Developing an Employer Value Proposition that Builds ... · PDF fileEVP & Engagement –...

EVP & Engagement – MCN ― Nov. 7, 2014

Developing an Employer Value Proposition that Builds

Sustainable Engagement

Participant Handout

Developing an Employer Value Proposition that

Builds Sustainable Engagement

© 2014 Gallagher Benefits Services, Inc.

EVP & Engagement – MCN ― Nov. 7, 2014

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Developing an Employer Value Proposition that Builds Sustainable Engagement

© 2014 Arthur J. Gallagher & Co. 1

Introduction

You know that a (the?) primary driver of success in the nonprofit world is engaged

talent (people!).

We won’t waste your time explaining the importance of employee engagement.

We won’t waste your time explaining the organizational dangers of dis-engaged

employees.

You also know that resources available to invest in talent are always limited – and

never more so than right now. Put simply, few organizations have excess cash to

throw at the engagement issue.

So what’s the answer for cash-strapped organizations with often exhausted,

emotionally disconnected employees, to increase ― or just maintain ― employee

engagement, and to sustain that engagement over the long haul?

Is there a secret? Is there a fantastical new way to immediately engage

employees with no money and little effort?

No.

We do, however, believe that the answer lies in developing an employer value

proposition that:

Is effective in recruiting, retaining, developing & engaging the talent you

need to be successful

Leverages a variety of rewards elements

Is operationally and financially sustainable

We’ll be referencing “total rewards” quite a bit today. “Total rewards” is

everything that the employee perceives to be of value resulting from the

employment relationship. As such — given this broad definition — an effective

total rewards program is really the driver of an effective employer value

proposition.

It is often assumed that the primary driver of engagement is more money (“how

can we engage/motivate employees with no cash?”). In reality, the primary

levers of engagement are:

Making the RIGHT expenditures (effective allocation of available

resources to get the best return on talent investment), and

Utilizing NON-CASH engagement levers (see next page and others that

follow)


2 © 2014 Arthur J. Gallagher & Co.

A survey of WorldAtWork members ― originally and primarily experts in

compensation management – was conducted in early 2010. Some selected

results and commentary:

Involving employees in programs that affect them offers a direct way . . .

to enhance employee engagement.

Base pay and benefits had a weaker relationship with the organization’s

ability to foster high levels of employee engagement and motivation

compared to nonfinancial incentives, intangible rewards and quality of

leadership.

Quality of work, career development, organization climate and work/life

balance all have a greater perceived impact on employee engagement

than financial rewards.

Quality of leadership has a profound impact on employee engagement

and motivation.

Organizations must think in terms of total rewards, and not just financial

rewards if they are to enhance employee involvement, commitment, job

satisfaction and performance.

Our experience (through our work with employers across the spectrum — including

nonprofits, government, and for-profit organizations — and confirmed by multiple

reputable resources) indicates that that repeatedly, the following factors are

cited as key drivers of engagement:

Trust

Communication

Being listened to

Clear expectations

Feedback

Fairness

Respect

Progress

Sense of value

Work/life balance

That’s not to say that compensation and benefits are unimportant. They are a

very important part of the mix. We’ll look more closely at that in a few

moments.

Remember – it’s not about spending more or spending less. It’s about spending

right and using non-cash engagement levers.

In short, let’s call what we’ll talk about today as

The EmployeeEngagement17



The EmployeeEngagement17

1. Develop and Deliver a Compelling Overall (Integrated) Employer Value Proposition What is your employer value proposition? Is it distinctive? Is it truly

compelling? Why do people come to work for your organization?

Organizations with a compelling employee value proposition have

engaged employees.

The employee value proposition is ― and must be ― totally unique to

your organization. No one can tell you what it is or should be.

What does the outside world say about your organization as a place to

live one-third of one’s life?

If you don’t have one, the market will make one up for you, and it may

or may not be what you want it to be.

This value proposition should be construed broadly ― all the factors that

make up the employee experience at your organization, including monetary &

non-monetary factors, tangible and non-tangible factors.

