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Worried About Employee Engagement? Then Re-think Your Employee Value Proposition

Image of employees with low engagement / morale and calendar showing monday

Many business leaders are wary as they enter 2023 trying to navigate an uncertain economic and competitive landscape.  Rumors of an impending recession are rampant as the Federal Reserve Bank vows to continue its campaign of raising interest rates to combat inflation, and a number of firms – including many prominent tech firms – have announced or already implemented layoffs.  Yet at the same time, the labor market remains strong, as reflected by the latest JOLTS report from the Bureau of Labor Statistics – with 223,000 new jobs added in December, the unemployment rate dropping to 3.5%, and 10.5 million job openings in the US – but companies are still finding it difficult to recruit and retain talent.

To meet their talent challenges, many organizations follow a basic strategy: Ask people what they want and try to give it to them.  This straightforward approach is at the core of many employee engagement and retention initiatives.  Tempting as this may be, doing so can be a trap, as it tends to focus discussions and actions on the material aspects of jobs that are uppermost in employees’ minds at that moment.  In the past, a top issue was often pay, but the more recent trend has been flexibility, notably in remote or hybrid work.  And while material offerings are the easiest levers to pull and are immediately appreciated, they are also easier for competitors to imitate, and their impact on employee retention is the least enduring – in fact, an over-reliance on material offerings can result in a race to the bottom, as companies strive to outbid one another for talent.

So, what to do?  A more impactful approach is to design and implement a framework – commonly referred to as the Employee Value Proposition (EVP) – that shifts the focus of leaders and employees (and job candidates) from what they want at the moment to what they need to build a thriving future for themselves and the organization.  Sound too complicated?  It’s really not – it’s simply refining the “ask people what they want” strategy by incorporating four interrelated factors:

  1. Material Offerings, which include salary & benefits, physical office space, work location, schedule flexibility, computer equipment, etc.
  2. Opportunities to Develop and Grow, which comprise all the ways a company helps employees acquire new skills and become more valuable in the labor market. Common examples include training activities, job rotations, and career pathways.
  3. Connection and Community represent the benefits that come from being part of a larger group. Examples include being appreciated and valued for who you are, social relationships, and mutual accountability, all of which serve as the foundation for an energizing culture.
  4. Meaning and Purpose which are the organization’s aspirational reasons for existing and answer the core question of why employees do the work they do.

 

It’s important to note that these factors vary with respect to how – and when – an employee experiences them.  HR leaders will want to think about short- vs. longer-term impact, as well as individual vs. collective impact.  For example, Material Offerings and Connection & Community are typically experienced in the short-term, while Growth & Development and Meaning & Purpose are longer-term plays.  Paying a bonus will have a nice immediate, positive impact but the effect wears off quickly.  However, coupling a bonus payment (immediate impact) with investments in an employee’s career growth (longer-term impact) creates both near-term satisfaction and longer-term “stickiness.”  Similarly, Material Offerings and Growth & Development are experienced by an employee individually, while Connection & Community and Meaning & Purpose are experienced on a collective level.

At many companies, different organizational areas – HR leaders, Operational leaders, C-Suite leaders – are involved in how the four factors are managed, and the result is too often a lack of integration or synergy between the factors.   HR typically handles salary and benefits, while Operational leaders handle scheduling and work flexibility, and senior leaders focus on culture and purpose.  This approach ignores how changes in one factor can affect others.  An enduring Employee Value Proposition framework requires treating the four factors as interdependent parts of an integrated system.  A systematic approach to re-thinking your company’s EVP entails several steps:

  • Assess what your company has and what your employees need (i.e., “ask people what they want”). Collect information on what your organization is currently providing with respect to each of the four factors, how employees experience them, and what employees want.  This information is often readily available from employee engagement survey data; if your company hasn’t surveyed employees, consider doing so.
  • Identify “priority” actions for each factor. An analysis of the employee engagement data will likely reveal key gaps in each of the four factors, areas in which your organization is not offering the right programs for employees, or perhaps you will see evidence of how activities in one factor are actually undermining programs in another area.   With this data, identify the key priorities highlighting which programs you will start, stop, or change.
  • Change the conversation – A crucial element is to ensure HR and Operational leaders are talking about the EVP in an integrated way. As new initiatives are started or changes are made to existing programs, all leaders should be prepared to explain the rationale (short-term vs. longer-term impact, and individual vs. collective dynamic).  This is particularly important in recruiting and onboarding activities, performance management, and decisions regarding employee development opportunities.
  • Finally, remember that employees’ needs are dynamic and should be reassessed on a regular basis. Ongoing assessment is vital to evaluating how relationships among the four factors may need to shift in response to changes in the organization or external environment.

 

Approaching employee attraction, retention, and engagement as an integrated system helps avoid a race to the bottom and allows your company to move from reacting to the demands of the moment – whether for signing bonuses, more time off, or remote work – to creating an environment that enables people to reach their full potential.  And who doesn’t want to work in a company that helps them reach their full potential?  A true win-win.

 

Rob Croner
Senior Consulting Advisor
CCI Consulting