin and the mobile nature of talent illustrate the unpredictably and tenuous nature of such inimitable intangible assets. Thus, the benefits of reputational capital, which we have argued is a key strategic resource, are best explained by other theoretical frameworks. One of these is signalling theory (Martin and Groen-in’t Woud 2011), which treats leadership and bundles of HPWPs as signals sent out by the organisation to create an impression of a reputable employer. Whether employees treat these signals as authentic or as ‘honest’ attempts by organisations to further mutual interests rather than ‘fake’ them, it will determine the impact of leadership behaviours and HPWPs on employee engagement. The second is traditional institutional theory, which claims that the demands of institutional environments lead organisations to become similar over time (DiMaggio and Powell 1983), often conforming to stakeholder demands for good governance through increased standards of wealth protection, corporate social responsibility and citizenship behaviour (Martin and Hetrick 2006). Thus, senior leaders’ desires for respectability and acceptance by peers for themselves and their organisations cause them to accept changing norms of legitimacy and social status, which is demonstrated in the HR field by the willingness of firms to publicise their ‘best practices’ and benchmark against those of others. The third framework, advanced by Bergh et al. (2010), is that social status theory rather than institutional theory which best explains reputational capital. Past performance can earn firms good reputations for specific attributes, such as innovative or quality products and being an ‘employer of choice’, which are often actively managed by firms’ public relations, communications and HR departments. Nevertheless, they have much less control over a firm’s social status, which is a more rounded, aggregate assessment of an organisation’s prestige by society at large, reflected in our definition of an employer brand at the beginning of this article. And, as researchers in this field have found out, social status may be unrelated to past performance or performance potential (Washington and Zajac 2005). Thus, we argue it is this distinction between an organisation’s needs (1) to be distinctive from others in terms of specific quality and performance attributes and to manage its reputation for being different from others, and (2) to be socially legitimate by accruing social status in the eyes of others, which lies at the heart of the wicked problems faced by MNEs. We further contend that the wicked problems faced by MNEs are rooted in the different logics governing much of the current SHRM literature and practice, to which we now turn in more detail. In the remainder of this paper, we have highlighted three approaches to SHRM and their implications for the impact of employer branding on innovation and reputational capital. The first two are grounded in the contradictory logics of differentiation and legitimacy. The third, HR strategy-in-action, is a potential way of resolving key tensions by adopting an engaged approach to employer branding.

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SHRM approach 1: being distinctive from others

The logic of distinctiveness and the RBV has been at the heart of recent work by a number of well-known American strategic HR scholars. Writing from an essentially normative perspective, they have sought to identify actionable and mid-level strategic capabilities in firms, which are a unique source of competitive advantage for the organisations (Lepak and Snell 2002; Becker and Huselid 2006; Boudreau and Ramstad 2007; Cascio and Boudreau 2008; Huselid and Becker 2010). These authors focus on their own brand of high value adding and uniquely skilled segments of the workforce (Lepak and Snell 2002) – variously described as ‘A jobs’ and ‘A-players’ (Becker et al. 2009) or ‘pivotal talent’ (Boudreau and Ramstad 2007) – on which these strategic capabilities rest and so help form a VRIO resource-base (Boxall and Purcell 2008) and dynamic capabilities (Teece 2007) that makes organisations distinctive and difficult to imitate. The common element in these new approaches to SHRM is a stress on the business unit or line of business rather than the corporation for the source of differentiation or novelty because (a) strategic capabilities and business model change tend to be located at the business unit/line of business level or located in key processes and even functions at the business unit level, (b) HR strategies, especially employer branding and talent management, need to be aligned directly with specific business unit strategies and (c) identity, as the social philosopher Baumann (2007) has argued, is a naturally local rather than global phenomenon. This logic of distinctiveness provides a strong argument for segmentation of the workforce (Lepak and Snell 2002). For example, Becker et al. (2009) have argued against an ‘employer of choice’ strategy, which they regard as a recipe for mediocrity and argued for an ‘employee of choice’, which stresses different employee value propositions to different employee groups, depending on the value creation potential and uniqueness.

