In the startup world, there simply isn't enough talent to go around. Fewer than 1% of engineers in the U.S. are unemployed, and companies are all competing for what limited talent is available. Employer reputations—often called “employer brands”—can be a company's biggest competitive asset.

Why are they such advantages? According to the Harvard Business Review, candidates are willing to accept 10% less in salary from companies with strong employer brands. At the same time, 87%of employees say they would leave their current job for a company with an “excellent” employer brand.

What happens, though, when you invest time and money into promoting an employer brand that doesn't match up with the reality of your company culture? Time and time again, companies make this mistake, and the results can be damaging.

Let's unpack this a bit.

How A Great Employer Brand Happens

Basecamp is a popular example when it comes to strong employer brands. Its founders have written three leading books (two of which are bestsellers) on leading remote teams, problem solving, and building startups. The company's employee handbook is publicly available on GitHub, and they publish personality-filled videos that give outsiders a window into their spontaneous team culture:

The payoffs for these efforts can be tremendous:

Employee retention can increase : The average employee stays at Basecamp for nearly five years. Uber employees, for comparison, typically leave before finishing their second year.

: The average employee stays at Basecamp for nearly five years. Uber employees, for comparison, typically leave before finishing their second year. Inbound applications will grow : Basecamp has little problem finding new talent. In fact, they had to institute a hiring freeze not because money was tight, but because they were growing too fast.

: Basecamp has little problem finding new talent. In fact, they had to institute a hiring freeze not because money was tight, but because they were growing too fast. Commitment to the company will reach new heights: The team has been able to grow to more than 50 full-time team members, distributed throughout the world, without any full-time managers. This is only possible with a highly-committed team.

While Basecamp's creative work is smart, the real secret to its success as an employer brand is very simple. When you deconstruct a good employer brand, you realize the company has taken an honest snapshot of its team culture and shared it with the world. For Basecamp—or any other successful brand—the creative marketing that comes next is just icing on the cake.

When employees join Basecamp, they find their experience matches up to the one they were promised, and that is exactly how a good employer brand should function. Where many get into trouble, however, is when an employee's experience doesn't line up with what was advertised to them.

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What Happens When A Company Betrays Its Brand

When startups churn employees, they're losing time, money, and future opportunities. The cumulative effect can be fatal. One of the big drivers of ballooning employee turnover? Marketing an employer brand that doesn't match the reality of working at your company. When employees feel betrayed, they don't tend to stick around.

Even massive, beloved companies aren't immune to this effect. In April of 2018, nearly 4,000 Google employees signed a petition protesting Google's contract to develop A.I. technology for the Pentagon, something employees felt was in direct violation of Google's famous “Don't be evil” cultural rule.

In the petition, which you can read here, employees specifically state:

This plan will irreparably damage Google's brand and its ability to compete for talent... Google's stated values make this clear: 'Every one of our users is trusting us. Never jeopardize that. Ever.' This contract puts Google's reputation at risk and stands in direct opposition to our core values.

Employees joined because of the brand Google advertised and were furious when they felt their trust was violated.

There are, of course, other ways companies end up violating their brands beyond lucrative defense contracts. Oftentimes, the real mistakes come down to negligence. Companies sell candidates on employee perks that sound good in theory, but leadership lacks the follow-through to deliver on them well. Common examples include:

Unlimited vacation policies. Done right, these work, but most companies fail to make sure employees take time off. As a result, people with unlimited PTO on average take less time off than people with traditional PTO.

Done right, these work, but most companies fail to make sure employees take time off. As a result, people with unlimited PTO on average take less time off than people with traditional PTO. Profit sharing. Many startups offer profit sharing, promising to reward employees directly for their work. However, some companies then invest all profits into growth, leaving employees waiting each quarter for a share of $0 profits.

Many startups offer profit sharing, promising to reward employees directly for their work. However, some companies then invest all profits into growth, leaving employees waiting each quarter for a share of $0 profits. Impossible bonuses. One of the hallmarks of a bad startup sales role is a bonus that looks amazing on a job ad, but is actually tied to a sales goal no team member has ever hit.

No matter how the disconnect between an employer's brand and an employee's actual experience is formed, though, the result is the same: Employees are left feeling betrayed, and many of them will leave if their situation doesn't improve. To make matters worse, one study found 72% of candidates with negative experiences aired their feelings publicly online.

When you consider the fact that incoming candidates care more about company reviews from former employees and candidates than any other data point when evaluating your employer brand, something important becomes very clear: Unless you're a company with the size and legacy of Google (and maybe not even then), you can't afford to have a toxic reputation.

Avoiding A Negative Employer Brand Is Simple

The key to building a great employer brand, from the beginning, is to talk honestly about your culture. When your employees love being a part of your startup, it's easy to market your company as the great employer it is. With that in mind, there are two key considerations when building your startup's employer brand:

Any cultural trait you advertise should be something new employees notice in their first week.

Anytime employees or candidates voice a complaint about leadership decisionmaking, make sure staffmembers knows someone is there to hear them.

The latter point is critical. Listening doesn't just mean waiting for employees to come into your office. It means proactively seeking out feedback, reviewing posts about your company on sites like GlassDoor, and monitoring your brand mentions across the Web. Making people feel heard by acknowledging their concerns and explaining your decisions transparently will instill confidence in your team, creating goodwill and loyalty along the way.

And when employees begin to voice valid concerns—like the kind that lead to brand debacles—it's always in your company's best interest to address them swift and tangible ways.

For example, after the petition was launched, Google agreed not to renew their contract with the Pentagon. Uber, after spending a full year in crisis mode following a female engineer's report of rampant sexual harrassment at the company, has slowly begun to recover, with their new CEO Dara Khosrowshahi publishing an updated list of “Cultural Norms." After a Pinterest engineer pointed out how few female engineers were employed on the team, Pinterest made diversity a point of emphasis, and raised their percentage of female engineers from 21% to 29%.