A recent Business Roundtable of CEOs revealed that shareholders are no longer the #1 concern of businesses. These 181 CEOs of major U.S. companies signed a statement redefining the "purpose of a corporation" as delivering value to their stakeholders – which includes employees.
"We commit to […] investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect."
The significance is clear: The priority of corporations is shifting from shareholders to stakeholders.
And companies are counting on HR to deliver (and articulate) these changes. But how, exactly, can HR make this happen?
Well, the first rule of marketing is to determine your value proposition: what you offer that makes a customer choose you over competitors. And companies are now applying this concept to their employees (and potential employees) with an Employee Value Proposition (EVP).
The EVP: A Value Proposition for Internal Clients
More companies are treating employees like internal clients and adopting an EVP to articulate the value they deliver to employees. As Gartner puts it, "The EVP portrays how the labor market and employees perceive the value employees gain by working in an organization, across five attributes:"
- Opportunity: Professional growth and development for the individual, as well as the company’s projected growth
- People: Quality of colleagues, managers, perception of upper management and a sense of camaraderie in the workplace
- Organization: Social responsibility, and quality of products or services
- Work: Alignment of job to personal interests and work-life integration
- Rewards: Components traditionally used to attract employees like benefits, salary and paid time off
EVPs go beyond compensation. While salary and benefits are important, they're the baseline for competitiveness in today's world. Research shows that for every 10% rise in pay, employees are only 1.5% more likely to remain with their employer.
The current talent landscape calls for employers to create more compelling EVPs for their internal clients – employees – who generate revenue, lower operating costs, and allow the organization to survive and grow.
And remember: Your organization has an EVP whether or not you are working to actively shape it.
So, HR leaders must be at the forefront of claiming, crafting, and strengthening their companies' EVP. EVPs are not only about what an employer offers to its workforce but about how these offerings make a company different from its competitors. Yet while many employers understand what is special and distinct about their organization, most fail to communicate it to candidates: Harvard Business Review reports that only 30% of medium and large business and 25% of small businesses articulate their differentiators to prospective employees.
With a scarce talent landscape and urgent need to foster a culture of adaptability to prepare for the future of work, companies not promoting their EVP are losing huge opportunities to attract top-tier talent. And according to McKinsey research, missing out on top performers has a gigantic impact: top-performers are up to eight times as productive as traditional employees, with the rate of increased productivity rising alongside a rise in complexity of job role.
Strengthen Your EVP
How can HR leaders seek organizational alignment to cultivate a winning EVP? One key piece of advice is, "Focus on the 5% that deliver 95% of the value." Because top performers disproportionately contribute to the success of your organization, work first to tailor EVPs for the top talent you want to attract and the mission-critical roles you have open.