What is Employee Value Proposition?

When employers are advised to become proactive in developing positive employee relations, the Employee Value Proposition (EVP) comes into play as an essential principle. A strong EVP requires you to take a proactive approach to defining your organization's unique offerings that contribute to employee satisfaction, engagement, and belonging. Once defined, you communicate the advantage of working for your organization and how the company's values and vision drive success. You are proactively creating a shared purpose, demonstrating appreciation for employees, and creating a positive organizational culture simultaneously.

The Society for Human Resources Management (SHRM) defines the Employee Value Proposition (EVP) in the following manner.

An employee value proposition (EVP) is part of an employer brand strategy that represents everything of value that the employer has to offer its employees. Items such as pay, benefits, and career development are common, but employers also highlight offerings that are currently in demand—like technology, remote work, and flexible scheduling.

Notice that the EVP does not only concern financial matters like compensation and benefits. It also includes what you offer employees that enables them to perform their best work, feel a sense of belonging and inclusiveness, and enjoy work-life balance.

The Employee Value Proposition is a Psychological Contract

At its heart, the Employee Value Proposition is a proposition. The proposition is that the employer will offer various benefits and advantages to people who work for the organization in exchange for employees meeting performance expectations. 

The EVP should be treated like a psychological contract because both sides are expected to fulfill what is promised. The psychological contract refers to the unwritten set of employer and employee expectations and beliefs. The Oxford Review Encyclopaedia of Terms defines it as the "unspoken set of expectations and assumptions that two parties (employees and the organisation, its leaders and managers) have of each other about things like how they will behave and act." The expectations for employees concern how the organization will treat them; for the employer, it's how the employees will act within the organization. 

Breaching the Psychological Contract

The issues surrounding post-pandemic remote work demonstrate the complexity of the psychological contract. Like any contract, the psychological contract can be breached, and breaches often occur during periods of organizational change. Post-Covid, when remote workers were told they had to return to working onsite five days a week, many felt a psychological contract was breached. Employees had just spent two years successfully working at home or in other remote places, and their employers praised them. A psychological contract was formed based on mutual trust and work productivity. Surveys are emerging that find employees who worked at home were more productive than those who worked solely onsite. Ergotron's survey found that 56 percent of employees reported mental health improvements due to remote work.

Stanford Professor Nicholas Bloom partnered with academics from MIT, ITAM, and the University of Chicago to survey remote employees. The academics found remote workers reported being nine percent more efficient working at home. Though self-reported, objective data can confirm remote workers are more productive. Examples given include calls per minute for call center workers and the number of coding changes engineers submit. The study found that approximately a third of office workers have returned to the office five days a week and are now reporting their worst employee experience. 

When employees were sent home to work during the pandemic, it was a necessity. As the pandemic progressed and remote work quality and productivity didn't slip and often improved, a psychological contract was created when the employer fully supported and approved the remote work. When employees were called back to onsite, they felt the trust in the employee-employer relationship was breached. So many remote workers have completely adjusted their work-life balance to accommodate their employer and maintain productivity, fulfilling their side of the EVP. They felt the employer had violated its touted values. Some companies relented and established a new policy that allows employees to work two days remotely and three days onsite or some such arrangement. 

When the employees were suddenly told to work remotely during the pandemic, it was disruptive and emotionally draining. Now, working remotely has become an essential part of the employee experience for so many.

EVP

Balancing the Give and Take of the EVP

McKinsey & Co. conducted the American Opportunity Survey, which queried 25,000 Americans. The survey found:

  • 58 percent have the opportunity to work from home at least one day a week
  • When given the option, 87 percent of employees would take it.
  • Younger workers were more likely than older workers to have remote work opportunities.
  • Tech workers demand remote work availability.
  • A flexible working arrangement is the third top motivator for job hunters.
  • People working flexible schedules still have challenges concerning issues like mental or physical health or managing children at home.

The Employee Value Proposition is a trade-off or a give-and-take. Employers who cannot meet employees' desires, like working at home or flexible work schedules, will need to find other ways to deliver value to employees to compete for talent and retain employees. If you can only partially meet employee needs, you need to find a way to fill the gap.

The Employee Value Proposition is a mix of benefits you offer employees, and the set of benefits offered is not fixed. They need frequent re-assessment and rebalancing to keep the employer brand relevant in a continuously changing business environment. For example, Apple had to pause a plan to return remote employees from two to three days a week to the office at the California headquarters. Employees pushed back, and Apple had to compromise. The new plan requires employees to work two days onsite on Tuesday and Thursday and allows teams to pick the third day. 

what is your employee value proposition

Employer Branding in the Context of Recruitment and Retention

During this period of labor shortages and social media, the employer brand takes on new importance as a differentiator in attracting and retaining employees. An employer's reputation matters to job searchers and employees, and messaging travels fast via social media. Bryan Adams, the CEO and founder of Ph.Creative, a global branding company, describes the three Cs of employer reputation from the job hunter's perspective.

