Every organization has an employee value proposition—the exchange, spoken or unspoken, between employers and employees that defines the relationship. In its simplest form, the exchange represents the currency paid for performing a job. In its highest, most strategic incarnation, it's the promise employers make to provide pay, benefits, career opportunities and a supportive work environment in exchange for an employee's discretionary effort to bring the company's mission, vision and values to life.
To reach that level, an employee value proposition must be explicit—though most are not, says Laura Sejen, global practice leader at Towers Watson in New York.
Without formal employee value propositions, HR professionals waste opportunities to "recruit employees who fit the culture and engage existing employees in the business strategy," she says.
For an employer, an employee value proposition "attracts, retains, motivates and engages employees," Sejen explains. For the employee, it "comes down to the give and the get."
Rich Boyer, key principal at ModernThink LLC, a consulting firm in Wilmington, Del., refers to the employee value proposition as "the deal" because it "emphasizes the reciprocity of the relationship."
Boyer cites the example of innovation, a common value for many organizations. In an employee value proposition, "the organization promises to provide an environment where employees feel comfortable presenting new ideas and engaging in vigorous debate. And the employee agrees to bring new ideas and debate the ideas of others in a respectful manner."
A formal employee value proposition articulates the mix of culture, offerings and opportunities—the entire experience—at a company that distinguishes it from competitors. It helps drive decisions at every level. Without a formal employee value proposition (EVP), "You may be wasting your energy on things that don't register with existing employees or with potential employees," Sejen says. "And employees may be wasting their energy on things that don't fit with the EVP. So, it's a big disconnect that can lead to high turnover and disengagement."
Only 27 percent of company executives said their employee value propositions are formally articulated, documented and communicated, while 73 percent of employers indicated their value propositions are informal, implicitly stated and have evolved over time, according to the 2009/2010 U.S. Strategic Rewards Report, originally published by Watson Wyatt Worldwide. Interestingly, employees' perceptions were just the opposite: 74 percent indicated that their companies have formal employee value propositions, and 26 percent said their companies' propositionsare informal. The survey polled executives at 175 companies as well as a sample of 1,300 full-time workers at organizations with more than 1,000 employees.
To employers who think they don't have a formal employee value proposition, Sejen says, "Your employees believe you do. Do you know what they think it is?"
Employee value propositions are not revolutionary; they represent evolutionary thinking among HR professionals and experts that began with total rewards, including compensation and benefits. But total rewards don't include everything employers do to attract and motivate workers, such as providing training or practicing corporate social responsibility.
"Total rewards evolved into EVPs and is sometimes confused with employment branding, which is the external manifestation of your EVP," Sejen explains. "You also need to communicate and reinforce the EVP internally. Employees need to understand what is expected of them and what they need to do to drive performance and customer satisfaction. In return, the employee needs to understand everything the company is doing to reward the employee."
Being transparent about expectations and intentional about the employee value proposition may translate into better financial performance. In a survey, Towers Watson researchers asked HR professionals in 316 U.S. companies to indicate on a five-point scale how they performed financially compared to others in their industries. The findings, published in Leading Through Uncertain Times: The 2011/2012 Talent Management and Rewards Study, revealed that respondents with programs that support the desired cultures, including employee value propositions, were more than twice as likely to report having higher financial performance.
Boyer sees a correlation between employee value propositions and companies that are recognized as great places to work. "Going through the process of defining it, communicating it, and making sure your programs and policies support it helps employees understand why they're working there."
Focusing on Strategy
Research from employee engagement surveys, the existing mission and values, and information gleaned from focus groups can help inform an employee value proposition. But EVPs should be based on the business strategy. The strongest ones "start with the business and defining who you are," says Jason Jeffay, Mercer's global leader of talent management in Atlanta. An employee value proposition needs "to be aligned with the business model, authentic so that business leaders believe in it and make decisions based on it, and aspirational so that people are proud to work there."
An employee value proposition shouldn't be created for segments of the employee population and shouldn't change from location to location, says Jeffay, adding that "You will focus on different aspects of it for each group. And part of the EVP may play a bigger role in one part of the world vs. another part, but the core of it should remain consistent."
At AMN Healthcare Services Inc. in San Diego, Karen von Boetticher, PHR, learning and talent development manager, served on a 12-person, cross-functional task force to create AMN's employee value proposition, which debuted in July 2010. She defines it as the "attributes that current and prospective employees perceive is the value they gain by working at the organization."
Von Boetticher says task force members looked at:
- Engagement surveys to determine what employees' identify as the value of working at AMN.
- Best-practices research from competitors and leaders in other industries.
- AMN's stated commitment to shareholders and customers.
"The pressure of the recession caused a distraction for our leadership team and our employees," she recalls. "We used the EVP to come out of the downturn even stronger."
Four attributes make up the employee value proposition that business leaders call the "AMN Difference":
- Core values.
- Leader and co-worker quality.
- Developmental and career opportunities.
- Collegial work environment.
Von Boetticher's talent acquisition team aligns the careers website with the employee value proposition, and leaders and recruiters discuss it with candidates. It gives existing employees language to use when talking about AMN job opportunities with friends.
HR professionals at Shenandoah University in Winchester, Va., formed a task force to discuss how to make the university an employer of choice. The work of the task force revealed that certain policies weren't aligned to the university's stated mission and values statements. Kelly Samson Rickert, SPHR, HR and benefits manager, says the university created a formal employee value proposition to align with the policies.
For example, a nondiscrimination policy states that "we don't discriminate based on sexual orientation, but our benefits plan was not available to domestic partners," Rickert explains. The panel recommended extending benefits to domestic partners, and the move was approved.
