If you’re a HR, Talent Acquisition or Recruitment Marketing professional, chances are you’ve already encountered an EVP – also known as an ‘Employer Value Proposition’. But what you may not know is how an EVP can directly impact your organization’s bottom line and drive value in both tangible and intangible ways.
But first, for the uninitiated, what is an EVP?
An EVP is an articulation of your culture. It explains your “why” to potential candidates, and, when done correctly, helps to retain in-house talent. Essentially, an EVP is a set of promises that clarifies what employees and candidates can expect to receive from you as an employer as well as what you require from them in return. A structed EVP is built on authenticity with emphasis on credibility and data-led proof points.
So where does the value come in?
At a high level, a well-defined EVP can be the difference between an expensive cost per hire vs. an effective cost per hire. A well-defined EVP can be the reason why employees are not only being retained at your organization, but also the activation of the EVP can contribute to them feeling engaged and valued. Here are some quick stats to back this up:
- Gartner states that organizations that effectively deliver on their EVP can decrease annual employee turnover by 69%. (Source: Gartner)
- LinkedIn found a 43% decrease in cost per hire for businesses with a strong employer brand. (Source: HBR)
- In the same article, LinkedIn says that employers with a poor reputation had to offer a 10% higher salary than those with a better reputation to get applicants to accept their position. (Source: HBR)
Let’s dive deeper into some numbers and the other ways an EVP can drive value to your firm.
#1: A Great EVP will positively impact your profitability. (Bottom line impact)
Let’s say you’re a company with 20,000 employees. You have about 20% annual turnover – meaning you drop 4,000 employees per year. Let’s also assume that each new employee costs roughly $30,000 USD to recruit, onboard and train and that after a year, that employee should help you generate about $100,000 USD in revenue.
That means your annual recruitment and training costs for 4,000 roles = $120M USD, and your annual revenue from these same people at the end of one year should be $100,000 x 4,000 = $400M USD.
$400M – $120M leaves you with an ROI of $280M.
Now, let’s apply an EVP.
Gartner (above) says a good EVP should lower your turnover by 69%. We’ll halve this and go with 30% attrition reduction. When applied to our model, instead of an annual drop of 4,000, the EVP has your attrition at 2,800.
2,800 x $30,000 USD = $84M
$120M – $84M creates a savings of $36M USD per year.
Let’s keep going.
#2: You’ll be attracting the right talent. (Quality of Hire & Time to Hire)
Remember in school when certain courses would be designed to ‘weed’ out individuals who might not be the best fit for the curriculum at hand? An EVP is similar in nature. A great EVP will select and deselect in equal measure. Because EVPs are structured to express and define your promises as an employer, candidates can ‘opt-out’ of your recruitment process if they feel their values don’t align with the organization’s mission or vision. This saves everyone – the candidate, the recruiters, and your HR team – valuable time. Having qualified and engaged candidates makes the recruitment process easier and more efficient as you’re selecting from a higher quality candidate pool than having one flooded by candidates who might not have selected to “opt out.”
#3: You’re building credibility (Long-term employer reputation management)
When was the last time you left a Yelp review? Probably when your food was exquisite, warranting a 5-star review, or sadly, when your expectations weren’t met, and you left with a stomachache … definitely 1-star worthy.
Reputation management sites like Glassdoor and Indeed follow that same algorithm. Candidates and employees that have a positive onboarding/recruitment process are more likely to leave a positive review. On the other hand, if the application process was slow or confusing or if they felt misled throughout their onboarding or current employee experience, individuals will share their experience and leave negative reviews for other candidates to see, potentially scaring them away from applying themselves.
To get in front of this, make sure that you’re equipping the right people with the right tools to enhance each candidate’s experience. Think about infusing your EVP language into different resources such as interview guides, email templates, offer letters, etc., so your recruiters can communicate your EVP effectively and consistently to candidates. This leads to a universally positive experience no matter who they talk to. The more you’re providing a quality and consistent experience to both candidates and employees, the more external talent will view you as a credible and trustworthy organization.
#4: Build brand ambassadors (Employee retention and advocacy)
Wouldn’t it be great if you had individuals that spoke highly of your company, posted about how great it is on their social media accounts and told all their friends and family that they should apply to work for you? Believe it or not, a strong employer brand and EVP can help with that.
When you’re delivering on the promises you made as a company to your employees and candidates, that doesn’t go unnoticed. People want to share their positive experiences with others and that shows up through employee advocacy. These are the employees that willingly promote the company on their own behalf through authentic, informal and unique content. On average, employees actually have 10 times as many connections as the company. Imagine the broader reach that your brand messaging can have when an employee posts about you to their network.
Lastly, employee advocates can also bring in referrals. These are the people who know your business the best and can speak to what it’s like to work as an employee at your company firsthand. If you have the means to track your employee referrals, seeing an increase in your referral rate could be a good indication that your employees are feeling engaged and that your employer brand is resonating with them.
#5: Stand out from the crowd.
Have you noticed that everyone wants to “make an impact?” While that may be true, there are different ways you can message this, so you don’t risk sounding exactly like everyone else.
If your EVP is distinct, credible and authentic to your company, you have a better chance of differentiating yourself from what other competitors are communicating and messaging to talent. You can differentiate yourself through content and messaging on your career site, profiles on sites like LinkedIn and Glassdoor, and social media sites like Instagram and TikTok. When talent researches you online, they’ll be able to see an unfiltered and authentic look at what it’s like to work at your company.
In this highly competitive and candidate-driven market, it has never been more important to invest in your employer brand and differentiate your EVP. Historically, data shows that the way employers face talent shortages and position themselves in times of crisis will ultimately dictate their success in the short-term and over the coming years. A data-driven and unique EVP will not only save you time and money, but also result in positive benefits on your organization’s culture and employee engagement.
Still have questions about EVP? Let’s have a conversation!
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Given the ever-increasing pace of change in the talent market, leading employers are now reviewing and refreshing their Employer Value Propositions on a more frequent basis. If this is something you’re considering, find out how we can help you create a more compelling and differentiated EVP.