SHRM approach 2: social legitimacy among others

The largely internally facing logic of distinctiveness can be contrasted with an externally focused strategic decision-making logic in which organisations seek to become well known for being socially legitimate (King and Whetten 2008; Bergh et al. 2010). This alternative logic points to senior executives’ strategic decisions being influenced by a need to earn the approval and respect of peers, the press and the public at large for social status. Social status may be viewed by firms as a source of differentiation, but institutional theory argues that it is driven more by the needs of firms for prestige and honour. Moreover, as we have noted, it is outside of the direct control of executives to actively manage social status, since honour and prestige are in the gift of others (Rindova et al. 2005). Yet, executives often spend a great deal of effort in attempting to influence the social status of the firm because it has important performance outcomes, not least for their own careers. Arguably, this is one reason why HR executives invest effort in honorific assessments such as the ‘Best Place to Work’ or HR Team of the Year Awards. It may also help explain the growing interest in corporate social responsibility, despite a lack of evidence for the ‘business case’ for such investment (Reich 2007; Devinney 2009). Thus, it is mimetic institutional pressures to copy others’ strategies and values, and social networking and recruitment among a small cadre of business leaders (Khurana 2002) that lead to bandwagon effects, coercive comparisons in the form of benchmarking best practice and national legal standards or codes of conduct in accounting, governance and CSR drive companies to achieve legitimacy by looking and feeling the same.

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The SHRM implications of this drive towards corporateness are that firms become similar in their employer branding propositions, seeking to become employers of choice with a global employer brand and set of HR ‘best practices’. The audience for such signals are largely external – to sell a message to investors, governments, customers and potential employees that they are engaging with a well-run, socially legitimate company that produces high-quality products and services and is well known for doing so. In turn, this help employees and business partners identify and engage with the organisation because identity and engagement are formed by what insiders think significant outsiders feel about their organisation – their so-called construed image (Price, Gioia and Corley 2008).

Facing up to wicked problems in MNEs

As we have argued and illustrated by drawing on the example of the financial services sector, these different strategic logics lead organisations and their corporate and business unit managers to work with ideas that are not easily resolved because they require of them the simultaneous need to be both (1) locally responsive and to adopt exclusive employer branding and talent management policies, focusing on talented individuals and human capital, and (2) be known for socially legitimacy by employing global standards of prestige and respectability, including inclusive talent management policies and a focus on the all-important social capital – the bonds, bridges and trust among people and partners that provide the glue which binds the organisation together. However, we have found during our previous and current research on MNEs that these contradictory logics cause HR practitioners and line managers great difficulty in practice (Martin and Beaumont 2001; Martin and Hetrick 2009).

(1) Tensions between global and local values.

The exhortation to think global and act local mantra is the recognition that MNEs are characterised by multiple identities. Global companies exercise control over these identities because of the need to have business units and their workforce ‘on message’ with the corporate logic, global cost leadership and corporate stakeholder management. However, as we have noted earlier, philosophers and management scholars of identity have argued that identity is essentially a local phenomenon and has to be authentic with employees and other local stakeholders because both are a product of local cultures (Hatch and Schultz 2004; Baumann 2007). This localisation of identity requires organisations to resonate with local employees and other stakeholders and to encourage constant expressions of employee voice and speaking truth to power (Gollan and Wilkinson 2007). Hatch and Schultz (2008) argue that organisations need to recognise and deal with dysfunctional identity dynamics, which refers to excessive adaptation to the global and the local. On the one hand, organisations are often driven towards narcissism and self- absorption whereby ‘they only talk to themselves and remain deaf to (local) stakeholders’ (Hatch and Schultz 2008, p. 57); on the other hand, they run the risk of being over- responsive to local stakeholders and losing the benefits of a strong corporate culture by appearing to have no identity at all or in responding to the latest trends by striving to be a local brand.

(2) The tensions between exclusive and inclusive HR strategies.

