How much did your EVP contribute to your bottom line last year? Most HR and reward leaders would struggle for an answer because they have not considered the question. In overlooking EVP’s commercial value, they are choosing to see it purely as an HR initiative and not a business asset.
Of course, delivering a strong Employee Value Proposition (EVP) can and does help businesses attract the best talent. But that is not all it can do and we believe it is now time to shift perspective.
When devised, implemented and communicated in the right way, EVP can also become a strategic lever with a measurable impact on key areas of business performance:
- Higher retention - research by Gallup in 2023 shows companies with high EVP scores reduce turnover by 31%, meaning lower recruitment costs
- Better customer satisfaction – the same research found companies with high EVP scores improve customer satisfaction by 22%, bringing higher revenue growth
- Stronger engagement with a well devised EVP can also lead to improved productivity - organisations with strong growth pathways see 32% higher productivity (LinkedIn, 2023)
Rethinking the power of EVP
Too often, EVP is reduced to pay, perks, and benefits, which are important, but too much of a focus on them leads to missed opportunity. A compelling EVP should also influence employee satisfaction, loyalty and effort, which all directly affect the customer experience and business outcomes.
When organisations align their EVP with purpose, culture and growth in this way, they can achieve tangible results. One UK-based insurer realised a 29% reduction in turnover, saving £750k, and a 5% increase in customer satisfaction, generating £3.1m more annually (Willis Towers Watson, 2023).
The Caffeine Partnership has also warned against an overemphasis on pay: "If you imply that the thing that should matter most to your employees is their pay and conditions, you’re creating a workforce that will constantly judge their worth in wages and nothing else."
How to link EVP to growth: the Service-Profit Chain
To unlock EVP’s full potential, organisations need to link it to business outcomes using the service-profit chain. This well-established model in customer experience shows how employee satisfaction drives customer satisfaction, which in turn fuels revenue and profit.
According to the Institute of Customer Service, one UK hospitality brand saw a 5% increase in employee satisfaction, leading to a 1.3% boost in customer retention and a £2.4m boost in additional revenue. Even during the 2008 financial crisis, Southwest Airlines’ strong employee satisfaction drove impressive customer retention, which in turn helped maintain high profitability. And yet these are isolated cases: despite its success in customer experience models, the model remains underutilised in HR and reward.
How to move forward and affect meaningful change
Convince finance leaders of EVP’s value – this can be challenging but the service-profit chain can illustrate direct impact on costs, revenue and profitability. A revamped EVP at one UK retailer resulted in a 32% reduction in turnover, saving £1.1 million, and a 5% boost in customer retention, generating £4.3 million in additional revenue (People Management, 2024).
Measure the impact of EVP – to make it a true business strategy, organisations need to measure how an EVP impacts customer satisfaction, productivity, and bottom-line results.
Consider an EBP (Employee Business Proposition) - at Innecto we are developing the concept of an EBP or Employee Business Proposition: a strategic business lever connecting employee experience with commercial outcomes. Rather than only being an HR tool, EBP is a value exchange that drives both employee fulfilment and business performance. It is tangible, measurable and directly linked to financial results so speaks the language of business leaders and helps align HR with organisational strategy.
Is your EVP contributing to business success? At Innecto, we help organisations adopt a data-led, business-focused approach to EVP, linking them to tangible business outcomes. By leveraging employee listening, engagement data and performance analytics, we can uncover how your EVP can drive improvements in customer experience, productivity, and profitability.
If you're looking to explore the business value of EVP and align it with your broader strategy, we’re here to help – Contact Us Now
