Employee Value Proposition (EVP) - What it is?
Organizations are busy putting together a customer value proposition in order to win the best customers and retain them for ongoing return business. The same theory applies to organizations' internal customers i.e. its employees. In today's knowledge economy, people play a critical role in organizational success, often acting as the key differentiator for business value. Organizations too are realizing this, and they are striving to hire the best of talent and offer them the best possible opportunities. Thus is born the concept of the Employee Value Proposition (EVP).
An employee value proposition is nothing but the sum total of the offerings a company offers to its prospective and current employees so as to elicit their best efforts. It is the totality of tools that employers implement to be able to attract, retain, engage and develop employees. While the concept is not new, it has gained renewed importance due to the cut throat war for talent, in which every organization is trying to woo the best of talent in the labor market. The employee value proposition is the core of the people strategy of an organization, driving employee engagement at various levels. It determines how employees including past, current and future, perceive the company as an employer and encompasses the entire gamut of HR interventions experienced by the candidate and employee - employer branding, recruitment, engagement, pay and benefits, learning and development, career growth, retention, HR operations and so on.
An employee value proposition must, therefore, be thoughtfully designed since it has a direct impact on behavior. It must look into the tangible and intangible elements of the psychological contracts between the employer and the employee. It must start way before the employee joins, even before the person is a job candidate; it must appeal to the person irrespective of whether the person intends to work with the organization or not. It must then percolate through the entire employee value chain, eliciting trust in the leadership and belongingness to the organization from candidate to former employee. Organizations must align their policies and processes based on this foundation by carefully curating the work opportunities, nature of work, culture, benefits and so on. The starting point for this is to understand what employees truly value - what makes people truly happy. A single and formal engagement survey often does not capture such intricacies. It is important to get under the skin of the employees and understand them as people with needs and dreams. All the while, keep in mind the happiness - focus and strive to know what happiness at both work and personal life means to your people.
At a time when the advent of automation and artificial intelligence has led to heightened competition, corporates are struggling to retain their best talent amidst uncertainties surrounding the job market. Promoting workplace happiness and keeping employees motivated and engaged is the key, not only to sustain employee productivity and achieve organisational success, but also to attract prospective employees. Engaging employees through awards and recognition, and by tailoring an effective employee value proposition (EVP), can help develop workplace happiness and motivate employees in a dynamic work environment.
Why Employee Value Proposition?
Many workers have recommended organizations to build unique brands of themselves in the eyes of its prospective employees. This essentially means developing a statement of why the total work experience at their organization is superior to that at other organizations. The value proposition should outline the unique employee policies, programs, rewards and benefits programs that prove an organizations commitment to people and management development. In nutshell it should define an employee's 'why should I join this organization?
The employee value proposition needs to be communicated in all hiring efforts of the organization. It may be reflected on the company's website, job advertisements and letters extending employment opportunities.
Most organizations encounter two main problems when it comes to their EVP:
A. They struggle to differentiate themselves from their competition. Differentiation is crucial if an organisation is to stand out from the "sea of sameness" that characterizes some sectors.
B. Their branding is appealing but it does not accurately reflect the reality.
An effective EVP enables an organisation to stand out as different but also it ensures that the 'packaging' reflects the 'contents'. All too often people join organizations tempted by the 'branding' and are disappointed when they experience the reality.
Specific benefits of an EVP:
Helps to attract and retain talent
A clear and differentiated EVP ensures that you attract and retain people that you would inevitably lose to other organisations with more attractive EVPs.
Helps to appeal to different markets and tough to hire talent groups
For organisations operating in a number of countries the EVP will need to move beyond a one size fits all. A good EVP contains elements that appeal to different groups of employees from different cultures, age groups and functions. The most successful EVPs are derived from combining needs of key segments of the workforce to form a universal brand which is then communicated through the best channel for each segment.
Helps to re - engage a disenchanted workforce
The process of creating an EVP involves surveying and talking to existing employees. This is a very powerful engagement tool in itself and people usually enjoy and appreciate when the organisation takes positive steps in this direction. In my experience, the process can also help to re - build/enhance trust and increase motivation.
