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Unlocking Talent’s True Potential: A Novel Approach to Employee Value Proposition

today2023.10.19.

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WHY SHOULD YOU CARE?

In a world where the talent market is fiercely competitive and the “Great Resignation” looms, attracting and retaining the right employees has become a paramount challenge. Enter Mark Mortensen and Amy C. Edmondson, whose groundbreaking thinking, as featured in the Harvard Business Review, offers a fresh and systemic approach. Discover how an integrated Employee Value Proposition can go beyond immediate perks, creating a narrative that not only benefits employees but also secures an organization’s long-term success.

In today’s dynamic business landscape, attracting and retaining top talent has never been more challenging. The Great Resignation, coupled with an intensely competitive labor market, has forced organizations to rethink their approach to talent management. Mark Mortensen and Amy C. Edmondson, authors featured in the Harvard Business Review, introduce a refreshing perspective on how to address this issue—one that transcends the immediate desires of employees, focusing on long-term sustainability and mutual growth.

Traditional strategies to lure talent have primarily revolved around a simple, yet seemingly effective approach—ask people what they want and provide it. In the past, the primary concern might have been salary, but more recently, it’s been the flexibility of remote and hybrid work arrangements. While material perks and short-term incentives are enticing, they’re not sustainable. Moreover, they are easy for competitors to emulate, resulting in a race to the bottom as organizations strive to outbid each other for top talent.

Mortensen and Edmondson propose a far more holistic approach to address the talent challenge—one that not only enhances recruitment and retention but also fosters a deeper sense of purpose for both employees and organizations. They introduce the concept of an “Employee Value Proposition,” a system comprising four interconnected factors.

Material Offerings: This encompasses tangible aspects such as compensation, physical office space, location, commuting benefits, equipment, and flexible schedules, among others.

Opportunities to Develop and Grow: This factor emphasizes how organizations support their employees in acquiring new skills and becoming more valuable in the labor market. It includes roles, job rotations, training, and advancement opportunities.

Connection and Community: Building a sense of belonging, mutual appreciation, and social relationships within a vibrant culture is essential to creating a sense of community.

Meaning and Purpose: Understanding the aspirational goals of the organization and how they align with employees’ desire to make a positive impact on society.

These four factors vary in terms of duration—material offerings and connection/community are experienced in the short term, while growth/development and meaning/purpose unfold over the long term.

The dangers of overemphasizing material offerings have been well-documented. Mortensen and Edmondson suggest that a myopic focus on short-term incentives can lead to unintended consequences, such as reduced collaboration and weaker social bonds among employees. As an example, Microsoft’s analysis of remote work during 2020 revealed that it resulted in more siloed relationships and less interaction. People value the energy, camaraderie, and idea-sharing that naturally occur when working alongside colleagues.

Addressing these factors holistically is essential. In the rush to cater to employee demands, such as remote work, organizations should recognize the potential costs. For instance, when surveyed, a significant portion of young professionals noted missing the office community and mentoring opportunities.

The critical insight shared by Mortensen and Edmondson is that organizations must strive to provide employees with what they need for long-term growth and fulfillment, rather than merely reacting to immediate desires. It’s about cultivating an environment that allows employees to reach their full potential.

The challenge for organizations lies in considering these four factors as interdependent, rather than separate elements. An effective Employee Value Proposition requires a coordinated approach. For instance, emphasizing the company’s purpose energizes the culture and supports individual growth and development. Likewise, a focus on collaboration promotes peer-to-peer mentoring, the sharing of best practices, and other forms of connection.

Mortensen and Edmondson provide examples of organizations that have embraced this holistic approach successfully. In one case, a software company adjusted its remote work policy to accommodate employee preferences, but engagement scores dropped as a result. The company had failed to consider the long-term impact on the sense of community. Similarly, UNICEF’s strong mission was a powerful recruitment tool, but it led to a toxic culture due to the singular focus on purpose. Organizations need to balance purpose with development and community.

An integrated Employee Value Proposition not only avoids a race to the bottom but also makes the organization’s offering more difficult to imitate. It aligns employees and managers around a common narrative, reducing tensions and reinforcing a sense of belonging. Mortensen and Edmondson emphasize that it enables organizations to look beyond immediate demands like signing bonuses and remote work and instead focus on creating an environment where people can thrive in the long run.

To implement this approach, leaders must take three key steps:

  1. Assessment: Organizations must understand what they currently offer and what their employees need. This requires collecting comprehensive data on each of the four factors, considering how employees experience them, and what they desire. This data collection should go beyond surface-level surveys to investigate the root causes of changes in employee engagement.
  2. Change the Conversation: Encourage managers and their teams to discuss the Employee Value Proposition in an integrated way. By explaining how these factors are interrelated, organizations can reduce misunderstandings and disagreements. Ensure that this integrated conversation occurs during recruiting and onboarding, performance management, and policy setting.
  3. Continual Updates: Employee needs evolve, and organizations must periodically reassess their offerings. Collecting data on an annual basis should suffice for most companies, but significant events such as mergers or acquisitions may necessitate more frequent evaluations.

In a world marked by the dynamic interplay of talent and organizations, a new approach to the Employee Value Proposition is emerging as a beacon of hope. Mark Mortensen and Amy C. Edmondson, have laid the foundation for a systemic shift in talent management. Their insights guide us to look beyond the immediate and focus on the holistic factors that foster long-term growth, fulfillment, and belonging. As we conclude this exploration, remember that the path to talent’s full potential lies not in short-term incentives but in crafting an enduring narrative that secures the future of both individuals and organizations.


Author Bio:

Mark Mortensen is a Professor of Organizational Behavior at INSEAD, specializing in collaboration and organization design. His insights have appeared in renowned publications such as Harvard Business Review and MIT Sloan Management Review.

Amy C. Edmondson, the Novartis Professor of Leadership and Management at Harvard Business School, is known for her expertise in leadership and learning from failure. She is the author of the upcoming book, “Right Kind of Wrong: The Science of Failing Well.”

This article is based on the work of Mark Mortensen and Amy C. Edmondson as featured in the Harvard Business Review in January 2023.

Written by: Mihaly Nagy

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