Putting Value Into the 'Employee Value Proposition'
Workforce: What exactly is an employee value proposition?
Laura Sejen: For us, it's the give and the get between the company and the worker. It's the broadest possible definition of that relationship—or the deal— between the employer and the employee, encompassing every aspect of the employee experience. It's not just about rewards programs but it extends to things like the mission, purpose and values of the company and the way they define jobs and the culture of the organization.
Workforce: When did the employment deal concept begin to gain traction?
Sejen: People like me have been talking about the deal for years. But it started to resonate in a substantive way with companies only in the past four or five years. Organizations like Towers Watson have been able to do research showing what the characteristics of an effective employee value proposition are and have shown that for companies who have more characteristics in place, there is a correlation or a greater likelihood of their workforce being highly engaged. There's also a correlation to better financial results. As a result, we've been able to make an effective business case.
Another reason it has been resonating more is that in developed economies that took a big hit in the financial crisis and recession, there was a lot of pressure on the traditional financial forms of reward, and I think it caused employers and employees to think more broadly about, 'What's it mean for someone to work here?' and 'What are the compelling reasons for someone to work for an organization beyond pay and benefits?' That naturally brings you to some of the talent management aspects, like career development opportunities.
Workforce: What are the top features in a high-quality employee value proposition?
Sejen: First, that it's formal. When we ask the question, 'Does your organization have a formal employee value proposition?' the majority of employees say 'Yes' and a minority of employers say 'Yes.' So companies, you have an employee value proposition whether you think you have one or not. You might as well do the work of thinking through what you want to be as an employer and debate it internally. No. 2 is make sure you effectively communicate it to the workforce. No. 3, make sure it aligns with what your organization stands for in the marketplace.
Workforce: What more can you say about your research linking effective employee value propositions to better financial performance?
Sejen: In our most recent talent management and rewards study, we looked at 10 characteristics of an effective employee value proposition. What we were able to find is that the companies that do more of those 10 things ... are in fact more likely to achieve better financial outcomes. They're less likely to say they're having trouble attracting critical-skill employees and less likely to say they're having challenges retaining critical-skill employees. So we are finding significant evidence and correlations.
Meg McSherry Breslin is a writer based in the Chicago area. Comment below or email email@example.com.