Linking the Employment Value Proposition (EVP) to Employee Engagement and Business Outcomes: Preliminary Findings from a Linkage Research Pilot Study

Organization Development Journal, Summer 2007 by Heger, Brian K

Abstract

This article addresses an important business concept called Employment Value Proposition (EVP), which describes the value or benefit an employee derives from his or her membership in an organization. The EVP has been suggested to be a determinant of employee engagement and retention, both of which have an impact on critical business outcomes. Specifically, this article describes a pilot study which examines the relationships between various EVP and employee engagement measures and the business outcomes of profit margin, productivity, voluntary turnover, and accounts receivable. Using an on-line survey, 614 respondents rated the strength of their organizations' EVP and self-reported their levels of employee engagement. Results showed several important relationships between EVP fulfillment and the intention to stay component of employee engagement. However, relationships between the employee measures and business outcomes were not as robust. Recommendations for making human capital investments and improving the design of future linkage research interventions are discussed.

Introduction

Never before have we witnessed such a remarkable transformation in the nature of work than what we have seen in the past two decades. The wave of corporate restructurings, technological advances, and competitive pressures that began in the early 1980s has rippled well into the 21st century by revolutionizing the terms and conditions of work and redefining the relationship between employer and employee.

Much has been written about the "new employment relationship" and how it is characterized by diminished feelings of employee loyalty, trust, and commitment.1 It is interesting, then, to observe that the new employment relationship coexists in time with a business practice termed employee engagement, which is often touted as a source of competitive advantage.2 The discrepancy between the new employment relationship and the desired business outcome of achieving competitive edge through human capital presents significant challenges to those who are charged with retaining key employees and engaging the workforce. These challenges are compounded by a growing job market in which employees increasingly reevaluate their fiims' Employment Value Proposition (EVP)- the value or benefit an employee perceives by serving as a member of the organization-and determine for themselves the extent to which this "value" is competitive. Employees who perceive their own organizations' EVP to be less competitive than the EVP of other organizations are likely to disengage from their own either by reducing their contributions or by leaving their organizations altogether.3 In either case, the outcome has implications for a firm's bottom-line.

The current landscape requires, first, that organizations take a strategic approach to measuring the strength of their EVP and, second, that they accurately analyze the resulting data to make human capital decisions that effectively enhance employee engagement and business results. The ability to link these measures can provide a powerful roadmap for improving business performance and gaining a competitive advantage.

Purpose and Overview

The purpose of this paper is to provide internal O.D. practitioners with an approach to linking the EVP to employee engagement and business outcomes. Over the past few years, linkage research has been advocated as a methodology for understanding the relationship between employee, customer, and financial data.4 Linkage research allows organizations to connect elements of the work environment-as described by employees- to employee engagement and organizational outcomes such as customer satisfaction and financial performance.5 However, few organizations utilize linkage research because of the significant challenges it poses-ranging from the technical (appropriating and combining different databases) to the political (gaining and maintaining commitment).6 Our goal is to help internal O.D. practitioners overcome some of these challenges by sharing preliminary findings from a linkage research pilot study that we recently conducted in one of our business units.

First, we will briefly describe the concept of employee engagement-what it is and how it differs from employee satisfaction. Second, we will discuss our rationale for conducting this initiative and will share our methodology for assessing the EVP and its impact on employee engagement and business outcomes. Third, we will share our preliminary findings and offer recommendations for improving the design and implementation of future linkage projects. Although the full implications of our research are still being understood, we believe that our approach and preliminary findings will encourage O.D. practitioners to attempt their own linkage projects and overcome some of the challenges that we faced. In doing so, the O.D. Community can build a better understanding of the practical application of linkage research and use this knowledge to drive best practices that impact the bottom-line.