The exclusive approach to talent management that focuses on the few at the expense of the many has its critics (Pfeffer and Sutton 2006; Pfeffer 2010) for ethical, economic and rational reasons (Martin and Groen-in’t Woud 2011). Especially among firms

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in coordinated market economies of parts of continental Europe, which have a heritage of stakeholder governance (Whitley 1999), the liberal market philosophy and shareholder value ethics (Davis 2009) underpinning exclusive talent management is a difficult pill to swallow. This is reflected among many European organisations in their inclusive approach to talent management. For example, a recent CIPD survey of UK firms showed that 63% of firms surveyed pursued an inclusive talent management strategy while 37% had more focused policies (CIPD 2007). Even within the liberal market economies of the USA, however, there is emerging evidence that an exclusive approach to talent management has not worked well and, given the unpredictability of economic environments, cannot work well. Evidence produced by Groysberg and colleagues have shown the negative side of the ‘star’ system which the exclusive version of talent management has helped fuel (Groysberg, Nanda and Nohria 2004; Groysberg 2008; Groysberg, Sant and Abrahams 2008). Their research into the recruitment and performance of investment analysts demonstrated how much recruiting ‘star’ analysts could backfire on the hiring companies and on the subsequent poorer performance of the supposed star, in part because of the resentment of lesser lights in the hiring companies and the difficulty of stars’ abilities to embed themselves in new supportive ‘soil’ (see next section). More recent work on US football stars and women managers has refined these arguments and hinted at the importance of social capital rather than the human capital of investment in stars (Groysberg et al. 2008). Regarding the problem of talent management in unpredictable environments, a core premise of exclusive talent management and the ubiquitous talent pipeline metaphor used by many organisations is that it is possible to forecast with some degree of accuracy into the future what skills and types of people will be needed and that once recruited and developed that such talent will remain in the pipeline. To borrow from the language of Becker et al. (2009), you would need to be able to predict, source and align the ‘A’ jobs and ‘A’ players to meet the requirements of exclusive talent management. However, as Sparrow, Hesketh, Hird, Marsh and Balain (2008) have argued, in an increasingly unknowable world, premises based on typical workforce talent planning assumptions such as these are not only fraught with problems but can also lock organisations into long-term talent strategies that are inappropriate in a volatile environment. Changes in the strategic environment of many industries and organisations, such as those which occurred during the early 1990s, the ‘dot-bomb’ era in the early years of the millennium and the period immediately following the global financial services in 2007–2008, have seen unprecedented corporate dis-integration and the end of many career ladders in the private sector (Davis 2009). Such dis-integration is rapidly becoming a feature of the UK public sector, which is being forced to lay-off many high-paid staff recently recruited during a sustained period of investment in sectors such as policing, education and healthcare. Finally, as Edmonson (2008) has pointed out, the delivery of short-term high performance, which is often a requirement of newly recruited talent to justify salary premiums and the passing over of internal recruits, is inimical to individual and organisational learning. Learning, particularly transformative learning necessitates individuals and teams making errors and, more importantly, publically acknowledging these errors for individual learning to feed forward into team and organisational learning. An exclusive approach to talent management mitigates such learning, in part because it needs to be justified by short-term performance claims and in part because it is not in the interests of stars, especially leaders, to admit their mistakes to lesser beings (Grint 2009).

(3) Tensions between human and social capital and innovation.

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Related to the above, HR initiatives are increasingly being judged against how they impact the innovation agenda in these organisations. Yet, practitioners and some researchers often commit the fundamental ‘attributional error’ of over-emphasising individuals and their talents as the cause of innovative improvement or decline and under-emphasising the social and organisational context in which innovation occurred. For example, a longitudinal study of 208 US firms found that increased emphasis on human capital had a negative impact on an organisation’s capacity to produce radical innovation and only had a positive effect when combined with social capital investment (Subramaniam and Youndt 2005). The series of studies by Groysberg mentioned in the previous section of this paper helps explain why such counter-intuitive findings may have occurred. Their longitudinal study of financial services analysts posed major risks associated with hiring stars, who became so because of supportive contexts, and expecting them to repeat similar levels of performance in new and typically unsupportive contexts. Thus, by talking up the value of individual human capital, there is a danger that we neglect to invest in these other key elements of context, most notably, social capital and organisational capital . Bontis and Serenko (2009) have argued that these forms of capital can have a greater and earlier impact on intellectual capital in certain circumstances.

