Employee value proposition - an EVP perspective l Mercer Australia

Employee value proposition - an EVP perspective l Mercer Australia

Our Thinking / Talent Trends

Views diverge on the employee value proposition
Calendar30 August 2017

Global Talent Trends research, corporate executives, HR leaders and employees themselves were asked for their perspectives on the EVP in their organizations. Their responses indicate there's a significant disparity in the way the groups characterize employee attitudes. This article compares their differing viewpoints.

What is the perceived value of a given job — not to the organization — but to the candidate for a job, or the employee who is performing it? Commonly referred to as the employee value proposition, this perception explains why a talented person would want to work in a given company and what differentiates a company from its competitors as a place to work. Ideally, the EVP for an organization would be defined the same way by HR leaders and recruiters and the C-suite — and employees would agree with that definition.

Mercer research shows there is no such agreement. While executives and HR professionals share the belief that their companies offer a compelling value proposition to employees, exactly what that proposition is differs.

What the C-Suite sees

Most executives (57%) think their companies offer a compelling value proposition to their employees and job candidates, and CEOs are even more likely than other executives to report that they have a strong EVP. C-suite members say the top three value differentiators are their organization's culture, brand recognition, and its business model. Leadership, significantly, was the differentiator executives ranked fourth, probably because of its critical role in building and sustaining corporate culture. In the United States, executives viewed the leadership team as a compelling factor in their value proposition to a greater extent than executives in other countries.

While it's a commonplace for companies to claim their people are the most important factor in their success, less than a quarter of global executives viewed their employees as a compelling part of their value proposition. In the UK, however, 37% of the executives participating in the study — the highest anywhere — saw their employees as a differentiator from their competitors.

Furthermore Despite a growing focus on corporate responsibility as an EVP determining factor, only 15% of global executives found it so, a sentiment shared by employees themselves. For example, corporate responsibility was the lowest of 13 choices for employees in Australia, France, and Italy.

The HR Perspective

Agreeing with C-suite respondents, 61% of HR professionals believe their organization offers a captivating EVP, with those in US firms particularly confident in the attractiveness of their EVP; but HR bases its conclusion on different factors. Rather than the public face of their brand, or their particular business model, HR leaders say the most significant differentiator is rewards policy: the compensation and benefits the job provides. HR rated the culture of the firm as next in importance; and culture is the only differentiator on which HR and their executives agree. HR rated brand recognition as very last out of 12 choices. Only one-quarter of HR professionals globally considered a company's diversity and inclusion policy as one of the top three elements in their organization's employee value proposition.

The employee's view

What has value to today’s employees? Not the foosball and ice cream bars of the high-tech boom; not the chance for team sports at work or the desire to give back to the community. Globally, today’s employees agree with the HR teams: they see pay and rewards as the heart of their organization's EVP.

If “show me the money” is the predominant differentiator seen by both HR and employees globally, the ramifications for HR affect both recruiting and retention. Given stiff competition for skilled talent, it's harder to get and retain employees who have replaced corporate loyalty with an “I can be bought” mentality.

Despite the value attached to compensation by the Millennial and GenZ audience, it will not be overly compelling beyond initial hiring. To meet the expectations of their employees, HR must readjust its perception of value. Beyond rewards, employees worldwide are very clear about what they expect from their employers in the two years ahead: they anticipate a greater focus on employee health and well-being, they look for greater flexibility in hours and locations worked, and they expect more collaboration and work in teams on the job. In addition, younger workers seek jobs with career promise: they want to know from the first job interview where the job is going, and what development is provided to support career ascension. Few HR professionals see support for these aspects as part of their current employee value proposition.

There are other areas that can affect an employee value proposition: “softer” factors such as the fit between work and the rest of life, perception of flexibility, and focus on health and wellness. Executive and employee perceptions of efficacy in these areas as part of their corporate value proposition is shown in the figure below. In all cases, the executives show slightly less belief than employees that these factors are compelling.

View of Factors as Manifested in Global Corporate EVPs (% of “Yes” Responses)

N = 398 executives, 5446 employees Source: Global Talent Trends, Mercer, 2017.

What does it all mean, and how should HR respond?

The most intriguing of this research was the vast disconnect it exposes between the executive view and the views of HR and employees. While all three groups agreed that culture was part of their differentiated value proposition, they varied greatly on other main points. Executives saw two other factors as primary: the public face of their brand, and their business model.

Both HR and employees regarded rewards — compensation first, and then benefits — as the principal employee value proposition. This discrepancy argues for HR to review organizational policies and address the gap the varying perspectives reveal.

Actions to achieve that goal include:

  • Corporate culture matters to everyone: employees, HR, and executives. Yet it is likely that these groups would describe that culture within their organization differently. HR would be well-served by:
    1. evaluating and articulating the features of their organization's culture that employees find most engaging. 
    2. Determining whether the executive view of the culture is in fact prevalent within the company.
  • The discrepancy in views between HR and executives on EVP can negatively affect hiring by presenting a bifurcated view of the organization to the candidate. As companies struggle to represent their culture and values accurately to applicants, it behooves executives, recruiters, and others in HR to represent an agreed-upon total value proposition.
  • This year's survey shows employee sentiment is very survival-focused. Money matters. The research indicates that career development was still held as important but less than compensation, and less so than a year ago. This hunkering down attitude may be a reaction to global economic uncertainty, or a response to feeling “developed” enough. In looking at retention, however, review of compensation competitiveness is an imperative for the global employee population. They can be bought.


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