Benefits and Compensation

Enron’s EVP Was Great … Except for One Thing

Many EVPs (Employee Value Propositions) consist of nice-sounding platitudes that are a litany of things that don’t reflect reality, says consultant Stephanie Tarant, PhD. Take Enron, for example.

Enron had a nice-sounding value statement that was based on four values:

  • Integrity
  • Communication
  • Respect
  • Excellence

In fact, the four values were chiseled in marble in the main lobby of Enron’s corporate headquarters, but those values had little to do with the real values of the organization, Tarant points out. Tarant, who is principal at Global Talent Consulting, offered her tips at BLR’s Advanced Employment Issues Symposium, held recently in Las Vegas.

Enron Not Alone—Failure to Deliver

Most organizations fail to deliver the benefits they promise to their candidates, says Tarant. In particular, more than half of employees indicate that their employers fail to deliver on the less-tangible aspects of the EVP, such as development opportunities, respect, and manager quality.

Get real, says Tarant. What the company really values and what employees really experience is shown by who gets rewarded, promoted, or let go … as opposed to the nice-sounding platitudes.


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Benefits of a Well-Managed EVP

Companies with a clear EVP outperform their competitors, says Tarant. She quotes a 2013 Towers Watson study showing that a differentiated EVP that integrates total rewards and aligns to business strategy results in:

  • An organization that is five times more likely to have engaged employees, and
  • An organization that is two times more likely to report achieving financial performance significantly above peers.

In addition, says Tarant, the EVP helps with attracting and retaining employees:

Attraction:

  • Reduces the compensation premium needed to hire by 50%
  • Enables 50% deeper penetration into the labor market to attract passive candidates

Retention:

  • Increases commitment of new hires by up to 29%
  • Increases commitment of employees by up to 37%

The challenge is that many companies don’t have or communicate a clear EVP, says Tarant. The EVP can’t just be an HR exercise, she adds. Think about the great employment brands: Google, Apple, IBM.

Communicate and DELIVER…

To sum up, Tarant says, be clear about your promise … and deliver on it!

From developing an EVP to determining merit increases to designing affordable incentive plans for the coming year, compensation and benefits are never easy. “Maintain internal equity and external competitiveness, with benefits and compensation, and control turnover, but still meet management’s demands for lowered costs.” Sound familiar?

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