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Employee Value Proposition: How effective is it?

November 29, 2010 16:20 IST
A Towers Watson survey shows that there are few differences among companies on a critical metric that determines employee satisfaction, says Shyamal Majumdar.

Most Indian companies shout from the rooftops about the importance they give to Employee Value Proposition (EVP) - a commonly used term to describe the characteristics and appeal of working for an organisation.

That's understandable, since an EVP quotient often determines whether you are an employer of choice, and studies have shown that companies with strong and credible EVPs become as famous for the way they treat people and the quality of their people as they are for their products and services.

So, talk to any CEO or HR head and an invariable claim is that one of the top priorities is to have an effective EVP since it helps manage employee expectations, facilitate communication and establish the employer brand.

A majority of companies seem to think that their EVP is being communicated well and represents their position in the marketplace.

The reality is different. A global survey by Towers Watson last month shows that only a third of Indian companies have a formal EVP, and even they seem to be struggling to differentiate themselves from their competition.

Basically, it's a problem of the sea of sameness. Other than top performers and those with a lot of potential, an organisation's EVP does not vary significantly. And few Indian companies think they have changed their EVP significantly in the light of the recent economic changes.

There is, however, good news. Forty-four per cent of the survey respondents say their organisations will change their EVP significantly over the next three years.

This means that attracting and retaining key talent will remain major concerns for companies.

At a time when the need for superior talent that can steer through wrenching change is increasing, companies are finding it difficult to get people to run divisions and manage critical functions, let alone lead companies.

So, it's no surprise that the survey shows a sharp difference in the views of employers and employees on the preferred career model.

While only 14 per cent of employers say their preferred career model for employees is switching organisations whenever a better opportunity arises, 44 per cent employees feel that's the right way to go.

Just a third of the employees say they would work for two to three organisations throughout their career. And working for life in one organisation is almost a thing of the past.

Employers and employees also have differing views on career advancement. A huge number of employees think there are fewer promotion opportunities since companies have reduced the number of job levels and it is difficult to get a transfer or lateral movement (over a third of employees also think there are no career advancement opportunities in many roles).

But employers beg to differ. However, India Inc would do well to introspect on the hard data provided by Towers Watson.

Competitive base pay and challenging work are obviously the overwhelming priorities for most employees, specially at a time when a majority of companies will continue to grow over the next three years and the key drivers of growth will be market expansion, a focus on revenue and product expansion.

That is why most companies are talking about increasing their salary budgets, bonus opportunities and the budget for training and development programmes.

But caution remains the watchword and that explains the recruitment preference shifting from aggressive go-getters, who can only ride the growth wave, to more stable people, who can take the company forward but not at jet speed. Clearly, the slowdown is too fresh in memory.

And many companies say they are ready with a blueprint should a slowdown strike again - that includes reducing pay increases and reducing or eliminating bonuses. But 37 per cent of companies say they will increase the employee co-pay for healthcare premiums.

That's roughly in line with what India Inc did during the slowdown: over 60 per cent froze hiring and 35 per cent froze salaries.

Unlike in the West, fewer Indian companies (15 per cent) went in for layoffs. Indian companies, in fact, had a better layoff record that their Chinese counterparts -  22 per cent of Chinese companies went in for employee retrenchment.

There is no doubt that Indian companies will have to align their talent policies with changing business priorities.

Towers Watson has provided some guidance in this regard - companies have no option but to build an internal pipeline of talent to ensure "talent readiness" for critical roles; and managerial capabilities that need to change the most are clear goal-setting, opportunities for skill development, enabling career planning and prioritisation of maximum returns to the business.

This is important since most talent management activities in Indian companies are now viewed as "somewhat effective" - that's not a very good sign for your company's EVP.

Shyamal Majumdar
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