What you do internally for your employees determines how people outside the organization view your organization's reputation and job applicant perspectives on the kind of employee experience they can expect.   

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The Adaptable Employee Value Proposition

The Employee Value Proposition has some elements that will not change. For example, work engagement through shared purpose and a positive work culture offer job candidates and employees value. However, the EVP must also adapt to change. Some of the greatest damage to employer brand and employee relations is attributable to outdated EVP elements. A good example is employee compensation. Many union organizing campaigns and employee protests and strikes are due to employers not maintaining competitive and fair wages, refusing to consider flexible schedules, or not giving employees an authentic employee voice that enables two-way communication between employees and management. 

The EVP combines emotional, psychological, and physical elements that blend rewards and benefits. They include:

  • Work-life balance
  • Compensation
  • Stable employment
  • Perks like student loan payment assistance
  • Health insurance
  • Retirement plans
  • Paid family leave
  • Paid vacation and sick leave
  • Remote work
  • Flexible schedules
  • Fitness club memberships or discounts
  • Advanced learning opportunities
  • Diverse workforce
  • Positive employee relations
  • Recognition and reward system
  • Employee training, including reskilling and upskilling
  • Social responsibility
  • Autonomy
  • Work location
  • Career growth 

Gartner articulated a five-pillar Employee Value Proposition for the post-pandemic workforce. The Gartner EVP is human-centric, recognizing the changed relationship between people and work. Employees want to be recognized as people with feelings, so Gartner recognized that the traditional EVP needed updating after the pandemic. The traditional EVP was based on three principles "defined around employees, designed to provide an exceptional employee experience and focused on delivering features that match employee needs." The proof the EVP needed revision was the fact that employee engagement is not significantly improving, employers are having difficulty attracting the right talent, employee turnover is high, and 65 percent of job candidates ended a hiring process due to an unattractive EVP. 

Gartner's human-centered EVP consists of the following:

  1. Deeper connections – "I feel understood…"
  2. Shared purpose – "I feel invested…"
  3. Holistic well-being – "I feel cared for…"
  4. Personal growth – "I feel valued…"
  5. Radical flexibility – "I feel autonomous…"

The five pillars are still employee-focused and contribute to the employee experience. As revised, though, each of these pillars reflects an empowered labor force with new expectations concerning the purpose of employment. Worker needs include leaders with emotional intelligence, a shared purpose, a belief that employers care about their work and personal lives, recognition, employee voice, and autonomy in how they get work done. These are identical to the needs that so many employees feel are unmet when they decide to organize.

employee value proposition

Developing the Employee Value Proposition

In many companies, management has an Employee value Proposition but has yet to explicitly develop a statement to broadcast to the labor market and employees. How do you create a quality EVP that reflects the value you offer employees and what your company wants in return? How do you differentiate your company from others companies?

  1. Assess what you currently offer employees – monetarily and non-monetarily (can make a checklist!)
  2. Define the overall employee experience in the workplace
  3. Identify the workplace culture and company values.
  4. Conduct employee engagement surveys and ask them what motivates them, if the company meets needs, where there is room for improvement, and other questions that dive into the employee experience (can use focus groups)
  5. Write a clear and motivating EVP statement that reflects the information collected and the organization's values; it is the intersection of what you want and what employees want.
  6. Regularly assess the impact of the EVP and its elements through analytics like higher retention rates and improved recruitment results.

The Employee Value Proposition is communicated externally and internally. Utilize all your communication channels, including digital communications, marketing campaigns, job postings, onboarding programs, an employee-focused website, employee mobile apps, and meetings and presentations. Externally, the EVP becomes a recruitment and hiring tool. Internally, it becomes an employee engagement tool that sets the theme for the employee experience.

Developing a high-quality, impactful EVP is not simple and is not a one-off management effort. Given its importance to the organizational brand and employee engagement, many companies seek help. IRI Consultants has industry experts who can help you precisely define your organization's Employee Value Proposition within the industry context.

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About the Author Jennifer Orechwa

With over 25 years in the industry, and now as IRI's Director of Business Development, Jennifer has gained a unique perspective on what it takes to build a culture of engagement. By blending a deep understanding of labor and employee relations with powerful digital marketing knowledge, Jennifer has helped thousands of companies achieve behavioral change at a cultural level.

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