Applying utility theory in the context of branding (Meffert, Burmann & Koers 2002) to the job market, provides a basis for viewing the employer brand as a signal that has the potential to create utility for both the prospective employer and potential employee. From the perspective of the potential employee the employer brand serves several functions. It provides orientation during the selection process as strong employer brands give rise to a position of ‘Employer of Choice’, and serves as a quality indicator to the employment market.
Consequently potential employees consider statements given by such companies to be more
trustworthy. Furthermore, once having joined the organisation, the brand can serve as a
mechanism to help employees to identify with the employer; working for a prestigious
company makes employees proud and may result in higher work morale. For the prospective
employer, the employer brand can increase the perceived value of the company as an
employer, enabling segment specific recruitment strategies to be developed, supporting
employee retention, differentiating the firm from other employers, and affecting preferences for other employers in the job market. In order to achieve this, employers must invest in clear and consistent brand signals to ensure that their position as ‘employer of choice’ is understood by potential employees.