In a recent CHRO webinar, Momentum Consultants and Actuaries’ Emda Fourie explored the tenets of a great EVP.
“The world is changing. As are employees. It, therefore, follows that companies’ efforts to remunerate and retain employees have to change,” said Momentum Consultants and Actuaries regional head of consulting Emda Fourie in a recent CHRO SA webinar about how companies can ensure that their employee value propositions (EVP) are geared towards retaining high performance and must be responsive to their specific challenges.
“We can no longer be in a place where we only provide our employees with a salary. Our employment contract has to change. From an employer point of view, not much has changed, because an employer will pay your salary and still expect you to give them everything you have, which of late has meant dedicating a lot more than eight hours of work a day to the business,” said Emda, adding that HR leaders need to look at the factors that influence resignations across different generations.
Baby boomers, who are aged around 56 and over, for example, saw competitive pay and job security as the things they valued most, whereas millennials want professional development and advancement opportunities.
“Highly skilled employees of the new generation want more than a salary. They want an employee value proposition on top of that, so it’s important to understand what that means,” said Emda.
In the words of Michael Page, a renowned headhunter in the US, an EVP comprises the unique benefits and employees receive in exchange for their time, experience and capabilities. A strong EVP, therefore, helps to retain top performers and attract the best talent.
Said Emda: “The Corporate Leadership Council has given us some insights regarding the value of a strong employee value proposition. A strong EVP can increase the commitment of your new employee by up to 29 percent. It will also increase the likelihood of your employees being the advocates of your business to other employees from 24 percent to 47 percent. Furthermore, a strong EVP can reduce the cost of a new hire by 21 percent, because people will sacrifice their salary.”
Emda said a strong EVP consisted of the following pillars:
1. Compensation, which does not only refer to the salary but the fairness and components thereof.
2. Benefits. This includes leave and the flexibility of the working hours that employees get. It includes things like employee assistance programmes, disability insurance as well as any other benefits that will enable the employee to support their family in both the normal course of work as well as in the event of unfortunate death or disability.
3. Career. Emda said employees and future employees want to know what their possible career progression will be. They want education, training as well as opportunities to rise through the ranks. This is especially true for millennials, who view their own improvement and development as very important.
4. Development planning. This is similar to the third point, which speaks to the career progression of an individual. But it also speaks to the kind of leeway they are given to develop in. Questions around whether one will be micromanaged and recognised for achievements in the work environment are key, as are those around work-life balance.
5. Culture is one of the most important elements of this new world of work. “Because how do you keep your culture alive when everyone is sitting at home with their computers? It comes down to the relationship an individual has with their leaders and colleagues. It also relies heavily on the extent to which they understand the organisation’s strategy and objectives,” said Emda.
Retaining top performers
Beyond the cost of recruitment, Emda explained that failing to retain top performers had significant costs for employers. Quoting Arnold Kransdorff, an American author and knowledge consultant, she said, “If knowledge walks out the front door, your organisation will be plagued with an inability to learn from past experience and this will lead to reinvented wheels, unlearned lessons, patterns of mistakes, productivity shortfalls and a lack of continuous performance improvement.”
Top performers are the backbone of a business because they are innovative and play an important role in the training of staff.
“We have all had experiences with suppliers where an important team member has moved on and all of a sudden, all the history has to be relearned.”
By retaining the knowledge in the business, Emda explained that an EVP can help businesses ensure that relationships with both your external and internal stakeholders are maintained.