Helps to prioritize your HR agenda
The process of eliciting your EVP will help you to understand what your HR priorities should be. To create an EVP you need to understand what is important to your employees and potential hires. Having this insight will mean that you understand what specifically you need to do to attract, engage and retain people that you want, where improvements need to be made and what will most likely make people leave if they are not addressed.
Creates a strong 'people' brand
Organizations' with strong and credible EVPs become as famous for the way they treat people and the quality of their people as they are for their products and services. A great example of this is Apple. Apple does not have to enter into a war for talent. They have great people queuing up to join them.
Reduce new hire premiums
When candidates view an organisation's EVP as attractive, they demand a smaller compensation premium when accepting an offer. According to the Corporate Leadership Council EVPs that are viewed as unattractive require a 21% premium to hire employees, while attractive EVPs require only an 11% premium.
An effective EVP framework tailored to suit a particular organisation or a set segment of talent will efficiently deal with the major challenges facing corporates in the dynamic world - automation, re-skilling, employee morale and performance anxiety, including fear.
An effective EVP strategy has two main advantages over traditional employee engagement tools - it takes a broader 360-degree view of the relationship, beginning well before a new hire comes on-board, and goes all the way through to his or her time as a former employee and carry forward the relationship between the company and the employee through alumni programme, etc. Companies also benefit by building a strategy around off-boarding on the lines of existing strategy for on-boarding (considered to be the second - most important HR practice), as these ex - employees can become one of the strongest brand ambassadors and be instrumental in lead generation.
Developing an Effective Employee Value Proposition
Developing an effective EVP has at its core the question: "What will attract the best talent, motivate them to give their best at work, and choose to stay with a company?"
It starts with what we call 'decision day,' which is the point at which an employee has been given the offer letter and he/she has decided to join the organisation. This is the start of the relationship with the employee and engagement has to begin at this point. The next stage is the 'first day,' when the employee joins the organisation. This is a critical stage as the employee experiences the organisation for the first time, in person. The next stage, which is the majority of the life - cycle, is what we term as 'every day'. Here we consider how organisations are engaging their employees every day across recognition and engagement touch - points. Then comes 'achievement day,' where we consider how an organisation is celebrating with the employee achieving company and personal milestones. Finally the last stage, which most organisations don't focus on but is critical, is what we call 'referral day,' which is when the employee has left the organization - exit interview, on-going engagement post - resignation, how are we keeping him/her loyal to the brand and leveraging his/her loyalty.
Implementing the recognition strategy early and exploring all available opportunities for awards and recognitions - service anniversary, result - based recognition, sales and performance incentives, 360-degree communications, regular meetings, events, and individual and/or group travel - are some of the approaches that an organisation can adopt. Peer-to-peer recognition has maximum impact on employees and reinforces corporate core values. All these factors hold the key to developing an EVP strategy that delivers maximum benefit for the employee as well as the company.
When the leadership commits to work towards the ultimate EVP - 'happiness' - it stands to gain from the positive engagement of happier workers, like attracting and retaining key talent, creating a strong people brand and reinvigorating disenchanted workers. A well - formed EVP strategy is a win-win - employers can count on a highly motivated, committed employee willing to go the extra mile, and employees enjoy the experience of a meaningful and fulfilling job.
1. Effective EVP development demands marketing excellence : Expertise is required in segmentation, insight, brand positioning and brand activation - yet EVPs are often driven and owned by the HR team who may not have all the above capabilities needed.
2. Stakeholder engagement is critical : Lack of stakeholder engagement will seriously undermine the ability of the EVP to gain commitment and traction within the business and hence its ultimate effectiveness.
3. Bespoke research is needed : Companies tend to fall back on existing research, but rarely has it been designed to uncover springboards for genuine EVP insights and propositions.
4. Avoid internal focus : EVPs can be overly introspective and tactical, undermining their differentiation and ultimate impact.
5. Employees are a discerning audience : EVPs offer a promise that needs to be delivered : employees are no less discerning than customers of a company's brands.
6. There is a key difference between the EVP and the communication itself : An EVP is not an end in itself, it needs to be brought to life internally and externally through many touch points.
The challenges are real but the benefits immense. Employee value propositions offer a key marketing tool to enable employers to attract and retain the right talent and to build the competitive edge needed to drive growth.