SHRM approach 3: HR strategy as practice

To return to the first of our core theses – that employer branding has an important potential influence on intellectual capital formation, and on innovation and the corporate reputations that ensue (Martin and Groen-in’t Woud 2011) – we have found in both our research and clinical practice with HR managers in MNEs based in different countries that they have significant if not insurmountable difficulties in reconciling these logics of difference and social legitimacy. So, is there an alternative SHRM perspective that might help them to do so, and what might it imply for EB? We believe the influential emergent strategy-as- practice perspective offers some guidance in this respect (Whittington et al. 2003; Johnson, Langley, Melin and Whittington 2007; Jarzabkowski and Spee 2009). Its key messages are that strategy needs to be understood not necessarily as a position nor as the outcome of legitimate actions but in terms of the problems experienced by strategists in different functions and at different levels in organisations in how they learn to strategise and what they do when they strategise to resolve often difficult or irreconcilable issues. This perspective emphasises the verb, ‘strategising’ rather than the outcomes of strategy, thus focusing on three factors, strategists, the practice of strategy and strategic practices (Jarzabkowski, Balogun and Seidl 2007). The first of these refers to the people doing the strategising, that is, the different types and levels of practitioners involved in creating strategic decisions – who they are, how they act and what resources they draw on when strategising. In the conventional normative strategic literature, these key actors are typically assumed to be those senior managers involved in strategic planning teams who draw on rational and political resources to achieve their ends. However, this is not always or even mainly the case; HR managers, line managers, union representatives, employees at all levels and external consultants are often heavily involved in developing as well as in implementing strategies through their actions and conversations. One of the main challenges facing HR in dealing with the types of wicked problems facing employer branding in complex organisations is how to deal with the ‘disconnected dialogues’ (Martin and Groen-in’t Woud 2011), characterising some employer branding design sessions when marketing, communications, line managers and HR specialists are required to work together (Burke et al. 2011). Although close cooperation among these functions

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and with line managers is deemed to be necessary in the design of effective employer brands (Moroko and Uncles 2008), case study research from a strategy-as-practice perspective has highlighted how different groups learn to strategise (Jarzabkowski and Spee 2009) and the influence of their relative power, the values they hold and the physical distance between them (Martin and Groen-in’t Woud 2011) can exacerbate the wicked nature of the problems they were brought together to solve. Thus, a key role of HR lies in finding ways to help connect these different dialogues and in helping different parties in the employer branding process learn how to strategise together. The second refers to the practice of strategy, which are the relationships between the actions of these different levels and groups of strategists and how they are socially, politically and economically embedded in the institutions of the particular organisations and societies in which they act. In SHRM terms this can be illustrated by the problems that local HR managers and line managers have in implementing corporate values, especially in business units and contexts that are institutionally and culturally distant from headquarters (Martin and Beaumont 2001). By way of illustration, during one exercise we facilitated in a large European MNE, a team of local HR managers from business units in different product divisions located in different countries frequently complained during session that a set of centrally determined corporate values, which were to be operationalised through employer branding, had either no obvious single meaning or indeed too many meanings. Perhaps more to the point for the current discussion of strategy as practice, it became obvious that their complaints were bound up with not having been involved in the value-scoping process until ‘too late in the day’. The third strategy-in-practice logic emphasises strategic practices, which are the routines of behaviour consisting of mental and interpersonal activities, background knowledge, know-how, motivations and material and discursive resources that strategists draw on for constructing strategic activity. Again, from an SHRM perspective, this refers to how specific HR practices such as talent management and employer branding are used to influence strategic practice and, indeed, strategists. How the notion of talent is constructed in an organisation – for example, using an inclusive or exclusive definition – will determine who is involved in the strategy-making process, whose voices will be listened to and thus the outcome of strategic decision-making in employer branding (Burke et al. 2011). Thus, the focus of this perspective is on how HR strategists, through their actions, interactions and negotiations, skilfully accomplish situated strategic HR practice. This has important implications for organisations, and for how they combine cognitive, behavioural, procedural, motivational, symbolic and physical resources to construct strategic HR practice which has meaning in specific contexts and time periods (Whittington et al. 2003; Jarzabkowski et al. 2007; Johnson et al. 2007). As such it is concerned with ‘thinking your way into acting’ and ‘acting your way into thinking’ (Weick 2001), and seeing strategy as a planned and emergent or learning process, thus allowing organisations to manage the inevitable tensions that face them when strategising. Such tensions are most acute when transferring learning across business units and between the centre and business units in multinational environments (Martin and Beaumont 2001; Bjorkman, Barner Rasmussen, Ehrnrooth and Makela 2009) and in gaining consensus on values over issues such as effective leadership (Burke et al. 2011). The strategic HRM implications of this perspective are most obvious in helping explain how organisations can and perhaps should resolve the distinctiveness – social legitimacy dilemma. By foregrounding various HR strategists, other functional specialists and line managers, their practices and how they can construct connected dialogues, that is

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putting people back into strategic management, this approach not only helps us understand how these wicked problems are worked through but also suggests that it is only by focusing on the journey that the skilful accomplishments of strategists and employees at different levels in creating workable HR strategies can be realised.

