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An Employee Value Proposition is Really a Partnership Agreement

April 26, 2019 • By Ken Gibson

Most business leaders offer their employees a value proposition that is incompatible with the outcomes they want those individuals to produce.  They want their employees to perform like growth partners, but they treat them like they’ve been hired just to fill a position or do a job.  The nature of the value proposition they offer is the best indicator of that contradiction.  A harsh assessment?  Not really.  Let me explain.

Consider a simple, common example.  A chief executive meets with a group of key leaders in her organization for a strategic planning session.  She paints a vision of where the company will be in three years—new products, new markets, improved systems, a fully leveraged business model and so on.  She tells those people that the goal is to double revenue over that period.  She then points at those in the room and says: “You are the ones that are going to make this happen.  I have full confidence in your ability get this done.  It’s why I hired you.”  She subsequently lays out what everyone’s role will be and what she needs them to do to fulfill the vision she has just described to them.

After the meeting closes, the people in the room head off to their various departments and go to work on the goals that have just been communicated. 

Meanwhile, these same people participate in a compensation plan that pays them a good salary, makes them eligible for an annual bonus (that will pay them an additional 15 to 20% of their salary each year if they hit their targets), allows them to contribute to a 401(k) plan and provides medical insurance.  Hmmm.  Exactly what part of that pay offer addresses their role in building the future company the CEO just told them she wants them to help her build?  And how long will it take these people to figure out that the value proposition she has offered them doesn’t correspond with the expectations she has of them?  Stated another way, the story they heard from her during the planning session (about the role she wants them to play) is different than the one the value proposition she's offered is telling. 

This is what I mean when I say most business leaders want their people to perform like growth partners, but they treat them like people who have been hired just to fill a position or do a job.  At VisionLink, we see this all the time.

So, what does it mean to actually view and treat your people as growth partners?

Creating Growth Partners

In today’s business environment, companies need employees who will act as stewards of shareholder interests.  This means they want people who are willing and able to view the business as owners do and make decisions that respect both the short and long-term implications of strategies undertaken and actions initiated.  They need to have a clear understanding of the outcomes their role exists to produce, and assume accountability for them. People never develop the ability to think and act this way if they sense their employer views them as a mere employee. 

The first step in moving towards treating your employees as growth partners is viewing them and speaking of them as such.  There is a philosophical shift that must occur in the way you see them before anything you do towards this end will be meaningful.  Treating employees as growth partners is not a contrived exercise or just a cute way of characterizing the people who work for you.  You have to actually believe that they either are, or are in the process of becoming, real partners in building the future business you have envisioned.

Employee Value Proposition Once you are looking at employees through this lens, building a value proposition that reflects that attitude becomes fairly natural.  Instead of thinking in terms of a mix of pay, benefits and perks that your people might relate to, you treat your value proposition like you would a partnership agreement—because that is what it really is.  If that is the approach, here is what such an “agreement” should include:

  1. A clear and compelling statement of the company’s purpose and the owners’ vision—what the company is trying to become and why it matters.
  2. An explanation of the business model and strategy is in place to fulfill that vision—how the company plans to realize its goals and why it is confident it will succeed.
  3. A clear description of the role each person is to fulfill, and the expectations associated with that role—so employees have clarity about the outcomes for which they are responsible. 
  4. A written explanation of how the company defines value creation—and a compensation philosophy statement that describes the company’s belief about how and with whom value should be shared.
  5. A summary of the compensation plans in which employees will participate—and how the value of each can be maximized. 
  6. A financial value statement that frames the financial nature of the partnership the company wants to form with the employee—so the “growth partner” can envision the monetary benefit he or she will derive from their contribution to the company’s future over the next five to 10 years.

An employee value proposition that demonstrates owners see their employees as growth partners will also attempt to make clear the following:

  • How each employee fits in the future of the company and why he or she is essential to its fulfillment.  To be true growth partners, employees need to be able to envision the impact the company thinks they can have. 
  • What the company considers the unique ability to be of each employee and where they fit in the unique team they will be part of.
  • The opportunities the company provides for its growth partners to improve personally and professionally. 
  • How the company describes the culture it is trying to develop and the performance standards all growth partners are expected to support and achieve towards that end.

Certainly, more could be included in a given company’s value proposition.  However, any organization that wants to nurture a growth partnership with its people will see the elements just discussed as essential. Ultimately, business leaders cannot fulfill the vision they have of a future company by themselves.  They need people around them that are as passionate about that future as they are and are willing to commit to its fulfillment.  That kind of commitment and engagement does not come by treating people as mere employees.  It comes by treating them like growth partners.

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When it comes to building a compensation strategy, you can trust that VisionLink knows what works and what doesn’t. We are ready to share that knowledge with you.

Ken Gibson

Ken is Senior Vice-President of The VisionLink Advisory Group. He is a frequent speaker and author on rewards strategies and has advised companies for over 30 years regarding executive compensation and benefit issues.