In order to understand the ways in which an employee value proposition (EVP) can benefit your company, let’s start with the definition. An EVP is the complete offering a company makes to its prospective and current employees in return for their best efforts. It encompasses pay and benefits, the non-financial aspects that attract, retain and motivate employees, and reasons due to which employees maintain a positive sentiment toward their former companies. The concept has been around for years but has been gaining more traction lately – and for good reason.

EVP borrows terminology from the consumer side of business, where a company develops a customer value proposition (CVP) through a strategic evaluation of how their products can be most appealing to potential buyers. CVP includes an inherent recognition that the customer always has the option to buy from the competition. Therefore, CVP initiatives focus intensely on what the customer wants. EVP initiatives work best when they have a similar intense focus on what employees value, unique to the organisation that they work for.

How does employee engagement fit into the picture? Think of EVP and employee engagement as siblings – two different but related concepts affecting the employee satisfaction continuum.

For starters, employee engagement only applies to the period when a person is an employee. In fact, engagement sometimes gets serious consideration only during the annual employee survey. Traditionally, engagement has given only modest attention to the reputation or “employer brand” of the organisation before and after a person joins.

An EVP strategy, when implemented in the best way possible, considers how the company is perceived before, during, and after employment. Since it is informed by worker surveys but is not as closely linked to them, EVP tends to be less episodic than engagement initiatives.

However, assuming that a company gets good insights from its employee surveys, those analyses are pivotal to understanding what employees value, how far the company has succeeded in its EVP, and which are the most serious gaps in the delivery of the proposition.

Like any way of framing the psychological contract between people and the organisations where they work, an employee value proposition is what a company makes it. If EVP is the mechanism for translating into concrete differences the leadership’s genuine desire to make their employees happy, it’s exceptionally powerful. If it’s just a marketing gimmick or a new label for doing more of what hasn’t worked before, EVP won’t matter. A focus on EVP does, however, have two advantages over a focus on employee engagement.

Firstly, as mentioned above, EVP takes a broader view of the relationship, from a prospective employee’s first encounter with the company all the way through the time he or she moves out of the company. This is important given the higher turnover in some companies and the increased awareness of organisation’s reputation on social media sites like Glassdoor and LinkedIn. With more people coming in and more people going out, greater attention needs to be spent on what happens during one’s course from being a new employee to a former employee.

Secondly, and more importantly, EVP throws the ball in the court of the company to offer the work, opportunities, culture, and benefits of the greatest value to the employee. In the last decade, traditional employee engagement programs increasingly blamed “disengaged” employees for having bad attitudes, despite evidence revealing that a vast majority of people will be “engaged” if the company provides attentive and supportive managers, work-life balance, teamwork, a promising future, and other reasonable requirements for a good job. EVP puts this responsibility where it belongs – on the company.

So, the first question companies should be asking is “what do employees value?” This is where traditional employee engagement approaches have failed. Many focus on the organisational upsides of engagement to the exclusion of what employees want in the bargain. People want to be happy at work. It’s just that simple. And yet, many old-school engagement consultancies are not only unable to focus on happiness, but they also argue against it. “The idea of making people happy at work is terrible,” said the CEO of one traditional consultancy in a comment representative of many others.

BI WORLDWIDE’s research shows a high correlation between happiness and all the performance variables that organisations need, such as customer focus, retention, innovation, collaboration and speaking well of the firm. To put it plainly, happiness at work is the ultimate employee value proposition.

Some think that happiness is too vague to be a business goal, and it can be, if it is not broken down into its components. This is where BI WORLDWIDE’s research conducted over the past five years is of value. Through these modern studies that built on what was already established, BI WORLDWIDE identified 12 elements that define the unwritten contract between people and the companies where they work. When well executed, these 12 aspects make people happy and motivate them to perform at the highest levels for their employers.

Employees have a role in EVP too, which is one of the major differentiations between an employee value proposition and a customer value proposition. Customers of most organisations do not take an active role in shaping their experience because the relationship is based on infrequent transactions. Employees on the other hand, spend a large part of everyday at work, and since many of the decisions are under their control, it is crucial to involve them in making the company a better place to work.

When your EVP strategy is in practice – focusing on what employees truly value sheds light on how your company is perceived before, during and after employment. Additionally, the motivation of leaders in your workplace directly affects the actions of your employees. So, when you commit to working toward employee happiness, the attitude of your employees follow suit and you stand to gain all that comes along with a happier workforce. That’s how assessing and steering the direction of the big picture with an employee value proposition can make an immense difference to your company.