Innovative actions can win the talent war.
Compensation is no longer enough to attract and retain key talent. Today’s diverse workforce requires a compelling employee value proposition (EVP) – in other words, “total rewards plus”.
EVP is the total value an employee receives from the employer, encompassing compensation, benefits, career management, workplace/lifestyle and employee pride. Successful and profitable businesses differentiate their products and services to attract targeted segments of the population and retain them as long-term customers – thereby ensuring a significant market share.
In a similar fashion, successful employers view their employees as customers, striving to attract qualified talent and retain that talent through offerings (a unique EVP) that distinguish the company and its values from others. Well-designed EVP can make the right individuals want to join an organisation, stay on, and deliver their best performance. When it reflects and reinforces the company’s external brand and values, EVP gives employees a sense of ownership and pride, distinguishing the organisation from its competitors. It also provides a common language and culture to guide all initiatives, communications and touch points for potential candidates, new recruits, and employees. Management typically considers EVP a success if it results in improved talent outcomes, better business performance and engaged employees. But it must present the company as an employer of choice by being unique, compelling, and credible.
EVP’s evolution: the x factor
In the past, salary and benefits played the key roles in motivating employees. As the field of human resources developed, most forward-thinking employers changed the traditional approach to total rewards so that it involved four factors:
1. Compensation represents the employee’s “value” today;
2. The benefit package is the employee’s “protection”;
3. Work and lifestyle refers to quality of life; and
4. Future value involves the individual’s development and career.
But EVP has taken the concept of total rewards further. A fifth (X) factor – an emotional connection – complements the contractual deal between employees and employer. In essence, the greater the emotional connection, the less dependence there is on contractual components such as salary.
Beyond basic EVP: innovations from the market
With the emotional connection taking a more central role in the workplace, companies are looking for ways to enrich their employees’ experience by re-evaluating EVP components. The external labour market provides insights into traditional packages, along with the new, creative programmes offered by progressive companies to engage their workforce.
Innovative programmes can mean many things – for example, imaginative ways to make the workplace more attractive or low-cost benefits that offer high value to the employee. Some companies segment their workforce demographically and offer targeted programmes to focus on, say, younger employees in an early-career phase. Innovations can also emerge from certain industrial sectors or world regions where employers struggle with talent scarcity and heavy competition.
Base salary, as the cornerstone of the reward package, should be internally equitable and externally competitive. Employees view base pay as the most important element of “the deal” between themselves and their employers, so that the way in which pay is set and progressed can have a huge effect on how an employee engages with work. Innovation in compensation typically occurs in discretionary pay elements, such as bonuses, special allowances or retention incentives. Most compensation plan designs have in-built linkages to performance and talent management programmes and systems.
Salary: Traditional offerings
– Base salary;
– Annual wage supplement;
Salary: Innovative offerings
– True broad banding that reduces the number of salary grades;
– Choose your own pay mix of base and variable pay for executives.
Allowances: Traditional offerings
– Car, transportation, commuting;
– Shift, night, weekend, standby, call-back.;
– Site, hazard, hardship;
– Clothing, laundry, dry-cleaning;
– Position, job, skill;
– Long service, retirement;
– Education, child education.
Allowances: Innovative offerings
– Holiday bonus for top performers;
– Heating allowance.
Incentives: Traditional offerings
– Performance bonus, variable pay, sales incentive, commission;
– Signing, retention, long-term bonus;
– Spot award;
– Professional development;
– Employee referral;
– Attendance, punctuality, employee of month/year;
– Profit sharing, productivity gain sharing, employee share/stock purchase.
Incentives: Innovative offerings
– Cash co-worker award given by colleagues;
– Exceptional reward;
– Pay-to-quit programme;
– Vested retention bonus.
Employee benefits are a significant company investment, though often undervalued by the workforce. Although employers need to ensure market competitiveness, they must communicate and differentiate their offerings to attract and retain critical talent.
An additional advantage is that benefits can incentivise certain behaviours that drive desired outcomes – for example, wellness programmes can have a positive impact on company culture, wellness and medical claims. Creative and engaging solutions, based on employee demographics and preferences, can also help boost productivity.
Benefits: Traditional offerings
– Medical, health insurance;
– Flexible benefits spending account;
– Free medical centre;
– Retirement, statutory pension;
– Insurance for life, auto, home, unemployment, travel, pet;
– Company car benefit, free or discounted car.
Benefits: Innovative offerings
– Annuity bidding service;
– Benefit market place;
– Cashless medical care that provides 100% premium and claim coverage;
– Death in service benefit;
– Holistic integration of benefits;
– New parent benefit;
– Profit-sharing based flexible spending account that allocates flex points based on company profits.
An authentic, inspiring employee experience is more than just a message or slogan. Progressive employers reinforce EVP throughout the employment lifecycle as an embedded part of their leadership, culture and human resource programmes. Organisations that can successfully link long-term career aspirations to available career paths are more effective in driving long-term engagement and retention. The new thinking on career framework is that there is no “one” path, as it involves performance, competence and opportunity, with choice a key component. Comprehending the various paths an employer can offer is crucial in delivering choice, allowing employees to decide on the next step to achieve their career aspiration. An employee-centric career framework reflects the way people talk about their careers: “what I want to do and what I’ve done.” The company expresses career steps as experiences, rather than competencies. Career progression builds on previous experience and gaining new expertise rather than directly linking to hierarchy or role mobility.
Career Management: Traditional offerings
– On-the-job training, job shadowing, on-boarding;
– Special assignment: stretch, industry secondment, rotation, apprentice, intern, ambassador;
– Graduate programme, education funding, university partnership, corporate university;
– Senior management interaction, coaching, mentoring;
– Performance development, promotion, advancement, people development as a core skill, role design, career counselling, 1:1 meetings;
– Classroom, online, virtual learning, peer training;
– Technical, functional, leadership career path;
– Career outplacement, development fairs, journeys, marketplace;
– Professional development, organisation membership, conferences, journals.
Career Management: Innovative offerings
– Buddying/peer coaching;
– Career explorer, an online portal or app that simulates potential career moves and what it might take to get there;
– Experiential profiles for destination jobs that replaces traditional competency frameworks with profiles that describe a career journey;
– On-and-off ramping programmes to maintain a connection with employees who take time off;
– Pair programming so engineers, for example, can work together on a situation with a single screen.
This is a series. References for all the parts of the series will be featured after the final part.
Anne-Magriet Schoeman is the Talent/Country Leader at Mercer Consulting (South Africa) Proprietary Limited, www.mercer.com.
This article appeared in the July 2015 issue of HR Future magazine.
Click here for part 2.