Finding the right talent for a position is not easy. These days, enticing a good candidate goes far beyond the typical promise of career advancement and a competitive salary. Now, particularly in the aftermath of the COVID-19 pandemic and major movements like Black Lives Matter and the Great Resignation, job seekers are increasingly looking at “nonwage” attributes, especially corporate culture, when considering a position (Sull, Sull and Zweig (2022)). Indeed, some recent estimates indicate that more than half of job seekers consider culture to be as important as salary. Despite its importance, culture is difficult to observe from the outside looking in, and it’s challenging for job seekers to get their hands on reliable information about a company’s culture. So, how (if at all) are employers responding? Our study examines not only how firms craft their job postings to promote their values but also how this impacts hiring.
Does disclosing more information about culture affect firm recruiting efforts? It’s unclear. On the one hand, more information about culture may help attract top talent, but this is assuming employees value that information and have trouble finding it on their own. Job postings may help reduce information asymmetry and the search costs that job seekers bear in learning about culture. On the other hand, culture information may not be important to job seekers. Job seekers may focus largely on salary and consider cultural information less relevant. In addition, job seekers may already know about a firm’s culture through other public avenues, such as job reviews and ratings on Glassdoor and Indeed, which would reduce the value of culture information in job postings. Ultimately, the effectiveness of culture information in job postings for recruiting employees warrants an empirical investigation.
We focus on job postings because they represent the most direct way a firm can reveal its values to prospective employees. In job postings, firms can concisely highlight the most important aspects and requirements of a job. Yet recent survey evidence indicates that many job postings are poorly written and many firms struggle to write effective ones (Allie (2016)) This challenge is further evidenced in the rapid growth of AI-augmented job description software focused on improving job posting disclosures (Misa (2021)) Crafting job postings that convey a firm’s culture is especially challenging, as evidenced by the rapid growth in AI-augmented job description software that focuses on improving job posting disclosure. Our analyses build on the work of Li, Mai, Shen and Yan (2021) and utilize state-of-the art machine learning methods to develop a comprehensive dictionary of the core cultural values conveyed across 10 million postings issued by public corporations from 2010 to 2020. Our aim is to assess the extent to which culture information in job postings attracts employees. We adopt a semi-supervised machine learning approach to measure corporate culture in firms’ job postings. We focus on the five most common dimensions of corporate culture that consistently emerge across the literature: innovation, integrity, respect, teamwork, and quality, as these cultural values are often mentioned on corporate websites (Guiso, Sapienza and Zingales (2015)); Li, Mai, Shen and Yan (2021)). We train a neural network model to learn meanings of all words and phrases in job postings that relate to the above cultural contexts and then construct a dictionary containing associated words. We analyze nearly 25 million postings issued by roughly 5,000 companies over the period from 2010 to 2020.
Our data reveal a significant increase in the intensity in which firms discuss corporate culture in their job postings over the sample period, consistent with culture becoming more important to job seekers in recent years. In terms of specific values, firms most commonly discuss those related to quality, innovation, and respect. We also uncover meaningful industry variation: firms in the professional services, pharmaceuticals, and information technology are the most likely to highlight corporate culture in their postings, whereas firms in coal, transportation, and agriculture, are the least likely to emphasize culture in their postings as they are relying on manual labor.
Our initial analyses examine the factors that influence a firm’s choice to provide culture information in its job postings. Specifically, are good culture firms more likely to promote culture in their job postings? These analyses require developing proxies for the quality of a firm’s corporate culture. This is difficult to measure, so we consider multiple proxies. First, we collect data from job reviews relating to employees’ perception of a firm’s culture. Job reviews (such as those provided on platforms such as Glassdoor and Indeed) are a natural starting point because they represent some of the most ubiquitous measures of corporate culture. Second, we also use an investor-oriented metric of corporate culture based on how firms discuss their culture in conference calls. Finally, we consider less subjective measures of culture based on real outcomes, including the number of employee violations and a firm’s exposure to labor-related risk. We find that firms emphasize culture more prominently in their job postings when their culture is indeed stronger based on these existing cultural proxies. Firms with strong corporate cultures, as measured by the strength of their Glassdoor ratings and conference call culture scores, promote culture more in their job postings. In addition, firms with more workplace violations and more labor-related risk are less likely to emphasize culture in their postings. These results suggest that job postings can credibly signal corporate culture. We find that firms are more likely to emphasize culture in job postings for more experienced and managerial positions. Firms also emphasize culture more when they have a history of intense recruiting needs and their competitors are also intensely recruiting. Overall, these results suggest that firms compete for talent by promoting culture in their job postings.
