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Source: Review of Research [2249-894X] yr:2014 | vol:3 | iss:6
A STUDY AND REVIEW OF EMPLOYEE VALUE PROPOSITION : A TOOL OF HUMAN RESOURCE
MANAGEMENT , Avinash Pawar and K. S. Charak
Vol. 3 | Issue. 6 | March. 2014
Review Of Research
KEY WORDS:
Employee value Proposition, Human Resource Planning, Compensation, training, Career
Planning, Human Resource Management, Employer Branding.
INTRODUCTION:
“Employee Value Proposition” will be a straightforward statement defining how the organization
will satisfy the employee's requirements. The manner and degree to which this Proposition is aligned with
Abstract:
The Employee Value Proposition represents the perceived overall deal between
employer and employee. The employer makes an offer to the employee (or the give) and
expects contributions (or the get) from the employee in return. The inducements and
contributions consist of mutual obligations and promises. Inducements typically
concern things such as career progression, organisational support, fair and transparent
performance management and more tangible things such as pay and holiday
entitlements. Contributions relate to things such as working hours, being an advocate of
the employer within and outside the organisation, bringing skills, enthusiasm and
entrepreneurship to productive work. Importantly, within the overall deal there are
nested deals operating at different levels of the organisation, such as the tailored,
workable arrangements forged between team leader and team members, these reflect
opportunities available for employees to shape their work experience. Top-performing
companies create a sustainable EVP and total rewards strategy based on the needs,
demographics and preferences of their workforce. Employee value Proposition refers to
the rewards and benefits that an employee receives in return of the performance that he
gives at the workplace in the organization. Manpower Planning: Manpower planning is
defined as putting the right number of people ,right kind of people at the right place ,right
time ,doing the right things for which they are suited for the achievement of
organizational goals.
EVP is at the core of all other organisational processes. The characteristics of
the EVP need to be reflected in the corporate and employer brands. The EVP, if
maintained well is the driver of engagement, it informs recruitment messages and
communications and it helps inform strategic HR priorities. It helps support and drive
business strategy forward. People are your most important assets. Treat them People are
your most important assets. Treat them like they make a difference and they'll make a
difference. This paper takes the Review of Concept of Employee Value Proposition and
its relationship with Human Resource Management
ISSN:-2249-894X
A STUDY AND REVIEW OF EMPLOYEE VALUE
PROPOSITION : A TOOL OF HUMAN RESOURCE
MANAGEMENT
Available online at www.ror.isrj.net
ORIGINAL ARTICLE
Avinash Pawar and K. S. Charak
Assistant Professor.
Director.
the purpose of the organization, its goals, values, the operating methodology, the management style, the
communication regime, and the opportunities for employee participation will determine long-term
outcomes. In other words, an organization's leadership and culture will become the pre-dominant factors in
predicting its viability.
Employee Value Proposition (EVP) is the commonly used jargon to describe the characteristics
and appeal of working for an organization. An EVP describes the mix of characteristics, benefits, and ways
of working in an organization. It is the deal struck between an organization and employee in return for their
contribution and performance. This “deal” characterizes an employer and differentiates it from its
competition. Most organizations encounter two main problems when it comes to their EVP: It is a known
fact now that there is more to employee satisfaction than just remuneration (salary and benefits). Employee
Value Proposition has been proven crucial to attracting, hiring and retaining the best talent in the industry.
They struggle to differentiate themselves from their competition. Differentiation is crucial if an
organization is to stand out from the “sea of sameness” that characterizes some sectors and make their
organization great. The brand might be appealing but it does not accurately reflect the reality. Reality lies in
Employee satisfaction and that comes from Employee value proposition.
Businesses today are making million-dollar decisions every day. Sadly, they are often based on
“gut feelings”. Alternatively, leading companies such as Dow Chemical, Comcast and Google have found
greater success by favouring workforce analytics over “gut instincts”. These businesses have learned to
take the guesswork out of business decisions by analyzing employee data and using this information to
understand which actions have the greatest impact on business performance. Workforce Analytics informs
workforce decisions by helping companies understand what matters to the business, how they're doing,
where the issues are and what to do about them. Answers to these questions provide organizations with the
ability to act with confidence when driving their strategic workforce initiatives. This is where the Employee
Value Proposition (EVP) comes in.
An effective EVP enables an organization to stand out as different but also it ensures that the
“Packaging” reflects the „contents. All too often people join organizations tempted by the “Branding” and
are disappointed when they experience the reality. The employer value proposition describes the
understanding of the brand from the employer's perspective. The statement formulates a shared basic
understanding as an employer and addresses topics such as the working environment, teamwork,
management style and development. It provides the basis for aligning communication and offerings in the
scope of employer branding.
