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

Daria Friedman

Daria Friedman is the Principal Analyst overseeing the talent acquisition practice for Brandon Hall Group. Prior to Brandon Hall, Daria led the research practice for Bernard Hodes Group, a recruitment solutions agency, and Findly, a talent acquisition software service provider. Daria’s focus is on conducting talent acquisition research on topics such as candidate experience, employer value proposition validation, onboarding, candidate experience, retention, internal communications, career site messaging, talent pool assessments/supply and demand, employee engagement, campus/graduate recruitment, brand perceptions/positioning, best practices, diversity, market/competitive dynamics, talent acquisition metrics, source-of-hire/job search dynamics, employer preferences, employee benefits, technology purchase preferences, and more. She has produced many thought-leading and award-winning research studies at Hodes, including: Healthcare Talent Metrics, The Growing Value of Employer Brands, RNs at Risk, The Collegiate Career Mindset, The Employment Conversation - How Employers and Talent Meet on the Social Web, and Playing for Keeps/Recruiting for Retention. Daria developed Industry Matters, a monthly newsletter that provides insight on the talent landscape from both an economic and talent acquisition trend perspective. She has conducted research globally across many industries, such as Healthcare, Technology, Insurance, Finance, Hospitality, Telecommunications, Defense, Law Enforcement, and Retail. Daria is skilled in quantitative, qualitative and secondary research methodologies. Daria has an MBA in Marketing from Fairleigh Dickinson University and a BA in French from Montclair State University.

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