Perhaps the most striking insight garnered from Corporate Executive Board’s (CEB) recent research among 30,000 c-level business professionals across Europe, is the effect of the global recession upon the balance of factors impacting organisations’ ability to attract candidates and engage their employees.
The findings cast aside assumptions that professionals are glad just to have remained in employment, faced with the toughest economic environment in living memory. Contrarily, evidence is emerging that as economies emerge from recession a focus on ‘self’ is abundant, with alignment of projects to personal interests ranking now as the critical driver for employee engagement, having only just made the top ten factors in a parallel 2006 study by CEB.
This comes coupled with a fall in the perceived importance of other firm-wide attributes, such as employer recognition awards or the quality of the companies’ products and services as a major impact factor on employee engagement in many European countries.
Drivers of this trend are multiple. Recessions bring redundancies and hiring freezes, with those who remain in post invariably finding their roles remoulded to cover resultant knowledge and skill gaps.
An intensified focus upon securing roles that match personal interests is a natural consequence of this trend towards role consolidation as staff numbers decline, at a time when uncertainty and instability within organisations lead their staff talent to question not what they can do for the business, but what the business can do for them.
In brief, a year of downsizing and change has reconfirmed to employees that the ’employment contract‘, which promises long-term career and job security between employer and employee (was) and is dead[1].
My intention in this piece is to equip The People Bulletin readers to see this in the wider context of CEB’s research premise and methodology, introducing six critical mandates for delivering an enhanced Employment Value Proposition (EVP) that allows organisations to improve both attractiveness of external talent and engagement levels of current employees.
Step 1: Create an EVP that aims at both increasing attractiveness in the labour market AND engagement of current employees
The EVP model has not yet warranted entry to the Oxford English Dictionary, but for definition purposes, it can be described as ’the collective attributes perceived by professionals to be the value gained from employment within a business, which in turn directly impact that organisation’s ability to attract candidates and retain employees.’
Practically for HR managers, the CEB research study breaks down the EVP model into five key categories, namely rewards, opportunity, organisation, work and people, sub-dividing these in turn to encompass a total of 38 ‘attributes’ the labour market and employees perceive as indices of the value attached to being employed by an organisation. See figure 1.
Figure 1:
The attributes are wide ranging, including for example such areas as compensation, health benefits and holiday entitlement under the ‘reward’ banner, to camaraderie, manager quality and senior leadership reputation in respect of ‘people’.
Most important is that organisations should view their EVP as a strategy to both attract external talent and retain internal talent. Too often, organisations make the error of primarily viewing their EVP as an expression of the ‘employment brand’, as a strategy for building a great pipeline of external talent while ignoring how to deliver on the EVP promise to those they employ. The key to success, however, is to build an EVP which actively targets and manages both the attraction and retention of key talent.
The commercial benefits of effective EVP management by HR practitioners are multiple. An effective EVP allows companies to resonate with a wider section of the labour pool, and adds to the bottom line by strengthening the corporate hand when negotiating compensation deals and reducing fees paid to intermediaries during the course of the recruitment process.
Indeed, CEB research estimates that a strong EVP can enable organisations to increase their potency in terms of trawling the labour pool by 50%, providing a platform for building dialogue with passive candidates, while simultaneously halving the compensation premium required to make a hire. Employee commitment benefits are identifiable too, with the uplift in loyalty among existing employees being gauged at 37%, itself fortifying the business case in lowering the cost of managing exits and hiring replacements in an environment where many firms are now looking to grow headcount.
Step 2: Focus on EVP attributes that matter most to candidate attraction and employee engagement outcomes
Armed with this knowledge as a template for application in their individual businesses, HR managers need then to demonstrate their comprehensive understanding of their surrounding labour market. This involves asking some searching questions.
Besides determining key factors for employee attraction and commitment in the sector and geographies where the business operates, special focus should be given to the few attributes we have found in our research that drive both attraction and commitment of talent, accompanied by the ability to gauge the sometimes rapid changes in the make-up of this complex equation.
Again, the CEB report provides a useful platform for understanding. It determines that 72% of variations in EVP preferences are founded upon the country location of the professionals under the spotlight, compared with 13% and 7% based upon staff seniority and age respectively. Within these guidelines, while compensation remains the key driver of employee attraction (with 54% of respondents ranking this as a top five factor), development (45%) now follows closely behind.
In contrast, ‘fashionable’ corporate selling points including social and environmental responsibility score at a low level (i.e. 5% and under), with people drivers such as camaraderie also figuring at a low level (3%), reiterating the tendency towards ‘self’ in dictating candidate decisions about what organisations to join .
However, once a candidate joins the organisation and becomes an employee, compensation loses its potency when required to drive and lead commitment to an organisation. Merely a third of CEB research participants cited this as a lead ranking factor, with retirement, health and holiday entitlements appearing closer to compensation than in the case of attraction. It is here that the alignment of self-interest and workplace role really comes to the fore, being quoted by some 47% as a commitment driver to staying with an organisation.