2. Drive a Compelling EVP with a Well-Designed Total Rewards Program Your total rewards program must be designed to appeal to the varied needs and

interests of your employees.



As we will discuss in greater detail momentarily, recruiting great

employees, engaging them, and retaining them, is all about making the right

decisions about what mix you’re offering, how you’re allocating resources within

the mix, and how well this drives your organization’s strategic objectives.

As you develop your (or improve on an already existing) compelling

employee value proposition, keep in mind the full range of employee needs and

interests, and what rewards appeal to what employee needs.

Consider this diagram connecting different rewards categories with

Maslow’s famous “hierarchy of needs” and how it affects employee engagement.

Adapted from: WorldAtWork Handbook of Compensation, Benefits and Total Rewards

Prof. & Org.

Development

Employer

Employees

Wellness

& Work-Life

Benefits

Compensation

?Informal input

and/orintermittent

surveys

Segmented designSiloed delivery( )

Traditional “Total Rewards” Process

Nothing left in

the budget

No time to think

about this

Benchmarking,

compliance,

renewal

Market review

Wow

! .

. .

We c

an’t

aff

ord

all

of

this

!



Compensation

Health & Retire. Benefits

Wellness & Work-Life

Prof. & Org.

Development

Defined

business

results

Employer

Core

talent

Multiple tools &

processes

Strategic Total Rewards Process

AssessmentGeneral

Employee

Strategy DevelopmentAssessment review & consultative dialog

Intended employer value proposition

Cost projections & recommendations

Senior executive commitment

ImplementationBranding & communication

Total rewards statements

Program roll-out

Ongoing measurements

Decisions & DesignDesign of reward elements

Integrated asset allocation decisions

Personalization

Ongoing measurements/metrics

Total Rewards Consulting Process

CompensationHealth &

Retirement

Benefits

Professional & Organization Development

WellnessWork-life

Recognition



3. Engage in an Ongoing, Multi-Faceted Rewards Dialogue with Employees

Many employers assume they know what is

important to employees. To assess

accurately, you need to have an ongoing

rewards dialogue with employees.

Consider multiple data-gathering

tools, including surveys, focus groups,

interviews, and just sitting down and

talking with employees.

Include in your dialogue inquiries

about what does and does not engage employees.

The goal should be to determine what employees prefer (not what they

“want”).

4. Avoid Patriarchy ― Go with What Engages You’re experienced, mature and intelligent. Therefore, you know what

employees should want and have. Right?

Remember that this exercise is about the proper allocation of

organizational resources to effect strategic outcomes like engagement. You may

need to provide (or subsidize) things that you think are superfluous, and drop (or

reduce your subsidy for) things you think are really important.



5. Understand ― but Don’t Stereotype ― and Manage Generations An entire industry has developed around the “clash of cultures” ― Millenials, Gen

X, Gen Y, Baby Boomers, etc. How much of this has to do with generations, and

how much has to do with life cycle? (We remember, years ago, hearing much the

same thing about boomers that we’re hearing now about younger

colleagues/generations.) Further, projecting stereotypical attributes on an

individual based on their age is dangerous.

But the under-30 employee (just like anyone else) who appears to exhibit

the negative behaviors that are attributed to his/her generation can be engaged

(just like anyone else), and this can be turned into a competitive advantage when

understood and managed correctly. (Hat tip to “The GenY Guy” Jason Dorsey.)

1. There may be no expectation of lifetime employment, but long hours, focus,

passion, commitment and engagement will be there if there is a genuine

connection to the organization and its mission.

2. Limited patience and short attention spans may be discouraging ― but before

dismissing it derisively, look at it as being outcome-driven. Make expectations

clear, and you may be surprised at how project-and-outcome-oriented (rather

than job-description-focused) the employee may be.

3. Technology has become an extension of the person ― this may be a huge

benefit for your organization (look at where the world is headed).

