HR Management, Talent Management

Want to Make Your CEO Happy? Use the Employee Value Exchange Proposition

Photo by Dreamstime

Over the last year we have been slowly introducing a new term to organizations. The goal is to replace the notion of the employee value proposition with the employee value exchange proposition™, and what we have learned is that CEOs very much appreciate this approach.

Here’s why:

Employee value proposition

  • One way – it’s about what the company gives employees.
  • Not tied to high performance.
  • May distract companies from doing what’s right.
  • Makes entitled employees even more entitled.

Employee value exchange proposition

  • Two way – it’s about what employees get in exchange for what they give to the company.
  • Tied to high performance because employees who are valued for not doing much are now recognized.
  • Focus the company on managing the market segment of employees who can be easily moved to a high performance and high value exchange proposition.
  • Makes entitled employees feel not valued, increases their sense of urgency to either perform better or leave

I worry about the employee value proposition because I truly believe that it is leading many companies down the wrong path. Giving more and more and not worrying about what a company gets in exchange for what is given will lead to mediocre performance.

Best place to work contests

Some of the dysfunctional behavior associated with the one-way employee value proposition may be associated with the link to best place to work contests. The best place to work phenomenon is good for recognizing high performance firms. These top companies got where they are because they were managing people well and not encouraging mediocrity and entitlement.

However, what about firms in the next level down from the top? In order to “win” they can be distracted by doing things that only improve the employee value proposition at the expense of firm performance. To be “cool” we have seen organizations start programs that encourage employees to bring dogs to work, that deliver higher levels of base pay, that spend resources to update furniture or engage in a number of activities that the contest winners write about doing to make their employees happy.

One has to ask whether these types of employee-based interventions lead to increases in bottom line financial results. There’s a good chance they will not.

In order to be “the best,” high performing employees need the rewards. That does not, however, mean that ALL employees should get more, which is where focusing on the employee value proposition alone leads organizations.

Application to employee engagement work

Employee engagement survey work is another organizational process set up to increase the employee value proposition, not the employee value exchange proposition. Our research team has been doing some extensive analysis of several different engagement surveys and demonstrating to organizations just how their actions would change if they did their survey data analysis work using an employee value exchange profile. The actions are, in many cases, dramatically different.

Perhaps the lack of using an exchange proposition model is one reason that despite all the employee engagement work done over the last ten plus years, overall numbers of engaged employees is not moving in the right direction (not improving). Various reports from firms like Towers Watson, Aon Hewitt and Right Management have shown that in 2010 employee engagement levels remain quite low, and this is years after numerous employee engagement programs have been enacted.

Case study in financial services

In a recent project we reworked a financial service firm’s employee engagement annual survey data to apply the employee value exchange model. The work utilized a proprietary process developed to separate out various groups of employees:

  • Aligned employees – people who are in alignment and whose performance is consistent with their rewards; low performers are not rewarded or valued and high performers are valued and rewarded. In other words, for these employees, the employee value exchange proposition is working. The percent of people in alignment is a critical number to benchmark.
  • Entitled employees – people who are “cruising” as one might say; they are low-performing employees who are receiving great rewards or for whom the employee value proposition is backfiring.
  • Neglected warriors – these are people who are getting hurt by the employee value proposition. They are high performers who are not valued or rewarded for their efforts.

The number of people in each group is an important benchmarking data point. This is very different from benchmarking a mean or percent positive on a question.

Also, this type of analysis gives one the ability to profile the various employee market segments so that employers can figure out how to take the right actions to drive performance vs. taking actions that just give more “stuff” to employees.

Make your CEO happy

This more rigorous process will make your CEO happy. In the financial services case study, the market segmentation analysis led to actions that were quite a bit different from the action strategy that was originally recommended to the firm. The original process led to actions that were based on aggregating all employees into one bucket and taking the employee value proposition as the leading theory for doing the work.

CEOs “get” the employee value exchange proposition. Using this model provides the CEO with actions that meet what is often called the “sniff test.” It makes sense, and it seems logical because your CEO can see that the money spent on employees will lead to the type of actions they need from the workforce.

Conclusion

We are all moving beyond the recession, and we hope the economy continues to plow forward in a healthy direction. In order to stay ahead of your competition, this may be an opportunity to change the paradigm.

Everyone else is going to be moving down the most popular path – tying to improve his or her employee value proposition. Perhaps starting with the employee value exchange proposition instead is the winning strategy for your organization.

If you want to learn more about this work stream, contact our research team at info@eepulse.com.

Note: Employee value exchange proposition is a trademark of eePulse, Inc., and the employee engagement survey value exchange diagnostic process also is copyright protected. Do not copy or use without permission of Dr. Theresa Welbourne.

Theresa M. Welbourne, PhD, is the FirsTier Banks Distinguished Professor of Business and Director of the Center of Entrepreneurship at the University of Nebraska, Lincoln. She is also the founder, President, and CEO of EEPulse Inc., a human capital technology and consulting firm in the energy business -- optimizing and directing human energy for growth and innovation. She also is an adjunct professor with the Center for Effective Organizations at the University of Southern California. Theresa was awarded the 2012 Academy of Management Distinguished HR Executive Award (for contributions in research, teaching and practice). Contact her at theresa@eepulse.com .
  • Terina Allen

    This is A MUST READ if you want to make your CEO happy by
    incorporating a value and performance model that passes the “sniff”
    test or if you are the CEO and want to have a better process for distinguishing
    high and low performers and realizing a return on the investment. It is at your
    finger tips -solid information and a tool for balancing what the employee gets
    with how he/she performs and for creating metrics that align with
    organizational success.

  • http://twitter.com/olaehinmoro Ola Ehinmoro

    Reading “Want to Make Your CEO Happy? Use the Employee Value Exchange Proposition” makes me feel that the title limits the potency of the insights.

    The approach surely should make employees highly motivated to perform in order to be rewarded and promote performance culture and equity

  • http://twitter.com/KerrianFournier Kerrian Fournier

    In order to help shift our company’s thinking about how to analysis survey results and design high impact interventions, I’ve recently started to do this work with Theresa on topical pulse surveys in advance of our full engagement survey in September.  Leaders I’ve discussed this with get it – want more of it – and the potential for robust root-cause analysis is so much deeper with this approach.  I’m excited to apply it to our full engagement survey in the Fall – I believe it will fundamentally shift how we prioritize our action plans and how we communicate with our employees on this topic