The implications for employer branding research and practice

So, what does this debate imply for employer branding and can employer branding be seen as a vehicle for resolving the wicked problems discussed earlier using a HR strategy-as- practice approach? To answer this question, we need to be clear about the changing role of employer branding in practice. As our discussion of employer branding has suggested, an employer brand needs to appeal to identity at the business unit, organisational and corporate levels. And, in an MNE environment, this complex layering of identities is overlaid by national cultural identities, though these may be less important than have previously been thought in influencing employees’ identification at local level (Martin and Hetrick 2009). As such, employer branding promises to be able to provide a powerful set of tools and concepts to resolve some of the dilemmas of SHRM and identity issues discussed in this paper, but what is needed for it to do so? We suggest that there are at least three areas in which research can add significant value in this regard and which have important implications for HR practice:

.

A focus on authenticity and employer branding

.

A privileging of the local and employer branding and

.

A focus on employer branding’s role in developing social capital

A focus on authenticity

One of our central arguments regarding the sustainability of employer branding in the future is to move it away from being something that is designed by HR, marketing or corporate communications departments for others, especially in subsidiaries of MNEs, towards helping employees socially construct employer brands which are locally responsive and authentic. Authenticity has become an important concept in recent management literature in fields such as leadership and marketing and, we believe, needs to be at the heart of employer branding for it to help resolve the dual logics of SHRM. Harquail (9 June 2009) has suggested a useful definition of authenticity in arguing that authentic voice is the expression of self-identity created when people are empowered to speak their truth about themselves, when they tell us what they know about themselves, when they are allowed to argue for what they care about, when they tell the world how they see things from their unique perspective and when they argue for their own wisdom, in their unique way. These insights can be applied to the process of creating effective employer brands in all complex organisations, since complexity and size, the drive towards ‘corporateness’ (Stiles et al. 2006) and the logic of similarity mitigate against the expression of authentic voice and identity. As we have noted, an HR strategy as practice approach requires a deeper understanding of, and hence further research into, the different values, motivations and potential contributions of all parties to the strategy-making process, how they act in practice and what resources they draw on as they participate in helping create and implement strategies and, by extension, business models. The second direction for research is to examine the importance of capturing the authentic voice of different groups of employees and managers at all levels and locations inside and outside the organisation

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to make employer branding more effective. With regard to this point, we have argued that employer branding can also contribute directly to the innovation agenda by encouraging greater participation in the process and more authentic voice in organisations through the introduction of new social media, including open access social networking, media sharing, blogs, wikis and on-line discussion forums (Martin and Hetrick 2009). For example, recent evidence has demonstrated the changing nature of employee blogs, which often begin as employee expression of opposition and cynicism to organisations’ policies and practices but sometimes become collective expressions of legitimate and innovative ideas on how organisations can be improved if they crystallise the opinions and beliefs of substantial minorities (Richards 2007). Thus, an important direction for future research is the impact of these new social media on voice and employer branding effectiveness (Burke et al. 2011).

Privileging the local

Our argument for greater authenticity in employer branding compels us to focus on the local and on the logic of difference. This is not only because identity is an essentially local phenomenon, but, as we have noted, so too are strategic capabilities, transformative business models and the HR architecture that supports them. In practical terms, this means privileging the local at the expense of the global in terms of creating authentically meaningful employer branding and employee value propositions. The outcomes may look no different from those that might result from a traditional top down exercise infused by the logic of similarity, especially since the process may be loosely framed in terms of broad aspirations of values or a corporate identity that organisations would like to be known for. However, an HR strategy-as-practice approach suggests that the outcome is less important than the means by which it is arrived at. It is also important, to paraphrase Edmonson (2008), that corporate learning not only takes place but is seen to take place. And being seen to learn is dependent on all actors in the system, including corporate headquarters’ management teams, admitting to making mistakes in the past in their desire to centralise and control.

