The Hindu Business Line : `Employees will stay if employment value proposition is attractive'

According to CEB, almost 30 per cent employees seem to be on the lookout for new jobs and more than 90 per cent display below average levels of commitment towards their organisation.

New Delhi April 1 It costs an Indian firm Rs 250 crore over and above the compensation component to hire 500 people with an average salary of Rs 5 lakh per annum. This is a result of unattractive employment value propositions (EVP) in the labour market, according to a study conducted by the Corporate Executive Board (CEB).

EVPs

"While attracting and retaining the right talent is the primary concern of chief human resource executives worldwide, fewer than 24 per cent of the companies keep up to the EVPs they set forth while recruiting new employees," said Mr Derek van Beyer, Chief Research Officer, CEB.

The firm defines EVP as the set of attributes that the labour market and employees perceive as the value they gain through employment in the organisation.

In fact, according to the study, if a company were to get their EVP right, only a 20 per cent increase in salaries would be required to attract new employees, juxtaposed to a 34 per cent increase in the same if the company has an unattractive EVP.

"An attractive EVP decreases required compensation premium and increases the work effectiveness and commitment of employees to not quit their jobs and look for fresh ones," said Mr Beyer.

Study results

As per the study, every 10 per cent increase in commitment results in an increase of 7 per cent in work effectiveness and decreases the chances of the employee quitting by 8 per cent amongst Indian employees.

An important aspect of the Indian labour market is that to retain a particular job, employees look for opportunities to innovate and scope for growth in the organisation much more than the levels of compensation or the value of the organisation in the market per se.

However, according to the findings of CEB, the problem in the domestic labour market seems to be that almost 30 per cent employees seem to be on the lookout for new jobs and more than 90 per cent display below average levels of commitment towards their organisation.

This is mainly due to companies not living up to the proposed EVPs. Around 67 per cent of Indian employees report poor to average delivery of EVPs.

"The most important thing for a company in India or globally is to develop a strong and attractive EVP, whereby, it is able to not only attract a talented workforce without paying a premium on compensation, but also is able to retain the workforce by getting it involved in the functioning of the organisation much more, thereby, giving it greater reason for continuing with the same firm," said Mr Beyer.

The CEB is an executive network for top corporate managers to research and solve their most urgent shared concerns. The membership includes executives from over 3,700 leading organisations, representing over 80 per cent of the Fortune 500 companies.