"In today's 24/7 news cycle and social media world, earning and maintaining a good reputation can be a challenge," said Rosemary Haefner, chief human resources officer at CareerBuilder. "It's easier than ever before for job seekers to research potential employers. Employers that value transparency and take a proactive approach to issues or complaints will have a better chance of securing trust and loyalty and maintaining a positive reputation that can strengthen their recruitment and retention strategies."
It seems that job candidates use this as an effective screen for implicit job attributes. If you consistently treat your customers poorly, you probably treat your employees poorly too.
This is an example of adverse selection, adverse selection is a problem that arises from information asymmetry, or “hidden”, information. Just as a company uses screening to eliminate poor job applicants, prospective applicants use company reputation to screen out bad employers. Go to Indeed.com and you can review reviews from current and former employees about company culture, pay scales, career advancement, etc…This simple information about the pros and cons of the company can be used to screen employers and avoid adverse selection by gaining knowledge about the company. Bad publicity serves the same purpose, most people aren’t going to work for an organization that did something bad, most people want to take pride in what they do for a living and the company they work for. To avoid the adverse selection, prospective employees should use any information available to make an informed decision. In my own experience when I first entered the corporate workforce I worked for a large financial institution, what I didn’t know was that these companies have a set salary increase per year which is near impossible to exceed. I also learned quickly that there was not much room for advancement within a department. Now when I go on Indeed I see reviews that spell out exactly the career advancement opportunities within a company and my entire job search is heavily influenced by this knowledge.
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