Employee Value Proposition: Definition, Importance and Key Components

Every year, companies in the USA vie to get on a prestigious list that has nothing to do with their products, services, or customers. And yet, getting on the recent list of Top 100 Best Places to Work is a signature achievement and has everything to do with the success of these companies.

Significantly, companies on this list are assured that they will be able to recruit the best of the best because employees are increasingly discerning “buyers” in the employment marketplace. 

According to a recent McKinsey study, word-of-mouth positively impacts the potential client by 20% to 50% for all purchase choices, and 50% to 80% of word-of-mouth is based on personal experience with a product or service, making the matter of EVP one of the most sought-for elements in any organization. 

To corroborate this study, Gartner revealed that organizations that effectively focus on delivering their EVP can positively notice a decrease in turnover by just under 70% and increase a new hire commitment by nearly 30%. This blog will focus on employee value proposition, its importance, and various nuances. 

What is employee value proposition (EVP)?

The employee value proposition is the primary tool to build employee loyalty. Broadly defined, it is the set of attributes like experiences, rewards, and opportunities that employees perceive as the value they gain through employment in an organization.

The EVP synchronizes the organization’s expectations of employee skills, capabilities, and experience; with the benefits that the employees derive from such work.

Simply put, an EVP is who you are as a company, and what you offer. It is the foundation for an organization’s reputation as an optimal place of work. It is what brings the best candidates into the organization and ensures those same individuals stay.

Importance of employee value proposition

Businesses can’t grow without a talented workforce. Companies with a clear and compelling EVP outperform their competitors because they attract and retain a superior workforce. The data on this is clear.

A well-designed and differentiated EVP is 5X times more likely to have highly engaged employees. It is also 2X times more likely to produce financial performance significantly above peers.

And yet, only 23% of executives say that their companies are excellent at aligning employees' goals with corporate purposes and as many as 33% of global companies don’t have or communicate a clear employee value proposition (Source: SHRM).

As the global economy recovers from the pandemic, and demand accelerates, there is a major competition underway for top-tier employees. With more remote working options now a post-COVID-19 norm, the landscape for company recruitment has also changed.

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Today, the work-from-anywhere model has moved the pool of potential employees far beyond previous geographic boundaries.

In this environment:

↠ 57% of recruiters say their top challenge is differentiating their company from the competition.

↠ Gartner notes that through 2023, 70% of companies who do not have a defined, compelling, and well-articulated EVP will be unable to hire and retain critical talent to meet their needs.

↠ Organizations with excellent EVPs experience a markedly lower voluntary turnover, which in turn lowers employment costs.

According to Gartner, organizations can reach 50% deeper into the labor market when candidates view their EVP as attractive. An effective EVP can also attract passive candidates, re-engages your current workforce, provide vital management and strategy alignment, and revitalize talent recruitment efforts.

Components of employee value proposition

A well-formed EVP provides a framework that addresses the characteristics of the modern Mazlow’s Hierarchy of Employee needs. It helps to articulate purpose, enthusiasm, and passion for current and prospective employees.

Employees want to know that they will be rewarded and recognized; and have the right cultural environment, processes, and opportunities to not just survive, but thrive in the company. Far too often, the EVP stops at compensation and benefits – also known as Total Rewards – and not the compendium of all the attributes that employees seek.

Here are key attributes of an effective EVP:


1. Organization

Employees want to know that they will be challenged but also supported by the company. Being recognized and rewarded for work done well is a powerful incentive for current and future employees.

2. Total rewards

This component of the EVP addresses an employee’s expectations from the overall evaluation and compensation system. Total rewards covers all the financial offerings like salary, bonuses, and benefits. Benefits can include: health insurance, retirement benefits, paid vacation, gym memberships, company-sponsored holidays, sabbaticals, etc.

In recent times, new platforms for delivering employee benefits have emerged to turbocharge this space.

As an example, Empuls is an employee engagement platform that enables companies to deliver digitized rewards to their employees from a large catalog of cards, experiences, and solutions chosen from thousands of vendors.

It allows management to staff with instant recognition and rewards handled simply and powerfully through one convenient SaaS portal. Through such a platform, the benefits component of total rewards has now moved far beyond the traditionally limited horizon of employee reward schemas.