In Indian organizations, where products are getting commoditized, Employee Value Proposition
(EVP) is the factor that can distinguish companies. Organizations are realizing that they should adopt
internal branding strategies to leverage upon the employees.
1.1] WHY IS AN EVP IMPORTANT?
An effective EVP can bring an organization significant benefit. According to the Corporate
Leadership Councils research a well thought through and executed EVP can:
Improve the commitment of new hires by up to 29%
Reduce new hire compensation premiums by up to 50%
Increase the likelihood of employees acting as advocates from an average of 24% to 47%
In addition an effective EVP allows organizations to source more deeply within the labor market, increasing
its access to passive candidates. This is important for organizations who want to secure the best talent in an
increasingly difficult talent market.
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A STUDY AND REVIEW OF EMPLOYEE VALUE PROPOSITION : A TOOL OF HUMAN RESOURCE MANAGEMENT
Review Of Research | Volume 3 | Issue 6 | March 2014
Demographic predictions show that there will be a stark contrast in population growth in certain
areas of the world. Many countries will show a decline in population making it harder to source talent,
whereas in countries such as India there will be large increases making it more difficult to attract the right
talent from a potentially large pool. This will cause challenges for organisations in the future and builds an
even stronger case for the importance of having an effective EVP.
1.2] BENEFITS OF EVP:
Helps you to attract and retain talent
Helps you to appeal to different markets and tough to hire talent groups
Helps you to priorities your HR agenda
Creates a strong people brand
Great Employee Commitment
Helps you to re-engage a disenchanted workforce
Reduce new hire premiums
Fig 1 : Benefits of EVP
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A STUDY AND REVIEW OF EMPLOYEE VALUE PROPOSITION : A TOOL OF HUMAN RESOURCE MANAGEMENT
To make a better EVP, it is required to provide good internal culture, employee engagement, a
better HR strategy which is favourable for employees. Employee and corporate Brand with better internal
culture and favourable HR strategy helps in making better EVP
Employee value proposition is also effected by recruitment. By selecting the right person at right
place at right time .i.e. manpower planning, employee contribution and performance is also better, if it insist
the employer to provide better EVP.
Why focus on the Employee Value Proposition?
For any organisation, the challenge is to find quality people – people with the skills, knowledge,
experience, competencies and values that provide a match for the roles within the organisation. The person
faces a different challenge: they look around, think about their personal circumstances, compare options,
and then choose to take up or stay in positions on the basis of the best value for them on offer. This, the
Employee Value Proposition (EVP) is the balance of reward and benefit, work policies and practices,
experienced by an employee in return for their work: it describes why the total work experience is better
than at any other organisation and accordingly it may be critical in attracting and retaining quality people
(Hill & Tande 2006).
Research undertaken by the CLC into the impact of EVP (The Employment Value Proposition – A
Key to Attraction and Commitment 2006) is summarised as follows :
Measurable performance may be increased by around 20% (Corporate Leadership Council 2004).
Across organisations the percentage of high engagement employees exerting high or maximal effort varied
from 3% to 25% (Corporate Leadership Council 2004), so shifting this percentage within an organisation
could significantly impact its productivity Retention can be dramatically improved—by up to 87%
(Corporate Leadership Council 2004). Typically only 13% of employees are disaffected, but they are four
times as likely to leave (Corporate Leadership Council 2004); reducing the proportion of disaffected
employees can therefore not only improve productivity but also have a significant impact on retention and
consequent recruitment costs. In addition, increasing satisfaction with the total compensation may increase
an employee's retention by 21% (Corporate Leadership Council 2004).
1.3] DEVELOPING EVP:
Developing an EVP capable of attracting talent in the highly competitive labour market involves
three steps:
1) Selecting the attributes for inclusion in the EVP
2) Building candidate awareness of the EVP
3) Shaping candidate perception
The first step, however, is the most vital. Selecting the right EVP attributes explain 77% of the
variation in EVP's attractiveness in the labour market, This helps in creating positive employer brand.
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Review Of Research | Volume 3 | Issue 6 | March 2014
Measure Organisations
without a clear
EVP
Organisations with
a clear EVP
Notes on the
impact of a clear
EVP
Employee
commitment at
commencement
9% 38% 4 times the
commitment level at
Commencement…
Employee
commitment after
one year
3% 31% commitment level is
maintained
significantly more
strongly
Salary premium
required to attract
21% 11% The ongoing cash
premium required is
halved
A STUDY AND REVIEW OF EMPLOYEE VALUE PROPOSITION : A TOOL OF HUMAN RESOURCE MANAGEMENT
Fig 2 : Stages in the process of EVP creation and developement.
