Employee value proposition: what it is and why it matters in the world of benefits

Employee value proposition (or EVP) is a new-ish term with big implications. It’s a statement describing what a company offers its employees, including everything from health coverage to growth opportunities to corporate values. As the term gains popularity, there is an opportunity to showcase an integral component that’s top of mind for employees: Benefits. 

This is part one of a blog series about employee value propositions. Be sure to keep reading at the links below.

What is an employee value proposition?

There isn’t an official definition of an EVP. But generally, it’s a statement that outlines what a company provides to its employees in return for their skills and contributions.

In addition to being a corporate communication, an employee value proposition also has a bigger meaning: It sends a message. It articulates why potential talent should consider your company, and it shows what makes your company unique.

Here are the foundational components of an employee value proposition.

Why an employee value proposition matters

Employee recruitment and retention

The workforce really cares about the list above. Many times, the tangible parts of an EVP (compensation, benefits, PTO) are what attract talent, and the intangible parts (workplace culture, professional development, company values) are why employees stay.

If employees aren’t happy and choose to leave? The negative impact is real. The total cost to hire a new employee can be three to four times the position's salary.(1) The colleagues covering while a position is empty can be overwhelmed, dissatisfied, or leave for a more steady hiring environment.

Of everything an EVP encompasses, benefits are one of the top things employees care about. “We’ve seen time and again that health benefits are key to attracting and retaining talent. So much so that health coverage can be as important as salary,” says Carrie King, Take Command Director of Talent Acquisition and Experience.

Health benefits are also one of the levers companies can pull to drastically affect their compensation package. 

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Company revenue

Talented, engaged employees drive revenue. And an employee value proposition can attract great talent and keep them engaged. In fact, companies that effectively deliver on their EVP can decrease annual employee turnover by 69%.(2)

As the younger workforce shows an interest in the organizational values of their employers, an EVP becomes even more important. It gives an opportunity to showcase what a brand stands for and motivates staff to perform at a higher level. 

The net net: Crafting and executing an employee value proposition has a measurable impact on a company’s revenue by helping reduce costly turnover and sustaining employee performance.

Why a board should care about an EVP

A company’s board is keenly focused on profitability. Which is influenced by business performance, which is influenced by employee engagement. 

An employee value proposition is a direct line to that profitability. So even though a board won’t be focused on operational details, time to revenue is likely on their minds, and an EVP ladders up to what they care about.
 
If you’re in HR or benefits, now is a great time to start discussions with your c-suite or board about what an employee value proposition is, why it matters, and how it supports profitability.

Keep reading

• Be an HR hero by delivering savings to the C-suite
  
• How one company achieved 96% employee satisfaction
  
• Why senior HR director Tony Rosenberg loves Take Command

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References

1. https://www.shrm.org/topics-tools/news/talent-acquisition/real-costs-recruitment
2. https://www.gartner.com.au/en/human-resources/insights/employee-value-proposition