Schindler Parent > Blog > Employer Branding and the Shortage of Skilled Workers in Germany
The competition for the best-skilled workers and young talent is in full swing - but this is nothing new! As early as the 1990s, it became clear that the labour market was in a state of upheaval: Companies' requirements have been changing ever since. Punctuality and reliability are still core elements that employers expect. However, other expectations such as: showing commitment to the company, being flexible, motivated, and working on one's own responsibility - are all part of employability and the ability to survive as a worker in the labour market. Thus, in addition to the rules that used to apply, employees require a certain mindset. However, applicants also have different demands and expectations when it comes to their employers. Flexible working hours and locations, a positive corporate culture, and flat hierarchies are just a few of the aspects that employees list on their wish lists. Companies can adapt their employer branding to these points - but more on that later.
What started quite brutally with the phrase "war for talents" is now more up to date than ever. Demographic change leads to a skills gap widening resulting in a shortage of qualified workers. The skills gap is the difference between the number of jobs that need to be filled and the number of suitably qualified workers. The lower the birth rate, the fewer young adults there are to occupy the number of jobs available in Germany. And the birth rate has been falling tremendously since 1966: while the average was 2.53 children per family back then, in 2019, it is a mere 1.54 children born per family!
Consequently, the lower the birth rates, the more the skilled labour gap grows. Another factor is the jobs that arise through new occupational fields, such as the field of digitalisation. Hence, the competition for talent not only has a novel quality but equally a different quantity. For many companies, this represents an immense challenge. They must position themselves as employers in a competitive market where the demand for workers is greater than the supply.
While the skills gap narrowed briefly during the peak of Corona, it is now larger than before the pandemic. Primarily, the reduction was because jobs were cut, and employees were put on short-time work. Quite logical really: while the number of young, qualified people remained the same, the number of jobs to be filled decreased. Now that the situation is gradually returning to normal, the skilled labour gap has widened again. That is because companies are hiring more people again. Alexander Burstedde of the Institute of the German Economy writes: "Since the middle of last year, the skilled labour gap has already been rising again, especially among highly qualified workers: since May 2021, there has already been a shortage of more skilled workers than before the crisis."
In this context, companies naturally ask themselves: which actions will successfully counteract the competition? And this is where the keyword employer brand comes in, as it is no longer enough to have a general brand identity as a company. One needs an employer brand to attract coveted skilled workers, preferably one that is equally authentic and convincing! Two things are essential to developing an employer brand: a clear idea of one's brand identity and a precisely defined target group. Together, these two points form the basis of employer branding.
But what exactly is employer branding? And what can it achieve?
Employer branding describes the branding of a company as an employer. One must then convey the brand to the public through appropriate marketing. The labour market is now a completely independent sphere and has changed structurally through digitalisation in recent decades. Self-promotion of applicants on platforms such as LinkedIn has become a given - companies must inevitably adapt to these changes. A sophisticated employer branding strategy is imperative to respond to such changes in the best possible way and to profit from them.
Like in classic brand work, status quo analyses are also required at the beginning of the employer branding process to derive concrete communication strategies. The first step is to define the target group, i.e., the potential employees. That is the basis for the communication strategy. It is built around the so-called "employer value propositions."
The Employer Value Proposition (EVP) is an elementary component of the employer branding strategy. It is the value or value proposition that companies communicate as potential employers. It focuses on precisely those features of the company that make it attractive to the target group:
Based on these aspects, individual and true value propositions are created, which must reflect the company's character. Otherwise, there will be a rude awakening after the recruitment. First for the new employees - and then for the company itself.
Of course, there are variations in the EVP: If the company is a newly founded start-up with five employees, the co-determination and the working environment will be different than in a family business with 300 years of history or a company with several thousand employees. It is crucial that the differentiating factors, also called differentiators, are identified. They distinguish the employer brand and EVPs from the competition. They ensure that employer branding works. Nothing is worse than jumping on the trend bandwagon of flat hierarchies or diversity and losing newly hired employees after the probationary period due to disappointed expectations. On the one hand, this is not goal-oriented and certainly not economical. On the other hand, something like this reflects negatively on the employer brand; in times of LinkedIn, kununu, and others, the exchange within the target group is a decisive factor – both positively and negatively!
