The term “employee value proposition” (EVP) has been around for a while
Most understand it to mean the composition of elements that constitute the promise an employer makes to each employee: “In return for your hard work, we’ll provide X, Y and Z.” Some of these things are tangible: a competitive salary, bonus, defined benefits, etc. Others are less easily quantified but combine to create a powerful inducement to join and stay with the company: the opportunity to learn new skills and grow; the chance to experience interesting work; alignment with the purpose of the organisation.
In tight labour markets, such as we’re seeing across much of the UK and Europe, and with inflation eroding people’s income, it makes sense to understand what your employees value about your EVP. Particularly if there are pressures to contain or reduce employment costs or if unwanted attrition is starting to constrain your business. Indeed, in almost every market, between 75% and 97% of organisations expect turnover rates to remain the same or increase in 2023. So the business case for evaluating your EVP becomes compelling if the cost pays for itself by saving just two people from leaving the organisation.
How are smart companies approaching the EVP equation?
One way is by deploying techniques from market research, using something called “conjoint analysis” to determine what people value as well as how satisfied they are with those things. Consider how car manufacturers evaluate customer preferences through focus group panels, in which diverse participants are asked to rank certain features — such as better fuel economy versus greater storage space — to gauge preferences. In the same way, we can evaluate how employees feel about elements of the EVP by asking them to rank aspects such as flex working versus holiday entitlement, health benefits versus retirement benefits, etc. Then we ask how satisfied they are with the current EVP elements, using a consistent scale. For new joiners, we can find out what attracted them to the company in the first place by having them rank defined items.
With some judicious analysis, we can then develop a clear picture of the cohorts within a population: What do younger employees value? What do those with children seek? How different are the needs of older employees? These “personas” help HR to stratify and segment their consumer base.
Finally, it essential to put a cost to each EVP element
This is easier to do with tangible elements like improving a healthcare benefit, but it’s possible even with the intangibles — by making certain assumptions; for example, the likely cost of improving a company’s sustainability efforts or the return we may see from investing more in specific skills training. Incidentally, that last point — investing in skills — speaks to two converging imperatives: the need organisations have to reskill/upskill to boost productivity and the desire employees express to have opportunities to learn and grow. The EVP analysis can help HR fulfil the people strategy even as it informs the business agenda. In one recent example, a global technology company used the conjoint analysis technique to plot importance of the main EVP elements against employee satisfaction with those items. It was one part of the company’s analysis of EVP — and led the organisation to reduce its spend on certain benefits while putting that money to work in more valued aspects. The company was also able to target recruitment more effectively by analysing what attracted highly skilled R&D engineers to join the company in one country versus another.
This, in turn, led to more focused communications in each country, helping the organisation differentiate itself and provide a more targeted EVP for people with critical skills.
The outcome from this approach creates a data-driven and fully costed analysis of what the customer base — the employees — value and feel about their EVP. This analysis gives HR the ability to modify certain elements to meet the needs of key persona groups while also demonstrating the economic effect of these changes in a way the CFO will applaud.
Knowing people’s preferences can pave the way to greater productivity, reduced attrition and stronger commitment. So tell me what you really, really want!