Employees can be rewarded in many ways

Recognition counts

It is employee appraisals season at corporates across India. A time when it isn’t unusual to see managers going about with tense expressions, apprehensive that some of their most talented employees might leave them for greener pastures (read: more money).

Is this perception true? Surveys, including by the well-known Sartoga Institute, show that 88 per cent of employees leave organisations for reasons other than money. Put differently, only 12 per cent leave for better compensation. In fact, if the surveys are to be believed, the top three reasons for which talented employees quit are limited opportunities for advancement (39 per cent), unhappiness with management (23 per cent) and lack of recognition (17 per cent).

In other words, compensation may be the reason mentioned in the exit interviews formally, however the thought for separating from the organisation would have taken seed due to various other factors. We need to keep in mind that people come to work for various personal factors. We as an organisation need to factor in the personal needs and see what we can do to align individual needs with organisational needs.

Today’s generation is well connected, tech savvy and seek work-life balance. They are no longer waiting in queues at employment exchanges waiting for a job. Today’s youth want a career, know exactly what they are looking for in terms of compensation and are well aware of the benefits provided for a particular role. Not surprisingly, organisations are beginning to pay greater attention to non-traditional awards to keep their flock together.

Candidates today ask for details on the company medical insurance, work from home options, global opportunities, continuing education reimbursement options, opportunities to show off their talent be it in sports/drama/dance etc.

Candidates also look out for an organisational culture that allows innovation and experimentation with new ideas. They seek empowerment and autonomy in decision making. They seek continual learning on the job and mutual support and respect. They want to create something which will leave a footprint. They seek a desirable future. We find young people today becoming entrepreneurs, being innovative and coming out with wonderful products and services. Marc Zuckerberg of Facebook, Rohan Shravan of Notion Ink or Suhas Gopinath of Globals Inc are all shining examples of young achievers who are innovative and have defined their own working terms.

When HR tries to build a ‘Total Package’ which comprises not just  compensation but all other benefits mentioned above, they are creating what is called an Employee Value Proposition, or EVP. Typically, an EVP is a statement that sets out with clarity and conviction why the total experience of working with a particular company is distinctly superior to what obtains at others. Quite a few companies have found having a credible EVP in place helps attract, hire and retain the best talent.

The value proposition would identify the people policies, processes and programmes that demonstrate the company’s commitment to employee growth, recognition and development. An EVP helps manage employee expectations, facilitate communication and establish the employer brand.

Building an EVP

Coming up with an effective EVP, one that would resonate with employees, both current and potential, is not as easy as it might sound; considerable research needs to precede it, including eliciting views and opinions through employee engagement surveys and focus group discussions. For an EVP to work, it must be built around attributes that attract, engage and retain talent. It needs to be aligned with the organisation’s goals, values, operating methodology, management and leadership style and the opportunities it offers for employee participation. Equally, an EVP should be consistent with a business’s strategic objectives. Not the least, it should be credible and presented in a language and style that interests the audience: employees belonging to various age groups, functions, and even cultural backgrounds. All this means before putting it into action, an EVP has to be tested to check its appeal among all categories of current and even potential employees, and making changes based on the feedback.

An EVP is an outcome of viewing employees in a manner similar to what a company would do when engaging with its customers: understand their wants and needs, and deliver products or services that will satisfy these aspirations. It’s not uncommon for companies to struggle to identify and articulate their own EVP. Often they hire specialised research firms to do the job.

An effective EVP not only helps an organisation distinguish itself from others in its space but ensures that the ‘packaging’, so to speak, accurately reflects the ‘contents.’  This is important lest people who join an organisation lured by the ‘branding’ don’t leave disappointed on experiencing a ‘different reality’.  

Shift in power equation

The growing importance of having an EVP in place should be seen in the context of the re-balancing of the power equation between employers and employees that is evident today in the organized sector. The days when employers thought and acted as though an employee were easily replaceable are fading fast.

Thanks to the information revolution and spread of the Internet, employees today can more easily gauge their worth in the marketplace and search for other job opportunities.

Should they discover another organisation that they perceive as offering a more attractive value proposition, they might not hesitate to shift. It is worth noting that according to a CEB (an execute network for top corporate managers) survey, almost 30 per cent of employees today seem to be on the lookout for news jobs, and a staggering 90 per cent plus display below-average levels of commitments towards their organisation. 

With the ‘war for talent’ intensifying across sectors, companies are becoming increasingly aware of the need to articulate their EVP, brand and support it with the requisite reward elements, both financial and relational awards.

Financial rewards would include pay, incentives and benefits and relational rewards would include work environment, learning and development, etc. Once finalised, an EVP should be reflected on a company’s web site, job ads, and letters extending employment opportunities. 

An effective EVP is an outcome of the realisation that personal job satisfaction, as distinct from mere financial factors, is a key motivator in attracting, retaining and engaging talent.

It’s all about companies building a distinctive brand for themselves in the eyes of both current and prospective employees. It’s about the “get” versus the “give”: if employees perceive that the “rewards” they get are equal or outweigh what they “give”, they are more likely to stay on with their current organisation. Indian companies, too, are beginning to realise the importance of an EVP though a global survey (in October 2010) by Towers Watson, a leading global professional services company, showed that only third of Indian firms had a formal EVP in place – and even those who had one seemed to find differentiating themselves from their competition a struggle. However, 44 per cent of the survey respondents said they would significantly change their EVP over the next three years, to keep with changes in the economic and business environment.  That’s good news indeed.  

When individual needs are met for each employee, HR professionals deliver employee value, which then helps line managers achieve their goals. It is not an easy job for HR professionals to fulfill the above conditions for every employee at work without top management's support. Every organisation should consider money spent on creating an EVP as investments to grow their businesses, and not as a cost.

(The writer is Director of HR at Arctern, a subsidiary of Volt Information Sciences, Inc)