What is an Employee Value Proposition?

An Employee Value Proposition (or “EVP”) comprises “everything” an employee gets in return for providing their labour to your firm. very pay cheque, every “thank you” and even every social media interaction that an employee sees – all of these contribute to an organisation’s EVP in some way. In effect, it comprises the totality of the deal you have struck with your people as to why they should join, stay and go the extra mile in their endeavours for your business.

We call an EVP the “Employee Deal” – it is a shorter and somehow more resonant phrase than its jargonistic equivalent. The key aspects of an Employee Deal for a professional services firm are as follows:


Why does it matter?

Defining your Employee Deal, and making it as compelling as possible, is a business imperative. If you don’t get this right, you will need to run very hard indeed to recruit the best people. And even harder to keep them. In today’s highly charged talent market, an ineffective Employee Deal poses a direct hit to your bottom line. Research from Gartner shows some worrying signs that the traditional Employee Deal faces significant challenges post-pandemic:

Balancing headcount growth with revenue generation is a real balancing act for professional services firms. Having insufficient people (and skills) puts pressure on your existing employees and may lead to you turning down new opportunities. But having too many people sitting around idle will also destroy your margins. Research from Gartner has found that organisations that effectively deliver on their Employee Deal can decrease annual employee turnover by just under 70% and increase new hire commitment by nearly 30%.

The problem with your Employee Deal 

Business critical though it may be, we see two problems organisations encounter in defining their own Employee Deal:

  • A deal, by its very nature, is a two-way thing. You can define what you wish – but the lived experience of your people becomes their deal. Irrespective of what you may have written down.
  • Different people value different things differently. The deal is weighted to reflect the personality type it is applied to. The employer has no control over this weighting. Organisations are not static and your Employee Deal needs to be capable of flexing to cater for people with different skills and needs.

So, why work so hard on defining your Employee Deal, when it is open to such extremes of interpretation?

A poorly articulated Employee Deal creates confusion for your leaders, your employees and in your potential talent market. You can only unlock this confusion, usually, by paying people more (cash reward is the one part of the Employee Deal that everyone sees and can value). If, therefore, you find yourself having to pay at the top of the market or deploy retention or joining bonuses with frequency, then there is likely to be an issue with your broader Employee Deal. 

So, there is every reason to take extreme care to define your Employee Deal and work to improve it. But we offer 4 traps to avoid:

1. It is a change tool for the employer – not a communication conduit to your employees

The value in defining an employee deal is that you can see, on a page, all the things that are important in making your firm the place to be – a level of clarity that enables you to carefully manage a change journey to make things better. What it is less useful for, is a tool to communicate to your people why they should be delighted to work for you.Bluntly, they’ll be the judge of that. And nothing you put on a slide will influence this.

2. Reward is a hygiene factor – you cannot hope your great culture or underpinning values compensate for sub-market pay

You must pay the going rate for the job. There is no trade-off between sub-market pay and other balancing (more positive) attributes. That’s the problem with one aspect of your Employee Deal being a hygiene factor – you can work hard at everything else - but get this piece wrong and it will all be for nothing.

This is usually a key area of tension in a professional services firm – for example due to the lack of a meaningful variable pay proposition. The absence of a significant short-term incentive pay opportunity places undue pressure on your base salary offer (with consequential pressure on margin).

3. Career progression is disproportionately important

In a professional services firm, it used to be that” getting to partner” was the career pathway.

The world has now moved on.But this means that there is now a need to get clear what a compelling career looks like for a technical specialist, versus a relationship lead.Or salesperson versus a financial controller. Even more important is recognising that career progression may involve leaving (and possibly coming back). Or moving horizontally.

Of all the aspects in an Employee Deal, getting this piece right (once the reward hygiene factor has been addressed) has the potential to make the most difference. We should always be sceptical about exit interview data (it highlights why people said they left rather than why they actually left) – but it usually tells us that people leave for a mixture of better pay, better career prospects and better experience. All of which are addressed by a better articulated career pathway for all.

4. Acknowledge the noise, but don’t flip-flop around in response to it

In a professional services firm, in 2020 (quite understandably), the Employee Deal debate focussed on wellbeing. In 2021, the loudest conversation out there was about hybrid.Today, the noise is on your base pay offer. This is not cyclical – it is event driven. But an appropriately crafted employee deal offers the answers to such events – you should not need to keep re-defining your deal to respond to them.

This offers an important aspect of an Employee Deal “activation” (placed in italics to acknowledge the potential for the expression to make you cringe) – it is principles based.If your Employee Deal has a “cycle to work scheme” on it, then you need to move the helicopter up a little. No one has ever joined or stayed at a business because of a cycle to work scheme. It’s not part of your Employee Deal.It’s a piece of small print.

The key is this. You have an Employee Deal, whether you like it or not. Understand it, and then manage it purposively, using data to inform and evidence progress. This offers you competitive advantage.  Hideous though the expression “Employee Deal activation” may be, it is difficult to establish what path you are on to make your firm the best place it can possibly be without taking this step…

Further information on this topic

A pay and reward framework for employers – Our simple framework shows you how each of the monetary and non-monetary benefits you can offer your people will affect key outcomes such as employee satisfaction and employee retention. The framework will help you define an efficient and effective package of benefits that helps your business recruit and retain the right talent.

Webinar: How can your optimise you firms reward strategies and people proposition? You can listen back to our virtual event where we discussed how firms can maximise the impact of their reward strategy and the whole employee proposition. Our expert panel of industry leaders talked through our framework based on scientific research conducted by the Behavioural Insights Team that outlines the impact of financial rewards alongside recognition, flexible working, wellbeing and ESG initiatives on employee outcomes.

How can we help?

Our experienced team of professional services experts would be happy to explore where we can help your business in this area. For help and advice, please contact David Ellis, Partner in our Strategic Reward Advisory team or your usual BDO professional services adviser.

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