4. There is a need for consistent feedback, but this doesn’t require a major time

investment, just a five-second recognition, which your breakout leader has

always believed was a pretty good management tactic for everyone (going back

about 25 years).

Other traits often mentioned ― love challenges, crave freedom and independence,

want control, focused on building professional skills and capabilities, value more

than work, aren’t content to wait their turn. These are problems?

6. Differentiate Your Rewards Another mistake employers often make is

attempting to fashion and implement a one-

size-fits-all rewards philosophy and program.

Employees are different. Engagement

means different things to different people.

Rewards, therefore, need to be varied. We continue to be amazed at the

number of organizations that claim “diversity is our strength” and then prove this by making an inflexible rewards offering — no personalization or customization possible — that treats everyone exactly the same.

There are many ways of creating greater personalization/customization. One that is gaining a lot of momentum is private health plan exchanges — and it is suited just as much for smaller organizations as it is for larger ones!



7. Crush Reward Silos Many rewards programs operate in silos. “We’ve

allocated $X for benefits this year, which is Y% more

than we budgeted last year, which is Y% more than we

budgeted the year prior. This is not a strategic

approach.

Look at your reward program as an integrated

whole. Maybe one category has proven less effective

in recruiting, retaining and engaging employees than

you thought it should or would. So cut it back and

allocate more to the category(ies) that have proven to drive engagement more

effectively.

This will require more robust assessment data gathering than you may have

been used to in the past. (See items 3 and 4, earlier.)

8. Provide Total Rewards Statements Employees often think that what they see on their paychecks is the total value they receive from the organization. A key part of a successful EVP and total rewards program is the development and distribution of total rewards statements that provide clarity to employees regarding total value.

9. Measure Measuring engagement is difficult, to be sure.

Still, there are ways to get a handle on whether

you’re winning or losing. Behaviors can be

observed and measured.

Establish metrics to measure the

effectiveness of various initiatives, or your

rewards program as a whole. There are an

infinite variety of metrics and measures to use

(but you should focus on just a few at a time).

Some examples:

Total labor cost/FTE

Labor cost growth as a function of revenue growth

Revenue/Reward Dollar

These measures could also be narrowed to focus on specific elements of

the rewards spectrum (cash compensation, benefits, professional development,

etc.)

When you determine your best behavioral metric(s) for employee

engagement, consider metrics such as “Engagement Quotient per Reward Dollar”

or “Engagement Quotient per Professional Development Dollar”

Regarding retention and the measurement thereof . . . it is not about just

the raw retention percentage. It’s about retaining the right (engaged) employees.

You also may want to consider placing a dollar cost on replacing employee who

voluntarily leave and incorporate these costs into managers’ financial results.



10. Make Engagement (and/or “Work Ethic”) a Strategic Initiative Make engagement a key strategic initiative to improve it in your organization so it becomes a competitive advantage. There has been a lot of noise about the lack of “work ethic” in the workforce, which may have at least some link to engagement, so if you feel this issue needs to be resolved as a precursor to improving engagement, start with it first.

1. Define it ― Determine the specific observable behaviors you want to see in the workplace.

2. Hire for it ― Make these behaviors key factor in your hiring process.

3. Build it ― Develop the desired behaviors in training and development programs.

4. Manage it ― Make sure the desired behaviors are included in the performance management criteria that managers are managing to.

5. Cook it into the culture ― Ensure that the desired behaviors are a central focus of organization development initiatives.

6. Celebrate it ― Make sure that when the desired behaviors are demonstrated, they are celebrated, in both small and large ways.

11. Focus on Top Talent There is a difference between “top talent” and “core

talent.” Your organization has both. Concentrate on

what will engage top talent and how you can provide

what they need and want.

First, you’ll need to determine who makes up

this group. Our definition: “Employees who drive a

disproportionate amount of value creation in

comparison to their peers.” It is not just your senior

executives. Who it is is unique to your organization.

There are many ways of figuring this out (position,

performance appraisals, revenue or other business metrics, subjective grading,

etc.).