Our main analyses examine the real effects of emphasizing corporate culture information in job postings. For these analyses, we collect detailed quarterly establishment-level data on worker inflows from Revelio Labs. We aggregate individual job postings to a firm-MSA-quarter panel and examine the association between the level of culture information in job postings and worker inflows. Our baseline results indicate a strong positive relation between culture information and worker inflow.
We next conduct two sets of cross-sectional analyses to assess the mechanisms for our findings. We first expect that culture information will more strongly affect worker inflow when information asymmetries are more pronounced. Consistent with this argument, we find that our results are less pronounced among larger facilities and firms with (high-quality) reviews on employee job review sites. These findings help strengthen our argument that job postings can help alleviate information frictions about corporate culture in the labor market. We also expect our results to be more pronounced when culture matters more to job seekers. Our second cross-sectional analysis uses the Black Lives Matter (BLM) movement as a plausibly exogenous shock that increases cultural awareness and job seekers’ desire to work at firms with strong cultures. We find that job postings containing culture information relevant to the BLM movement, such as integrity and respect, have a more pronounced effect on worker inflow following the rise of BLM. In contrast, cultural dimensions less relevant to BLM (such as quality) are not associated with increased inflows following the movement. These results suggest that the effects of culture information depend heavily on the value that employees place on working at strong culture firms.
We conduct a battery of robustness tests to strengthen our claim that culture information in job postings influences worker inflow and conclude with two exploratory analyses. We first examine the implications of culture information for worker outflows and find that culture information in job postings is also associated with lower levels of future worker outflows. This suggests that workers are more satisfied in firms that promote culture. Second, we examine how workers value culture when presented with salary information, a phenomenon that is rare in our sample. We examine a subsample of firms that provide salary information and find that culture still predicts inflows after controlling for the advertised wage.
Our study contributes to the literature across several dimensions. First, we extend the academic literature on corporate culture. Studies have focused almost exclusively on how corporate culture is subtly signaled through firms’ public disclosures and conference calls or reflected in employee reviews. Our study is the first to examine how firms craft job postings to communicate their values. This is an important extension to the literature, as job postings represent a natural avenue for promoting culture, attracting job seekers, and improving cultural fit. More broadly, our focus on culture disclosures is also relevant to the social pillar of ESG, which pertains to disclosures related to other workplace issues, such as safety, fair payments, and diversity and inclusion. Second, we extend studies in accounting and finance examining the informational role of job review sites, such as Glassdoor and Indeed. These studies primarily focus on the information content of employee review platforms and how they affect firm behavior. We extend this literature by examining how firms seek to alleviate potential information frictions on these platforms. Third, our findings extend the economics and accounting literature on job searching, in that our results suggest that corporate culture can influence job searches and can increase the efficiency in which firms hire employees. More broadly, our results should be of interest to practitioners and managers. Advertising a firm’s values is an important practice that has been advocated by many professionals. Our study provides some of the first large-scale empirical evidence quantifying the benefits of crafting job postings in a way that conveys a firm’s culture.
Joseph Pacelli is the Gerald Schuster Associate Professor of Business Administration in the Accounting and Management Unit at the Harvard Business School.
Tianshuo Shi is a doctoral student at the Harvard Business School.
Yuan Zou is an Assistant Professor in the Accounting and Management Unit at the Harvard Business School.
This post is adapted from their paper, “Communicating Corporate Culture in Labor Markets: Evidence from Job Postings,” available on SSRN.