Integrate total rewards and your EVP to attract and retain the best talent.
Probably the simplest description of the employee value proposition (EVP) can be summed up in the question, “What’s in it for me?” Minchington (2010) defines an EVP more broadly as a set of associations and offerings provided by an organisation in return for the skills, capabilities and experiences an employee brings to the organisation. According to the Corporate Leadership Council (2007), the EVP is the total employment experience and therefore the differentiated total compelling employment offer.
Albeit that many organisations are not currently focused on the attraction and retention of key talent due to the economic meltdown, it remains important for organisations to have a unique, relevant and compelling EVP for it to act as a key driver of talent attraction, engagement and retention in the long term. The EVP should identify the unique people policies, processes and programmes that demonstrate the organisation’s commitment to, for example, employee growth, management development, ongoing employee recognition and community service. The EVP contains the reasons employees will choose to commit themselves to a specific organisation (Tandehill, 2006).
The EVP is an employee-centred approach that is aligned to integrated talent management strategies. An organisation’s EVP is typically informed by existing employees as well as prospective employees and therefore an organisation needs to understand what talent it needs to attract and retain currently, as well as in the future and how it will differentiate its offering in the labour markets. The challenge for organisations therefore is to:
– Clearly articulate the EVP, and package or brand it (also referred to as employer branding);
– Link the proposition to business strategy, talent needs and business results; and
– Integrate the different components of the EVP with financial and non-financial reward elements.
EVP and total rewards
The term EVP is often incorrectly used, in an interchangeable manner with the concept of total rewards. Confusion is then created in terms of what EVP stands for versus what total rewards refers to. Although rewards are critical to an organisation’s EVP, it is only a subset of the EVP. Authors have different opinions of what components should be included in the ambit of an organisation’s EVP. For example, Lamoureux (2009) states that the key components of the EVP include:
– Remuneration – salary, incentives, cash recognition, pay process;
– Benefits – healthcare, retirement, insurances, recognition programmes;
– Affiliation – work environment, trust, transparency, organisational commitment;
– Career – advancement opportunities, personal growth and development, training, job security; and
– Work Content – challenge, autonomy, meaningfulness, variety.
Towers Perrin (2007) states the EVP complements total rewards by adding components such as market benchmarking, leadership research and organisational performance. Black (2008) identifies four components that form the foundation of an organisation’s EVP:
– Strong leadership;
– Organisational reputation, which includes reputation, culture, contribution to the community and the world, stability and core values;
– Interesting and compelling job and career opportunities; and
– Tangible and intangible rewards.
The following diagram explains the concept of an Employee Value Proposition:
Rewards are therefore clearly a component that contributes to the overall EVP, but the EVP also includes the intangible experience and reputation of the organisation as well as inter alia culture, organisational brand and success, transformation initiatives, environmental concern and job security (Armstrong & Brown, 2006).
Examples of organisations’ Employee Value Propositions
Organisations clearly differentiate themselves in terms of their EVPs. Here are some examples of how organisations define their EVP:
– Working at Starbucks is a lot like working with your friends. We understand, respect, appreciate and include different people. And we believe in keeping each other informed, so our senior leaders regularly hold Open Forum events to answer your questions. Starbucks refers to their EVP as “Your Special Blend” which includes a wide range of perquisites if one works for the organisation, that is:
- Competitive pay;
- Insurance: medical, prescription drug, dental, vision, life, disability;
- Paid time off;
- Retirement savings plan;
- Equity in the form of Starbucks stock and discounted stock purchase plan;
- Adoption assistance;
- Domestic partner benefits;
- Emergency financial aid;
- Referral and support resources for child and elder care; and
- A free pound of coffee each week.
– At Google, the EVP includes a culture that drives a fun place to work, subsidised broadband for all employees, pool tables in the tea room, on-site dental care, free T-shirts twice a week, free meals and the opportunity to bring your dog to work.
- Performance is recognised and rewarded;
- An organisation that truly cares;
- A place where you can thrive;
- We have a community of leaders with a clear vision;
- A values-based organisation with a high performance culture;
- An organisation that is proudly South African;
- People that are bright and amazing to work with;
- A role with a sense of purpose and true value add; and
- People’s individual needs are respected.
– Allstate includes in their EVP three components:
- A company that is innovative, successful and community-minded;
- Leaders who inspire, build trust and empower employees to achieve optimal performance; and
- An environment where employees feel valued and rewarded.
– The Sasol EVP consists of the following five themes:
- Flexible work practices;
- Reward and benefits;
- Learning and development and career opportunities;
- Organisational reputation and leadership; and
- Relationship with my line manager.
-The Sodexho EVP themes are summarised as follows:
- We care about our employees in the same way that we care about our clients and we strive to provide each and every employee with a wide range of professional and personal opportunities to improve the quality of their daily life;
- Our employees are able to develop their careers both locally and globally across all of our service areas. They have the flexibility to align the pace of their career with their various life stages; and
- By living the Sodexho values and ethical principles, and actively fostering diversity and inclusion, our people make Sodexho a company of the future.
The EVP is the unique and proprietary way in which organisations attract, retain and motivate employees. Increasingly more organisations are citing “culture” as a challenge to attract and retain talent and therefore forward-thinking organisations are revisiting their employee value propositions to ensure that the components that make up their EVPs remain relevant and in step with what employees require when they search for an organisation to work for. Organisations have also started to differentiate their EVPs on the basis of the different needs that employees have in the generational segments.
For example, career opportunities are much more important for younger employees than older employees, and therefore a stronger emphasis is placed on career opportunities when organisations recruit for younger employees. The CLC (2007) has also found that engineering and research employees place a premium on innovative work, IT employees place a premium on organisational technology and marketing employees value product brand awareness – these areas of interests can be very effectively integrated into the organisation EVP, with minor adjustments for different areas of the workforce.
The integration of total rewards and the EVP is the key to obtaining optimal effectiveness of both systems. By using an EVP effectively, organisations distinguish themselves in the marketplace to both attract and retain critically skilled employees. In order to do this, organisations should communicate to both potential and current employees a compelling and unique EVP, of which total rewards is a critical part.
Dr Ronél Nienaber is Vice President: Global Rewards and Benefits at Sasol Ltd, www.sasol.com. She is an Independent Commission for Remuneration of Public Office Bearers in the Office of the Presidency and a South African Reward Association (SARA) Executive Committee member.
Dr Mark Bussin is the Executive Chairperson at 21st Century Pay Solutions Group, www.21century.co.za, a Professor at University of Johannesburg, Professor Extraordinaire at North West University, Chairperson and member of various boards and remuneration committees, immediate past President and EXCO member of SARA, and a former Commissioner in the Office of the Presidency.
This article appeared in the November 2015 issue of HR Future magazine.