Yes, there are limitations in certain reward categories (like ERISA and

cafeteria plan non-discrimination rules). But there are still ways in which you can

differentiate rewards for top talent, and this is particularly true for engagement

triggers.

Keep in mind that you are most vulnerable with this group. They are

crucial to your success, hard to recruit, sometimes quirky to reward, easy to lose,

and terrifically difficult (and expensive) to replace.

Make sure that managers fuel top talent’s passion for important work and

engaging projects.

Do all you can to ensure that top talent is surrounded by other great

people, including a manager who manages effectively.



12. Provide Opportunity We know that engagement is far more driven by non-financial rewards than

financial ones. So amp up the non-financial, intangible areas of your rewards

program:

Involve employees in what’s happening in your organization and the

decisions that are made.

Implement job enlargement, enrichment, and rotation opportunities.

Implement coaching and mentoring programs with more experienced

and/or “top talent” employees to develop skills and expand capabilities.

Provide more imaginative career pathing options, as appropriate.

Work to purge your organization’s definition of “opportunity” as

“promotion.”

13. Provide Training One of the biggest drivers of employee engagement is to provide training ― good

training that engages, involves and develops skills, not just information dump.

If you hesitate because you’re concerned that providing training will result

in training your competition’s future employees, you may have a deeper problem.

If you don’t provide training and other career growth opportunities, they will

leave.

Make sure that your training initiatives include a strong component of

post-training coaching, mentoring and follow up. Eighty percent or more of a

person’s development happens outside the classroom and beyond the “online

learning module.”



14. Build Managers’ Skills Perhaps the single biggest factor in employee engagement is an employee’s

relationship with his/her manager. It’s a time-worn cliché that “employees leave

their bosses, not their jobs” ― but it’s true! In a recent work entitled the “top

ten reasons people leave their jobs,” each of the ten reasons starts with

“Management did . . .” or “Management didn’t . . .”

Build the management skills (read: interpersonal communication skills) of

your managers. Done correctly, this will result in a significant difference in

employee engagement. It will also result in a significant difference in manager

engagement.

Reward managers for demonstrated people skills as much as you reward

them for any other factor.

Make sure that managers conduct frequent, effective performance reviews

and career development discussions. Note: This cannot and will not happen if

managers do not possess fundamental managerial communication skills such as

developing and communicating expectations, active listening, coaching,

confronting (professionally) to change behavior, etc.

A key point ― employees who are positive about their managers are also

positive about pay, benefits and organizational culture.

15. Build Leadership Capacity Leadership is different than management. (Both are important

and must be continuously developed for an organization to

succeed.)

Leading is not about authority, hierarchy, or age. It is

about influence.

What are you doing to build leadership capacity in your

organization (not just executive management skills)?

16. Work on Culture Culture development must be an ongoing strategic objective, not a one-off event.

Bash as much bureaucracy as possible. Bureaucracy is an engagement

killer.

Interventions such as team building and future search conferences can be

extraordinarily important in accelerating culture change.



17. “Brand” the EVP Another key element of your efforts to effectively recruit, retain, develop and

engage employees is to brand your EVP/total rewards program.

This is a marketing process – and while it may well include things like a

logo, a catchy theme, etc., it is really about effectively communicating both

inside and outside the organization what your EVP is, why it engages, and why

talented individuals choose your organization and stay there. This is part visual,

part emotional, part cultural, part rational. It must effectively convey how you

want the outside world to view your EVP, and be an accurate reflection of what

employees actually experience.

Overall: Make Your Organization a Seriously Cool, Totally

Awesome, Incredible Place to Work

Recruit great people, engage them in an extraordinary mission, set high

standards, and create rock stars throughout the organization.

This is not a “warm & fuzzy” issue.

Many of these types of initiatives died when the economy swooned. As employees

become increasingly dis-engaged, you can re-ignite engagement and make it your

competitive advantage, or you can defer on this issue to your talent competitors.

Which will you choose?

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