3. Work

Factors here include flexible working hours, work-life balance, and remote work. Culture may be one of the most important components and yet it is one of the hardest to define. Increasingly, with the younger generations, meaningful work is taking on a high priority.

4. Opportunities

Most employees want stability and a robust career path including training, mentoring, and opportunities to work in different areas and geographies.

5. People & place

People want to work in a ‘fun’ place where you can have both professional and personal stimulation to produce your best work and feel fulfilled.

Developing an employee value proposition

Building a strong employee value proposition needs to be a deliberate and thoughtful process and be well resourced. Successful organizations know that a happy and motivated workforce leads to higher profitability.

The goal should be to create a sustainable EVP that is effective in any economic environment but also allows for scalability in a downturn - like the one we have experienced in 2020.

Here is a recommended EVP lifecycle:

  • Assess phase: In the first phase, assess, one creates a checklist of all the EVP components that are currently being offered.
  • Research phase: Research requires collecting feedback from incoming and outgoing employees and cataloging what is working and what is not meeting employee expectations.
  • Discuss phase: In the Discuss phase, employee populations and roles are segmented to find out what is most important to each group. Everyone does not have the same drivers and motivation. Think outside the box and include new benefits like the ones from Empuls.
  • Build phase: In Build, use data from the previous three phases to define the characteristics of the new EVP.
  • Executive phase: In the Execute phase, market, and promote the EVP through internal and external channels. Train and reward managers to not only know EVP attributes but to “live” them - thus setting an example for all their employees.
  • Review phase: The Review phase requires an objective review of whether the expected EVP metrics (like hiring statistics) are being met. If needed, recalibrate, and change attributes to deliver a more effective EVP. No EVP can remain static for long.

Impact of pandemic on employee value proposition

As a result of the pandemic, remote work options have exploded, and candidates can now find jobs that give them better flexibility and more work-life balance. More than half (53%) of companies recently surveyed said that they are altering their EVPs to promote more work-life balance and wellness.

Conversely, some of the benefits that companies offer—gym memberships and opulent office spaces, to name a few—may no longer have the same value. Forbes adds that only 10% of employees desire to return to their workplaces full-time. Employee health and safety have become far more important.

Employees are also seeking assurances that companies have the financial wherewithal to survive severe downturns like the COVID-19 crisis.

The shift in how we work, where we work, and what attributes are important - has undergone a sea change post-pandemic. If you have not already done so, it is time to consider a thorough review of the EVP so that your recruiters have the right answers for prospective candidates - responses that resonate with the new reality of the workplace.

Examples of companies with best employee value proposition

Here is how the famous companies like Unilever, PwC, Nasa and Deloitte are doing employee value proposition right.

1. ‍Unilever

"Unilever is the place where you can bring your purpose to life through the work that you do, creating a better business and a better world. You will work with brands that are loved and improve the lives of our consumers and the communities around us. At the heart of our value proposition is that we build leaders. We develop leaders for Unilever, and Unilever leaders go on to be leaders elsewhere in the world."

2. PwC

"From developing leaders at every level, to digital training to help you embrace the innovative technology of tomorrow, PwC provides you with support to help you develop your career and build relationships with people from diverse backgrounds and across multiple industries. Are you ready to make an impact?"

3. NASA

"Explore the Extraordinary, Every Day. NASA is more than astronauts. We are scientists, engineers, IT specialists, human resources specialists, accountants, writers, technicians, and many other kinds of people working together to break barriers to achieve the seemingly impossible."

4. Deloitte‍

"Our people are our brand. We have a continuous learning environment. Creativity is encouraged; innovation is expected. We believe teamwork beats individual brilliance every time. Our leaders know they are not the sole source of wisdom – they are students and teachers simultaneously. We are redefining the way professional services are experienced for our clients and our people."

Key takeaways

Today, the prospective employee is discerning and “shops” different employers to find the right alignment and fit for their own passion, role, culture, and life.

To stand out in this crowded field, employers must have a strong EVP to set themselves apart and offer prospective employees a great experience. Organizations that do this successfully will be able to attract and retain top talent, and hence will be better placed to be successful.