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How Do You Measure the Success of Your Employee Value Proposition?

May 02, 2019 • By Ken Gibson

Perception is reality.  That’s not a new concept but it has a new application.  How your employees perceive their experience with your company will decide whether they join your organization and whether they stay once they’re on board. 

Given that truth, it is important to know whether or not you are succeeding with the value proposition you are offering.  The problem is you don’t really know how to make that determination. Right?  And so, you just experiment with different approaches, hoping you’ll eventually land on something that works.   Well, in today’s highly competitive talent market, you can’t afford to have your “experiments” fail.  By the time you recover, it’s too late.

Assuming there is a better way, the question to be answered is this: What indicators will tell you if your value offer is “hitting the mark,” especially with those you most want to recruit and retain?

I think those success factors are best revealed by asking yourself a series of questions—and answering them honestly.  There are a multitude you could pose, but here we’ll discuss just five.  I believe using these queries as a framework for examining your value offer will give you a pretty good idea whether it is succeeding.  

Learn what your employee value proposition should include here: https://www.vladvisors.com/what-is-an-employee-value-proposition#intro

The 5 Key Questions

1. Are you able to compete for top talent?

One the primary purposes of your employee value proposition is to help you attract and retain the people you want as growth partners in your company.  So, a very simple measure of whether yours is successful is how often you are hitting your recruiting and retention targets.  Are your pay offers being accepted?  Are you able to communicate a future to the people you are trying to attract that is compelling enough to make them want to be a part of it?  Are they able to envision how their unique abilities will be used and the level of personal and professional development they will experience in your company?  Does the value proposition you articulate match the actual experience your people have when they join your organization?

This is a simple thing to measure.  You know right now whether your succeeding or failing in this regard. 

2. Is there “line of sight” in your organization?

Great value propositions are effective at aligning employees with the vision of shareholders.  There is an easy way to determine whether this is occurring in your company.  Pick at random 5 to 10 members of your workforce from different tiers, departments or teams.  Ask them this series of questions and see how consistent their answers are—and whether those responses are what you want them to be.

  • What is the vision of this company?  What does it intend to become?
  • What is the business model and strategy of this company?  How do those two things lead to the fulfillment of our vision?
  • What is your role in that model and strategy?  What are the outcomes for which you are responsible?
  • How are you rewarded for achieving those outcomes?
  • To what extent are those rewards helping you achieve your personal ambitions and expectations?

When employees offer consistent answers to those questions, and they match the experience you are trying to create, you are achieving “line of sight” in your organization.  If you have line of sight, your employee value proposition is succeeding. 

Learn what an employee value proposition should include.3. Is your company's “productivity profit” improving?

A value proposition’s success is not determined solely by whether employees are benefiting from their experience with the company.  Shareholders also need to see their interests supported and protected by the nature of the value offer being made.  The best way of determining this is to measure the amount of business value being created through the productivity and performance of your employees. 

In this context, I define value creation as profits being generated beyond those needed to “cover” the cost of capital that shareholders have tied up in the business.  At VisionLink, we refer to this as “productivity profit.”  I have written extensively about this in other articles, so I won’t go into detail about the concept here.  In simple terms, shareholders are entitled to “protect” their capital contribution by assessing a capital charge against earnings before sharing value with employees.  Productivity profit is the net operating income remaining after that charge has been assessed.

If productivity profit is increasing it means employee performance is driving value creation.  Therefore, your value proposition—and its associated pay offering—is succeeding. 

4. Is your employer “brand” rated highly?

In the online age in which we live, every employer must be concerned with its brand.  Here, I don’t mean brand in the sense of how your products are perceived by customers in the marketplace.  I’m talking about your reputation as an employer.  Ultimately, you don’t get to decide what your brand is.  It is determined by others and is represented by the collective impression employees, potential employees and the public at large have of your company.  It’s what they say to others about your business if they work for you or what they perceive the employee experience to be at your company if they don’t.  For example, you likely have an impression of the employee experience at Google, whether you have worked there or not.  That’s Google’s employer brand. 

Although you do not get to determine what your brand is, you can be proactive in defining what you want it to be and taking appropriate steps to influence how it is perceived.  And you can monitor the perception that is “out there” right now about your brand.   Companies with foresight develop an extensive marketing strategy to take control of their employer brand.  And there are dozens of tools and applications that can help you determine what the “talk” is about your company.  All these things can help you determine whether your employer brand is viewed favorably.

At the end of the day, however, you can just tell what your brand is.  If you are committed to delivering an employee experience that matches the value proposition you’ve offered, you will have happy, committed people in your organization.  They will come, stay, perform and engage.  That positivity will manifest itself in a variety of forms and will ultimately be reflected in the data that examines such things. Your employer brand will grow in favorability organically.  As it does, you can then use strategic marketing initiatives to magnify your message and promote the experience employees are having in your company.

So, if employees actually have a positive experience in your company, that will be reflected in how your brand is perceived.  And if your employer brand is strong, that's an indicator that your employee value proposition is working.  

5. Do you have a winning culture?

Cultures can become magnets for high-performing talent.  They can also have the opposite effect.  Winning cultures are those that perpetuate success to the point it becomes self-sustaining.   There is a growth mindset that permeates the organization and employees are viewed and treated as growth partners in the business.  Individuals adopt a stewardship approach to their roles and there is accountability for results.  That accountability is reflected in the way people are paid.  If productivity profit is increasing, so are employee earnings. (The opposite is also true.)  In fact, there is no cap on what people can earn in a winning culture because value is being paid out of the surplus profits that employees are creating.

 So, you know you have a winning culture if the following things are occurring:

  • The company is routinely meeting its budgeted and superior performance targets.
  • Employees are executing the initiatives associated with their roles with consistency and precision.
  • Employees know what their priorities are and are focused on their achievement.
  • The organization’s pay plans reinforce and reward the fulfillment of those priorities.
  • The compensation strategy effectively rewards both short and long-term employee performance.
  • The company is sharing a large amount of value with employees as a result of the wealth multiple (business growth) they are helping to drive.

If you have a winning culture, then your value proposition is succeeding. 

More questions could be added to this list as you examine whether the value offer your company is making to employees is successful.  But hopefully you get the idea.  By asking the right questions you can deduce the level of success you are having in any number of organizational dimensions, including your employee value proposition. 

Given the talent environment we are in, I recommend you make it a priority to perform this kind of evaluation soon and often. 

Ready to Get Started?

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.