When mapped together, findings for attraction and commitment reinforce this importance: People join organisations for pay and the opportunities but choose to stay and work hard for the organisations where the surrounding managers and work environment are great.
Step 3: Select EVP Attributes that differentiate your organisation from labour market competitors
Fathoming the basis of the EVP offer is somewhat akin to the childhood prospect of facing the confectionary pick and mix counter. Not everyone likes the same things at the same time, while too much focus on one EVP attribute could serve to decay the financial teeth of the organisation.
The solution lies in viewing HR in this context as an extension of an organisation’s marketing function. Knowing your customer and determining your points of product and service differentiation are integral to any successful marketing campaign and the same science applies in building EVP.
This is why the CEB research methodology encourages HR managers to combine data-based findings, focus groups and primary and secondary research to identify exactly what matters to the people they want and the people they already have as well as how competitive the organisation is on those critical attributes relative to competitors in the labor market.
Individual EVP attributes need to be ranked in terms being high, medium or low against such factors as their current strength and presence within the organisation, their commercial relevance, resources available to deliver them at an effective level and their worth in terms of differentiation in the competitor landscape.
The balance of values attached to each factor is for individuals to determine, but the output should be a mean average of high, medium or low importance of an attribute in the context of the overall EVP. Such analysis and attention to detail can only empower the HR function in its dealings with c-level decision makers in their organisations.
Step 4: Tailor the EVP for global relevance
With geography cited as the primary driver of EVP variations, simple selection of attributes for blanket application by businesses operating across multiple jurisdictions simply isn’t feasible. As such, the selection of attributes is only the start of the EVP development journey. Ostensibly, the challenge here is one of management, and the need to avoid creating costly bureaucratic infrastructures purely to serve the EVP offering in all its nuances across those markets in which the organisation operates.
The CEB research offers some solace by revealing that compensation, development opportunity and future career opportunity emerge consistently across Europe as the most compelling attributes for attraction and recruitment. Likewise, offering work-life balance should be part of a competitive EVP in especially the UK, Spain and the Netherlands.
Step 5: Leverage your current employees to communicate the EVP message to the labour market
As a HR manager, there’s little to be achieved by hiding your light under the proverbial bushel, and EVP is no exception. The need for the HR function to collaborate with their marketing and public relations counterparts is again underscored in ensuring the EVP experience matches the public persona of the organisation, at least in terms of not raising candidate expectations to unrealistic levels which cannot be matched once they join the organisation.
The challenge is intensified, however, by the CEB research finding that EVP messages emanating from current and past employees are those most likely to be trusted by job candidates, particularly in Western Europe, with formal organisational communications channels such as websites, job fairs and adverts likely to earn trust from less than 50% of the labour pool.
This situation is, remarkably, inverted in Eastern Europe, where formal communications, and in particular annual reports, are seen as trustworthy sources of guidance by professionals. Here, 100% of respondents cited annual reports as being credible, with just 65% pointing to former employees of the organisation as a preferred source.
For HR managers in the West, the impact may be to emphasise to those responsible for internal communications the importance of identifying ‘advocates’ of the business among past and present employees who may harbour sufficient influence to sway wider opinion. Looking East, it becomes apparent that this strategy is likely to be ineffective, with the same applying to the seeking of media endorsement of the business and its values. Rather, funneling resource into company events and literature holds the key, mindful of the risk inherent in not refreshing regularly the content of these channels.
Step 6: Ensure consistent delivery of promised EVP attributes across the employee life cycle
Our research-led journey terminates naturally with the challenge of delivering EVP effectively. Here, a dominant finding of the CEB study tells us that in many organisations familiarity breeds contempt, as employees’ perceptions of EVP delivery decrease with their tenure of employment.
A great marketing campaign will never make up for a poor product and the same is true for EVP. If as a business you don’t deliver on the promised experience you will inevitably find higher turnover rates and lower engagement and performance levels.
This is particularly the case in relation to attributes figuring under the ‘people’ category of the EVP model, although a rapid slump in perceptions of ‘opportunity’ suggests once again that organisations are all too often their own Achilles heel, purveying a vision of EVP that is rooted neither in reality or feasibility when it comes to implementation.
Once again, the key for HR managers is to build dialogue within their organisations and position themselves to head employee disenchantment off at the pass. The creation of feedback channels, through focus groups, satisfaction surveys or employee-led EVP schemes is therefore essential for success.
In the final analysis, however, communication is the crucial needlepoint. In an age of spin, EVP offerings need not only to be tailored to market needs, but presented in an honest, reasonable and substantive manner. Only by journeying down this route can HR managers successfully respond to the shift in the employment landscape identified by CEB created by the rise of the ‘me’ culture among professionals and accelerated by effects of the global downturn.
[1] See also Michael Wellin’s article ‘Inside their minds’ about the psychological contract in The People Bulletin, 18 November 2009
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