Using preference research to evaluate your employee value proposition
Over the past few months, the coronavirus pandemic has disrupted the employee experience, changing everything from where people work to how they interact with clients, colleagues and customers. Now there are signs that the pandemic is affecting employees’ fundamental expectations and assumptions about work. For example, one recent study found that almost half of employees want to continue working remotely after quarantines end. Other research shows that as pandemic-induced stress levels rise, interest in personal health and wellness is increasing.
For HR leaders and decision-makers, this raises a critical question: Is your employee value proposition (EVP) aligned with your workforce’s current and future needs? Are the rewards, benefits and incentives you were using to attract, engage and retain talent before COVID-19 still as relevant in a dramatically altered world of work?
The evolving employee contract
Organizational approaches to rewards have changed drastically in recent decades. Traditionally, the design of compensation systems and EVPs was almost exclusively based on extrinsic motivators and financial incentives. This strategy was common in the 20th century, when the loyalty contract characterized the psychological relationship between employer and employee. At the core of this relationship was a basic deal: Organizations provided pay, benefits and job security in exchange for a lifetime of commitment from employees.
Many organizations realize this deal is no longer tenable, or even desirable, for multiple reasons. First, a growing body of research — including our own — shows that while pay and benefits are important, most employees also want jobs that are intrinsically motivating and provide a sense of meaning, purpose and personal impact. Second, new technologies have transformed the employee experience, changing how and where work can be done. This has led to an increased interest in remote work and flexible work arrangements. Third, automation, artificial intelligence and the Fourth Industrial Revolution have made learning and development, training and reskilling increasingly crucial for many segments of the workforce. And the global pandemic has heightened concerns about mental wellbeing, physical health and personal safety.
Because of these changes, a growing number of organizations have started to provide their employees with a holistic set of rewards and benefits, considering not just their financial interests, but also their psychological needs, emotional wellbeing, work-life balance, professional development, and personal health and fitness. Based on an extensive five-year analysis of our normative data, this whole-person approach makes sense. Consistent with Maslow’s theory of motivation and Alderfer’s ERG model, we have found that employees are more likely to feel committed and engaged when they experience a deep sense of security, support and significance at work.
Is your EVP future-proof?
As the pandemic unfolds, it is raising new questions and concerns for many employees. Based on our research, many workers are worried about both the security of their jobs and the safety of their offices. After months of remote work and isolation, many are struggling to feel supported by their leaders, their managers and their colleagues. And amid a global health crisis that has turned the world upside down, some employees are reflecting on the significance of their jobs, the purpose of their organizations and the future of their careers.
These kinds of questions and concerns are causing many organizations to realize that a new shape of work — one that will require fundamentally different approaches to various people practices — is emerging. For example, flexible work is likely to become the norm in many organizations because of the pandemic. So too is cost containment: After years of economic growth and expansion, many organizations have been forced to focus on cost optimization because of the economic fallout of COVID-19. This is causing knock-on concerns about talent engagement and retention. Even though the job market is tight, many organizations realize they could lose top talent — either now or in the near future — if they mismanage their total rewards strategy over the next 12 months.
Considering the size and scope of these changes, now is a critical time to determine if your EVP is still compelling. Here are four ways to learn what your workforce wants, and evaluate the appeal and effectiveness of your total rewards strategy.
No one can predict what work will look like once this pandemic has passed. But one thing is sure: The war for talent will continue. Now is an important time to talk with your employees, evaluate your total rewards strategy and start designing an EVP for the new shape of work.