In the last few years, the “war for talent” has seen organisations spend copious amounts of time, money, and energy on promoting their employer brand or “Employee Value Proposition” (EVP). Against a competitive backdrop where candidates are increasingly looking beyond a salary when it comes to job role, many organisations now believe having an enticing employer brand is the bare minimum needed to help them attract and retain the best talent. But, is this actually the case?
Setting the bar too high
The issue with this, as identified by Dr Graham Dietz, is that as competing for talent becomes increasingly challenging, the minimum requirement to attract the best individuals gets higher and employers need to offer more to differentiate themselves from competitors. So, as the EVP attractiveness increases, promises often become brazen, leaving expectations higher and more challenging to fulfil. Practically, the EVP should be an employer’s attempt to form a psychological contract with employees which will not only help successfully recruit, but also retain talent.
The term “psychological contract”, a concept which emerged in the early 60’s and is core to understanding the employment relationship, refers to “individuals’ expectations, beliefs and obligations, as perceived by the employer and the worker” (CIPD). Ruchika and Prasad’s research states the process of the psychological contract starts at the first interaction with an organisation, before an employee has joined, in the form of an Anticipatory Psychological Contract (APC). This could be the first time the candidate takes a look at the company website or perhaps the first email exchange with the hiring manager, for example.
Ruchika and Prasad identified that, as well as setting out expectations, the terms generated through these initial interactions determine the satisfaction level of candidates once they begin a role. Each interaction is building a picture and creating expectation with the candidate in line with the organisation’s promissory incentives. They will then compare this against the actual environment once they join.
Realistic expectations = happy employee
The lesson to be learned from this? Creating a realistic and honest picture of your EVP during the hiring process is crucial.
But don’t just take our word for it. Multiple studies have shown when expectations are met by their employer, employees are happier at work and reciprocate with discretionary effort; effort which workers freely contribute. This leads to higher levels of commitment, increased willingness to go the extra mile, and less temptation to engage with head-hunters.
And at the other end, the studies show that breaches of the psychological contract, for example broken promises or expectations, can lead to employee’s lack of co-operation and commitment, decreasing performance levels, absenteeism, employee turnover, and, in the worse cases, even sabotage. Especially when expectations have been calculatingly cultivated by the employer.
So, if you want to ensure you not only attract, but also retain employees, a good place to start is in ensuring you’re not overselling your EVP. Through this, employees start to genuinely “live the brand”, as opposed to compliantly which leads to a multitude of benefits for the organisation. This phenomenon is known as “employee branding”.
Research has shown EVP and employee branding are therefore interdependent – if the promises of the former are not fulfilled, the authenticity of the latter will not occur. If the EVP overpromises to seem more attractive, by default it is more likely not to meet the expectations set.
The cost of getting it wrong
This leads to wasted investment in EVP campaigns (currently estimated by The HR Outlook at £537 billion in annual global spending) as well as higher unwanted employee turnover due to disillusioned new recruits leave prematurely. Replacing these employees also incurs a further cost of around 50-75% of the leaving employee’s salary (Society for Human Resource Management). On top of this, Dietz also identifies reputational costs both internally, as cynicism may begin to fester, and externally, due to leavers badmouthing the organisation.
Many companies feel they need to be producing wildly elaborate EVPs, despite research showing that higher employee job satisfaction and low intention to quit stem mostly from realistic job previews and setting reasonable and achievable expectations.
So, how can organisations get it right?
Whether intentionally, or not, it’s clear that many organisations are mis-selling their EVP to potential employees. There’s a couple steps we’d encourage businesses to take if they are struggling to retain new recruits.
- Understand your current position. It can be difficult for leaders and HR professionals to have a true understanding of their current position. Even if you’re proactively working to do this, employees often won’t provide honest feedback if they believe it could be traced back to them. An independent review is by far and large the best way to do this, and our Talent Intelligence team can help with that.A real-world example of this is when the Talent Intelligence team carried out a piece of work for a manufacturing business who had previously managed to recruit a committed workforce, mostly as a result of strong branding, but were now experiencing challenges around retention and recruitment. The company believed they were meeting employees’ expectations. However, as we delved deeper it was clear employees felt the company offering internally was inadequate and contradicted the “Premium” brand image that had been created externally. Aspects of the psychological contract were not being met and this was therefore impacting employee perceptions. Ultimately, effecting engagement and enthusiasm for work both internally and externally.The current EVP was not accurately reflecting the best of what the organisation was offering (that was in fact strongly aligned with market wants and needs at the time). Instead, it was unrepresentative of the organisation. We worked with the clients to help them identify and understand their current position therefore ensuring they could effectively align their EVP.
- Just like the example above, if there is disparity between your current situation and what you promote as your EVP, make sure to address this. Perhaps you unearth that employees don’t feel they have the flexibility they were promised. Can policies be updated? Perhaps a more engrained cultural issue is brought to light. (Something our Organisation Advisory team could help with!) Do what can be done to address any issues and then…
- Ensure it is reflected honestly in how you promote this to the outside world – especially during the hiring process. It’s not about having the most perfect, shiny EVP but having one that’s true to the environment in your organisation. Not only will you maintain the psychological contract, but this should allow you to attract the right people who will fit in with your business and live the brand.