The application process and all its various aspects must be embedded in the framework of the employer brand in order to contribute to employee recruitment. Especially if the target group of potential applicants is from Generation Z, unfavourable reports from their environment can lead to a premature rejection of the company. In the study "Generation Z - the employees of tomorrow" by the "Centre of Human Resources Information Systems", the importance of a positive application process is proven with conclusive figures: "Two-thirds of Generation Z candidates do not apply to a company if friends tell them about bad experiences during the application process of that company". So even if an application with an interview does not lead to employment, a positive application experience is crucial.
In addition to potential applicants, another target group is at least as crucial to companies: the employees. Their experiences at work are a central component of the brand since values practised in the company make up the corporate culture. The way everyone interacts with each other can serve as a positive differentiator for the company in the labour market if employees express the company's culture to the public. But this requires the right communication channels. In addition to LinkedIn, other social networks such as Instagram, Facebook or TikTok are helpful here, but one mustn't forget the absolute classic: face-to-face conversation. We all trust people more when we like them. Hearing from a friend in a personal conversation how much they like their job has a correspondingly big impact on the employer's brand. Intrinsically motivated employees who talk positively about their work experiences make the employer brand authentic - it becomes tangible and alive.
Therefore, it is essential to include the opinion of employees in the employer branding process: To respond to their needs and simultaneously strengthen the brand from within. Only then can your own employees become multipliers in the recruiting process. After all, it is not only important to find good people, but just as fundamental to keep good people.
To successfully approach employer branding without getting caught up in its many aspects, it is best to divide the topic into individual sub-areas. Here, one might look at the four impact dimensions: corporate culture, company retention, company performance, and company reputation. These four impact dimensions of the employer brand help to structure employer branding. The dimensions of impact are particularly crucial in relation to the primary goal that a company is pursuing with the development of the employer brand. Of course, the individual dimensions are interrelated and influence each other. Nevertheless, it can help to be aware of which aspects one wants to focus on regarding the employer branding strategy.
The impact dimension of corporate culture primarily includes soft factors such as good cooperation and communication within the team. In a corporate culture in which employees feel understood because of open communication, the feeling of "we" is strengthened. This influences the recommendation rate, commitment, and engagement of the employees. However, it is really about the "feel-good factor".
Retention is also related to the dimension of 'corporate culture'. In a company whose values employees can identify with, they are happy to stay for a longer period. The result of successful retention is low fluctuation. This dimension is, therefore, indirectly related to the company's success. Nonetheless, it is predominantly concerned with measures that create employee loyalty.
Hard factors such as concrete performance and a company's competitiveness also play a decisive role in employer branding. They are part of the 'performance dimension'. One can describe it as the 'result dimension' of the preceding impact dimensions. Here it is expressed in figures which effects the measures have in the context of corporate culture and retention.
The fourth dimension, 'company image or reputation,' has a particular impact on the recruitment of new employees. If these measures are successful in corporate culture, retention and performance are communicated externally and then the 'reputation dimension' benefits.
"But what is the benefit of building an employer brand?" you may ask. The answer is simple: target group-oriented communication and a clear brand positioning increase the quality of job applications. This means that you, as a company, fill vacant positions with the right people - faster and with less fluctuation.
As a critical component of employer branding, effective and honest internal branding leads to increased employee engagement and commitment and positively impacts performance.
Therefore, one can argue that good employer branding does not only impact the recruitment of new employees but influences all facets of a company. Everything from soft factors, such as the corporate culture, to measurable figures, like the dismissal rate, sick leave, or turnover, is directly or indirectly related to the employer brand.
To truly become the answer to the skills shortage, an employer branding strategy should address the following points:
Employer branding is not a temporary trend topic. Employer branding is the best way to survive in the future labour market. At Schindler Parent, we would be happy to accompany you on your way to becoming an attractive employer brand. Do not hesitate to contact us:
More information is available from:
Sascha Schmidt
Consultant (Strategy)
sascha.schmidt@schindlerparent.de