suggests that the

top-down, corporate global message continues to be the dominant one, which often represents considerable previous investment in ideas and programs, and, hence, an inbuilt reluctance to change course or experiment’ (Martin and Hetrick 2009: 316). And, as we have noted in this paper, top down employer branding reflects the compelling logic of similarity, the benefits of integration and strong institutional and rational pressures to remain top down, including the desire to build global customer facing brands, pressures to meet international governance standards, investor demands, global performance standards and HR business processes. The similarity logic requires it is not only local responsiveness and authenticity which needs to be taken into account; but there also needs to be a balance between the needs for and benefits of integration. So, in privileging the local we are not arguing for a neglect of corporate or global values and branding, but rather that they should be ‘equivocal’ (Price et al. 2008) to allow employees at local level considerable latitude in creating local expressions of these values, authentic identities and meaningful strategies for themselves, and in doing so benefit the corporation as a whole. To invoke the classic pluralist dictum of Alan Flanders developed in the industrial relations climate of 1960s and 1970s of many countries (Flanders 1965), ‘organisations need to share control in order to regain control’. In one sense, then, the HR strategy-as-practice approach may be seen as a ‘refreshing’ or re-enactment of good,

As has been argued elsewhere, however, ‘the weight of evidence

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old-fashioned industrial relations pluralism of yesteryear, this time imploring employees, especially talented ones, and HR managers to become strategists rather than adversaries over the terms and conditions of their mutual accommodation. Thus, an important direction for further research would be to investigate cases where equivocality in corporate and employer branding has been attempted as a strategy to understand and learn from these attempts to resolve the integration-responsiveness problem.

Focus on social capital

Finally, we stake a claim for employer branding’s potential contribution to building bonds, bridges and trust, the key elements of social capital, and not just focusing on the creation of human capital. Social capital as a complementary asset and enabler of human capital and as a precursor of intellectual capital and innovation has become amongst the ‘biggest games in town’. And as Sparrow et al. (2008) have argued, innovative business model change and product-market innovation need a clear explanatory framework of how HR integrates with such changes, which provides an essential justification for employer branding’s role in learning about and communicating a discourse that binds individual, team and organisational identities – the glue that holds organisations together – during periods of change. Thus, research in this field needs to focus on the extent to which organisations use employer branding to help create and sustain internal bonding ties inside, perhaps through person-organisation fit, and how they go about doing so. Since social capital is also dependent on building bridges among employees and business partners, employer branding can help innovation, business model and strategic change by extending its traditional focus from those employed on a ‘contract of service’, the traditional employment contract, to those ‘contracted for services’, often pejoratively described as the contingent workforce. These networking ties and need for integration of business partners provide a further line of research into employer branding by addressing the question: to what extent to organisations use employer branding to create external bonging and networking ties and how do they go about doing so?

Conclusions

Employer branding flourished during the era of tight labour markets and talent management, but has been questioned in the changed circumstances of world-wide recession (CIPD 2009). We have made a case for the importance of the concept to show how it can contribute to the strategic aims and business model change of organisations. Our paper began by setting out a model for linking employer branding to innovation and reputational capital, but pointed out the wicked problems resulting from contradictory logics underpinning dominant approaches to SHRM, each leading different directions for HR architectures, and pointed out the dangers inherent in slavishly following one or the other. We introduced the third, HR strategy–as-practice, and showed how employer branding might be used to help reconcile the problems created by the dual logics inherent in being distinctive and similar. Our argument is that employer branding has the potential to help organisations become authentic, responsive and build social capital, thus contributing to the innovation agenda and transformative business model change. In making this case, we have outlined a number of directions for future research on employer branding if this topic is to be advanced as a concept worthy of study and practice beyond its traditional focus on recruitment and ‘communications spin’. Finally, we acknowledge that some researchers may think that in this paper we have overloaded employer branding with qualities, properties and a potential for improving

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SHRM practice that it does not deserve, which was our initial position when we began to investigate this topic in 2003 (Martin and Beaumont 2003). However, we have come to a regard employer branding as a key topic for integrating HR policies and practice, and for helping build much needed bridges between HR, reputation management, marketing, communications and information and communications technologies. Research in this field needs to catch up with practice as well as to inform it, so it is worth much more academic ‘airtime’ than it gets at present.

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