When used and communicated effectively, an EVP becomes a powerful tool for management. As
depicted in the chart, high-performing organizations are more likely to have a formalized EVP, and as an
EVP helps identify, engage, and retain critical workforce segments, it has probably contributed to their
success.
When organizations effectively communicate their competitive total rewards programs through
an EVP, they can significantly impact employee satisfaction – increasing engagement and reducing
investment in bigger rewards. Furthermore, an EVP helps align the workforce with organizational
productivity goals and the company's brand promise. Employees are the face of a company. When they are
engaged and committed to the organization, they are more likely to deliver the brand promise – whether it is
customer service, innovation, or others. A company that remains true to its brand promise receives more
favourable consumer opinions and enjoys higher levels of credibility and profitability than those
organizations that waver from their promises.
The same holds true for a company's relocation package. Ensuring that relocation benefit
programs align with the brand promise and are competitive can be keys to recruiting top candidates.
Updated relocation policies that take into account the brand, employees' best interests, and the economy can
also help keep transferred employees engaged and productive throughout their relocations.
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A STUDY AND REVIEW OF EMPLOYEE VALUE PROPOSITION : A TOOL OF HUMAN RESOURCE MANAGEMENT
“70% of customer brand perception is determined by experiences with people.” Along with
engaging current employees, an EVP can be instrumental in setting the expectations of new hires and
transferees. When communicated during recruiting, interviews, and relocation candidate assessments, the
EVP may help individuals determine if the job opportunities and company match their needs and
personalities. In turn, this process can help save companies money and reduce inefficiencies by decreasing
the likelihood of wrong hiring or job transfer decisions. On the other hand, companies that communicate a
specific EVP during hiring and then fail to deliver can experience negative impacts – as this failure can
cause more than a 25-percent decline in commitment from new hires in the first year of employment
Traditional focus of an organisation's marketing efforts has been on its customers and clients, the concept of
EVP compels such efforts to be employee-centred. As such, an EVP must be “unique, relevant and
compelling' if it is to act as a key driver of talent attraction, engagement and retention. Some scholars
(Barrow and Mosley, 2005), have described EVP as the Employer Brand Proposition on which an
organisation's employer brand marketing and management activities are based. According to a recent
University of Canberra report (2009) on EVP, the greatest benefit of using EVP lies in its ability to help the
organisation in 'attracting, retaining and engaging quality people”. For organisations operating in a number
of countries the EVP will need to move beyond a one size fits all. A good EVP contains elements that appeal
to different groups of employees from different cultures, age groups and functions. The most successful
EVPs are derived from combining needs of key segments of the workforce to form a universal brand which
is then communicated through the best channel for each segment.
2] FORMALIZING AN EVP :
As an EVP affects both internal and external perceptions of a company, human resources and
marketing should collaborate to ensure the employee and customer experiences are integrated and aligned.
Likewise, human resources and its relocation partner must collaborate to clearly and succinctly explain
relocation benefits to ensure the best possible results for both the transferees and the corporation.
According to Stewart Black, a professor of organizational behaviour for INSEAD – a leading
graduate business school – companies should consider the following values when formalizing their EVPS
Organizations with Formalized EVP
Fig 3 : Organizations with formalized EVP
There's a world beyond pay cheque: It is not compulsory that employee feel satisfy with the pay cheques,
but there are many more benefits that are available in many organizations which support the employee to
feel committed to the organization and employee feel satisfied. Here comes the Role of EVP to make
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A STUDY AND REVIEW OF EMPLOYEE VALUE PROPOSITION : A TOOL OF HUMAN RESOURCE MANAGEMENT
employees satisfied beyond pay cheques for employee performance by providing extra benefits to the
employees. There are many examples like Ladies who are having small babies providing crèche for their
babies within the organization premises, car facilities, medical facility, training, retirement benefits etc.
Better EVP helps in making an employee as a part of their family (organization).
Better EVP starts with the Congenial Culture which starts with providing the better culture which
need to be friendly and suits with different needs that are required to create your organization. There are
learning organizations which help the employee to grow their team with training and development. Then if
training is provided one can expect a career growth in their career. with promotion. When all these needs are
fulfilled then an employee think about his security ,security for future that can be retirement benefits. When
all these benefits are fulfilled, then an employee feels satisfied and committed to the organization to create
better employer brand. These things are explained in a better way with the help of a diagram.
Fig 4 : Components of EVP
To be successful, the EVP must be credible which is why it must always be tested. The purpose of
testing is to ensure that all categories of employees and potential employees find it appealing. The testing
also tells you which elements of the EVP need to be turned up or turned down to appeal to different groups.