While only five of 500 employees use domestic partner benefits, Rickert says people like working for a university with an inclusive value.
Another example: A core value at the university is "development of an enduring passion for learning," but certain opportunities for development weren't being made available to all staff. Faculty members were able to take sabbaticals to pursue focused, intensive training, but support staff were not. To better align the core values with the employee value proposition, the university began allowing staff members with 10 years' tenure to take sabbaticals of 45 to 60 days to pursue professional development related to their jobs. For instance, one staff member is taking a sabbatical to interview alumni and capture stories about their university experiences to use in marketing materials.
Imagine the competitive environment in Silicon Valley where, despite an unemployment rate above 9 percent, top software engineers are still in high demand.
Now imagine you're competing with high-profile employers like Google, Facebook and Apple. Steve Cadigan, vice president of talent at LinkedIn in Mountain View, Calif., doesn't have to imagine this—he deals with it. The only way to compete is with a clearly defined employee value proposition.
"At LinkedIn," Cadigan explains, "our EVP is transformation on three dimensions: An employee has the opportunity to transform the company because LinkedIn is still a young company; an employee can transform the trajectory of his career; and an employee can transform the careers and lives of others who are members of LinkedIn.com."
LinkedIn's employee value proposition serves as an integral part of talent acquisition. In 2010-11, LinkedIn grew from 480 employees to more than 1,500. "We are competing with Google and Facebook for talent, so we have to know what's different about our company," Cadigan says. "We are earlier in our evolution and a lot smaller than those two companies, so employees have the opportunity here to make a fundamental, creative contribution to the overall trajectory of the organization."
Now, LinkedIn is taking its employee value proposition to campuses. Previously, the company needed experienced engineers but is now ready to hire up-and-coming talent. "We wouldn't be ready to do that if we hadn't clearly defined the EVP to answer the question about why new graduates should look at a career at LinkedIn," Cadigan says.
Between recruiting and onboarding, LinkedIn's HR professionals haven't had much time to create central HR programs. "Instead, we created a platform for employees to come up with what they need or want to be successful—a structure that works only if we are very clear about who we are and what our business strategy is," Cadigan says.
The structure of the company mimics the platform of the LinkedIn.com community, with employee groups similar to LinkedIn groups where employees can:
- Build networks—transforming their careers.
- Share ideas—transforming the company.
- Suggest ways to give back to the community for the monthly "InDay" service projects—transforming the lives of others.
Cadigan says he will need to shift his focus toward retention as large numbers of employeescome up on one- or two-year anniversaries. "They may be ready for new opportunities or promotions," he says. "We are moving people to different parts of the organization as well as other countries. We need to make sure they are still transforming their careers, the company and others' lives. We highlight those moves so that others see them and get excited about and inspired by them."
Consistently connecting the dots of the employee value proposition for workers becomes important for retention. But fewer than four in 10 executive respondents said their organizations do a good job of communicating the employment deal to employees, according to the Towers Watson study. Companies with formal value propositions are nearly four times as likely to communicate them effectively, researchers said.
Orlando Ashford is noticing that link. As chief human resources and communications officer at New York City-based Marsh and McLennan Cos., Mercer's parent, he is making his company's employee value proposition more formal. The message: "We're going to care about your health, about your career and about your ability to manage your personal finances in addition to the competitive salary and benefits, and you should care about the company's bottom line," he says.
"Compared to three years ago, more employees can articulate the value proposition, and three years from now more employees will be able to," he predicts. To get there, HR professionals take time during onboarding sessions to articulate this exchange between employee and employer. Employees get reminders about the EVP as well.
Companies with formal employee value propositions are twice as likely to align them with consumer branding, according to the Towers Watson study. Formal employee value propositions are more likely to become stable, unifying experiences within the company, the researchers concluded.
"Think about how to make the EVP real," Jeffay urges. "Where it tends to fall apart is in the execution. A lot of EVPs turn into brands and make for nice communication campaigns. But making it real is harder."
A clearly defined employee value proposition helps HR professionals focus on what matters to the organization and employees. It "ensures that the commitments made to investing in programs are appropriate. It helps guide daily behaviors," von Boetticher says. "We constantly ask ourselves when we make decisions or create policies if they align" to the employee value proposition.
Misalignment can be a danger, Jeffay warns. "Since a lot of value proposition work begins in recruiting, it tends to wax and wane according to labor market conditions. Or it mimics competitors'. "
Von Boetticher says threading AMN's employee value proposition language—in policies, performance management systems, engagement surveys and communications—is paying off. For the first time, AMN's 2011 engagement survey asked employees how well the company delivers on the promise of the "AMN Difference." Nearly 85 percent of the respondents had a favorable perception that AMN is effectively delivering on the promise in its employee value proposition. Seventy-nine percent of the organization's 1,880 employees participated in the survey.
Jeffay urges HR to measure the "proof points. ... If the value proposition is faster, moreexciting careers than your competitors, look at the number of people who apply for promotions and then the number of people promoted from within."
Jeffay says an employee value proposition shouldn't change drastically over the years or depend on the economy unless the business model changes dramatically. Tactics "may change, but the core of the organization shouldn't need to if it is aligned, authentic and aspirational," he says.
"The EVP work is what HR is all about, and everything else should be in support of that work," Ashford says. "If the idea is to create a highly engaged, highly motivated workforce that can deliver results while being clear on the value proposition, you can't get there without this work."
The author, a contributing editor and former managing editor of HR Magazine, is based in Alexandria, Va.