Ideas for Leaders #348

Securing Talent with a Superior Employee Value Proposition

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Key Concept

A shift is taking place in the business world; power has moved from employers to employees. In this Idea, the reasons behind this shift are explored, and advice is provided to organizations on how to ensure they successfully attract, develop and retain employees, and remain an ‘employer of choice’.

Idea Summary

Traditionally, financial capital has been viewed as the primary promoter of growth and profitability for an organization. Though undoubtedly still important, executives have begun to realise there is something else that is even more crucial: human capital. How companies attract, develop and retain talent is fast replacing financial concerns, especially in light of the fact that today’s employees have more information, more choices and lower switching costs than ever before; employee retention has become a necessity.

In a White Paper published by IMD Business School, Professor J. Stewart Black highlights five seismic shifts that are taking place in the current business environment, which play a role in the changing nature of organizational talent:

  1. Shift in basis of competitive advantage: intangible assets such as brand, culture, leadership and innovativeness have now assumed greater importance in terms of a company’s competitive advantage than tangible assets. The principal drivers of these are an organization’s employees.
  2. Shift in competitive scope: the shift from primarily ‘known’ domestic factors (i.e. competitors, customers, regulators, etc.) to global factors involved in competitive scope has led to a firm’s strategist becoming more important than the firm’s strategy.
  3. Shift in information symmetry: the increase in the use of job websites, social media networks, etc., has meant that information about salaries, open positions and market worth is more easily available than ever before.
  4. Shift in firm-specific benefits: the trend to tie benefits with tenure (i.e. the longer an employee stays with a firm, the higher the benefits) has decreased as tendencies to switch jobs have increased.
  5. Shift in talent supply and demand: the gap between supply and demand has been widening and is expected to widen even more rapidly over the next decade. The imminent retirement of the ‘baby boom’ generation and ascendancy of generations of ‘baby busts’ means that many countries will soon see declines in the number of eligible working people. Whenever demand exceeds supply, the balance of power shifts from employers toward employees.

These five seismic shifts have increased the importance of being an employer of choice; organizations must implement strategies that will help them address each of these dimensions, as the ability to attract, retain and engage talent has gone from nice to necessary.

Business Application

According to Black, one approach organizations can take is to focus on strengthening employee attraction, retention and engagement through a superior employee value proposition. He points to four categories of benefits that capture 80% of what employees care about: leaders; the company; the job; and rewards. Today, employees (like customers) can access more information about these benefits, and have more choices and lower switching costs; consequently, they have more power.

Simplistic notions and measures of employee satisfaction (such as employee surveys) will need to be set aside as measuring employee value proposition is different from simply measuring employee satisfaction. To an employee, ‘value’ encompasses not just what they get, but what they pay for what they get (i.e. hours, time away from home, stress, etc.)

Employers must strive harder to understand and build superior employee value propositions based on what employees want. This, according to Black, is the key to attracting, retaining and engaging talent.

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Idea conceived

  • December 2013

Idea posted

  • March 2014

DOI number



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