Testing should take place with internal employees and external potential employees.
It is a people cantered approach that is directed to existing employees and integrated manpower
planning strategies because it comes from existing employees themselves. It must be original, unique,
compelling and strategically directed to a talent pool.
The biggest challenge to talent management is ensuring a supply of talent sufficient to match the
estimated demand, especially when the demand is very hard to predict and when the supply of talent is not
constant. Remember - the talent management of 1970's that failed severely because of the demand supply
match. In such a scenario it is the best to build an employer brand of the organization which can be achieved
by developing an employee value proposition. The latter is also referred to as employer brand proposition.
“The employment brand and EVP should win the hearts and minds of the right candidates by
connecting on a rational and emotional level.” If employee feel satisfied, then it helps the HR Department to
support to have better manpower planning (selecting the right person at right place at right time). Better
EVP and manpower planning helps in creating positive Employer Brand which helps in attracting potential
employee that again helps the HR department to provide good and effective EVP. So it becomes a vicious
circle.
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Fig 5 : Linkages of EVP
To be managed effectively, the EVP must be employee-centred. That is, whilst it will be made up
of the unique mix of environment, policies, programs and processes (Hill & Tande 2006) in place in the
organisation (organisational policies and practices are the best predictor of degree of engagement
(Corporate Leadership Council 2004)). it must be relevant to the employee, rather than focused on the
employer. To be successful it must also be compelling for the employee as well as unique and relevant
(Minchington 2010). Finally, it must be built up from optional components, which can then be separated
and re-mixed to provide unique combinations to meet the unique needs and values of each employee. From
this perspective it becomes clear that there are two aspects to a person's relationship with the organisation.
The first is the view formed from outside the organisation; the second is that formed inside the
organisation—as an employee. From the viewpoint of the organisation these may broadly be divided into
attraction (recruitment) and retention. Typically, the relevance of the various components that could make
up the EVP differs across these two phases of the relationship: Towers (2008) found that whilst a
competitive salary is number one interest of job candidates, once appointed their focus shifts to other
aspects of the job and the relationship. Research undertaken by the CLC (Employment Value Proposition –
Corporate Leadership Council (CLC) Research Summary 2006) proposes five categories (Rewards,
Opportunities, Organisation, Work and People): however, the following discussion of components that
may make up the EVP is framed around these two key phases of the employer-employee relationship. The
employee's satisfaction in their working life will be directly related to their value experience. This
satisfaction is based on the relationship between the cost to the employee—the work to be performed---and
the quality experienced—the total balance of reward and benefit received as defined by the employee. It is
this balance between the cost and quality that will lead to competitive advantage for the employer in
attraction and retention of quality people.
CONCLUSION:
Today's environment has created new challenges for attracting and retaining employees. Now
more than ever, people have access to information and resources that can help them find new jobs. After
facing cost-cutting measures and layoffs, employees may start looking to leave their current companies,
especially if a new opportunity offered the chance to have greater job stability, higher pay wages, and a
better work-life balance. To keep the best and the brightest workforce, companies will need to have an
attractive Employee Value Proposition for employees. The concept of the EVP has been around for
decades, many organisations have yet to realise the importance of having a strong EVP. This can be a costly
mistake, especially with the continuing strong demand for talent across many industries and professions.
By providing better and strong EVP, it become easier to attract and appoint the right person at right place at
right time, means to say a better manpower planning.
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BIBLIOGRAPHY:
1. Deloitte. “Employee Value Propositions: Maximizing performance through EVP, not IOU.” 2010.
2. Towers Watson. “Creating a sustainable Rewards and Talent Management Model.” 2010 Global Talent
Management and Rewards Study.
3. Stewart Black. “The employee value proposition: How to be an employer of choice.”INSEAD,
December 2009.
4. Towers Watson. “Creating a sustainable Rewards and Talent Management Model.” 2010 Global Talent
Management and Rewards Study. Deloitte. “Employee Value Propositions:Maximizing performance
through EVP, not IOU.” 2010.
5. Kathy Kibbe, Laura Sejen, Kathryn Yates. “Why an Employee Value Proposition Matters: Creating
Alignment, Engagement and Stronger Business Results.” Towers Watson, October 13, 2010
6. Corporate Leadership Council, “EVP Survey: Corporate Leadership Research, 2006” White Paper: EVP
and its Benefits: Graebal Peace OF mind: January 201
7. Hiltrop, J-M., 2006. A diagnostic framework for building HR capability in organizations. Strategic
Change 15(7/8), 341-356.
8. Employment Value Proposition – Corporate Leadership Council (CLC) Research Summary 2006
9. EVP and its Benefits: Graebal Peace OF mind: January 2011
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