What’s Money Got to Do with It?

Recent research studies from Brandon Hall Group — Employer Value Proposition 2015, Strategic Talent Acquisition 2015, and Talent Shortage/Hiring Practices 2015 — show there is a conundrum between how employers perceive compensation as a driver of talent attraction and as a cause of first-year attrition.  And this perception is fairly consistent across most employers.

moneyThe conundrum is this:

  • For the most part employers think that the most important reason individuals decide to join, or stay with, their organizations is the opportunity for development or to gain experience (71%), a working environment where they are a cultural fit (49%), organizational growth and performance (45%), and then the compensation and benefits package (41%).
  • And yet, when asked for the top three reasons for attrition during the first year, compensation is selected by most (44%), followed by organizational fit issues (37%), and direct manager relationship (30%).

So is it that organizations do not really understand their Employer Value Proposition (EVP) – what they best offer as an employer — or is it that their hiring processes are broken and bad hires are muddying the waters? I contend it is a little bit of both.

The Role of EVP in Candidate Attraction

What is in an EVP?  It is the matching of what employees and employers value in each other. And, it can be many combinations of factors, ranging from providing meaningful work, opportunity and growth, flexible work environment, compensation and benefits, to market leadership.  Each employer’s EVP is unique.

An EVP as expressed in employer brand messaging can motivate candidates to want to work for your organization or not. It can act as a mechanism to attract candidates as well as to help filter out those candidates who might not be a good fit. It is about the quality of the candidates being attracted to your organization, not the quantity.

The majority of organizations (61%) responding to our recent EVP survey indicated they either do not have a formally defined EVP or have defined some elements of the EVP, but they are not universally understood or accepted.  Leaving the EVP undefined means organizations are not controlling their own offering as an employer. They are leaving their value proposition to the imagination of the candidates. That may or may not be a good thing.

So is the compensation package important to your value proposition? Possibly, but knowing the extent of its influence can help you position your total offering to candidates.   

The Role of EVP in the Interviewing Process

Our recent research shows that, on average, approximately 9% of past-year hires are considered to be “bad hires.” And bad hires can be a costly mistake, by needing to replace that bad hire, and by incurring other costs like training, onboarding, and missed opportunities.

And more than half of the respondents’ organizations do not identify a bad hire until after they are onboard. About two-thirds feel that it is a broken interviewing process that most influences a bad hire.

Defining your organization’s EVP can help improve your interview process. It can help with the formulation of interview questions, and with the assessments of the candidates’ responses and interactions.

It is also important to ensure that the interview process is consistent, and the steps are understood by the entire team, sourcers, recruiters and hiring managers. These processes will help increase the likelihood of finding quality hires.

The Role of EVP in Differentiating Yourself as an Employer

A well-defined and communicated EVP can also differentiate your organization from your competition. No two EVPs are exactly alike, even in the same industry. Perhaps compensation is competitive in both organizations, but one may have more developmental opportunities than the other. Career paths can be differentiated. The possibilities are limitless. By evaluating the true nature of your organization, you have the chance to strengthen those areas that will help your organization compete in the market for talent and for market share.

In conclusion, the first-year attrition rate can be damaging, and it impacts some industries and companies more than others. It can be damaging because it wastes resources put forth to find the hire, and because it costs so much. It is better to place the emphasis on defining and communicating your EVP than letting weak messaging and interview protocols contribute to first-year attrition.

It is not always about the money.

Daria Friedman, Principal Analyst, Talent Acquisition, Brandon Hall Group

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Mike Cooke

Chief Executive Officer of Brandon Hall Group Mike Cooke Prior to joining Brandon Hall Group, Mike Cooke was the Chief Executive Officer and co-founder of AC Growth. Mike held leadership and executive positions for the majority of his career, at which he was responsible for steering sales and marketing teams to drive results and profitability. His background includes more than 15 years of experience in sales, marketing, management, and operations in the research, consulting, software and technology industries. Mike has extensive experience in sales, marketing and management having worked for several early high-growth emerging businesses and has implemented technology systems to support various critical sales, finance, marketing and client service functions. He is especially skilled in organizing the sales and service strategy to fully support a company’s growth strategy. The concept of growth was an absolute to Mike and a motivator in starting AC Growth, in order to help organizations achieve research driven results. Most recently, Mike was the VP and General Manager of Field Operations at Bersin & Associates, a global analyst and consulting services firm focused on all areas of enterprise learning, talent management and talent acquisition. Tasked with leading the company’s global expansion, Mike led all sales operations worldwide. During Mike’s tenure, the company has grown into a multi-national firm, conducting business in over 45 countries with over 4,500 multi-national organizations. Mike started his career at MicroVideo Learning Systems in 1992, eventually holding a senior management position and leading all corporate sales before founding Dynamic Minds. Mike was CEO and Co-Founder of Dynamic Minds, a custom developer of software programs, working with clients like Goldman Sachs, Prentice Hall, McGraw Hill and Merrill Lynch. Also, Mike worked for Oddcast, a leading provider of customer experience and marketing solutions, where he held a senior management position leading the company into new markets across various industries. Mike also serves on the Advisory Board for Carbon Solutions America, an independent sustainability consulting and carbon management firm that specializes in the design and implementation of greenhouse reduction and sustainability plans as well as managing the generation of carbon and renewal energy and energy efficiency credits. Mike attended University of Phoenix, studying Business Administration and Finance. He has also completed executive training at the Chicago Graduate School of Business in Chicago, IL.