Becoming An Employer of Choice

1. Becoming An Employer of Choice APPA National Conference June 25, 2007

2. Outline • What It Means to be an Employer of Choice • How to Attract and Retain Critical Talent • An Employment Value Proposition (EVP) for the Future Workforce • The Importance of Flexibility • How to Create an EVP for Your Organization

3. What It Means to be an Employer of Choice Historical Definitions • Able to attract and retain best and brightest • Recognized and respected among employers • Competitive pay, benefits and growth opportunities • Leader in effective human resource practices • Enjoy high levels of employee satisfaction • Known as a good place to work

4. What It Means to be an Employer of Choice Why Our Definitions Must Change • “The worst employment crisis ever is on the horizon as baby boomers leave the workforce faster than new employees can take their place.” CEO, Monster.com • Over half of 76 million baby boomers eligible to retire in next decade • U.S. Dept. of Labor states that 60% of 21st century jobs will require skills that 20% of workers have

5. What It Means to be an Employer of Choice Why Our Definitions Must Change • Only 5% of U.S. students earn undergraduate degrees in science and engineering • Bureau of Labor Statistics estimates that more than 300,000 new IT jobs will remain unfilled

6. What It Means to be an Employer of Choice Why Our Definitions Must Change • Towers Perrin study in 2005 found only 21% of U.S. workforce considered themselves fully engaged • Gallup’s U.S. Employee Engagement Index: • 29% truly engaged • 54% not engaged • 17% actively disengaged

7. What It Means to be an Employer of Choice New Definitions • Ability to attract and retain the right people • Excited by what they’re doing • Fiercely loyal to the organization • Productive for the long-term • Target recruitment for high performance • Intelligence • Right skill set • Clear performance standards • Organizational fit • Employee engagement as competitive advantage • Goes beyond job satisfaction • Extent to which employees commit to something or someone in the organization • How hard they work • How long they stay • Likely to go the “extra mile”

8. How To Attract and Retain Critical Talent • Build and deliver an effective employment value proposition (EVP) • What Is An EVP?Attributes labor market and employees perceive as value gained from an organization • What Is In An EVP? • Tangible rewards • Opportunity • Nature of work itself • Characteristics of the organization • Understand what matters to employees at different stages • Financial drivers • Work content (interesting, challenging and meaningful) • Development and real-life learning • Communications • Affiliation and connection

9. How to Attract and Retain Critical Talent • Benefits an effective EVP delivers • Increases size of talent pool (60% vs. 40%) • Reduces new hire compensation premium (4% vs. 21%) • Improves commitment of new hires (38% vs. 9%) • Improves commitment after first 12 months of tenure (31% vs. 3%) • Enables shift of expenses from recruitment costs to development investments

10. The employment value proposition (EVP) drives attraction and commitment in the labor market

11. Compensation and career opportunities show disproportionate returns at improving attraction

12. Pay (Also) Keeps Talent Inside Compensation has a much larger impact on retention than effort

14. Development opportunities, job-interests alignment, respect, and people management are critical for commitment

15. Out of 38 employment value proposition (EVP) attributes, seven are critical for driving attraction or commitment across all major talent segments and geographies, but only three drive both

16. Definitions of EVP Attributes Collegial Work Environment • Whether the work environment is team-oriented and collaborative Compensation • The competitiveness of the job’s financial compensation package Development Opportunities • The developmental/educational opportunities provided by the job and organization Future Career Opportunities • The future career opportunities provided by organization Manager Quality • The quality of the organization’s managers Organizational Stability • The level of stability of the organization and the job Respect • The degree of respect that the organization shows employees

17. Employees join for “the opportunity” and “the rewards” and stay for “the people” and “the organization”

18. The Role of the Manager • Tremendous impact on employees’ commitment to team, organization and job • Managers serve as the enablers (connection) to many attributes of the EVP • Compensation • Development • Future career opportunities • Respect • Work/life balance • Empowerment • Almost all manager activities drive employee effort • Provide clear, consistent and honest communication • Building collaborative teams • Enable access to individuals and networks • Commitment to diversity • Offering frequent and job relevant informal feedback • Focusing on employee contributions • Creating linkage between employee’s job and organization’s mission

19. The Role of the Manager • According to one survey, 32% of an employee’s decision to stay with their organization is based on trust for their direct supervision • Key Actions to Enhance Management Quality • Establish selection criteria for supervisors and managers • Use 360 degree feedback and coaching • Invest in supervisory training and leadership development • Enroll best managers as mentors and facilitators • Provide tools to enable managerial productivity and effectiveness

20. An EVP for the Future Workforce • Four Generations in the Workplace • Traditionalists (1925-1945) = 52 million • Baby Boomers (1946-1964) = 80 million • Generation X (1965-1980) = 51 million • Millenials/Gen Y (1980-2000) = 76 million • EVP for “Mature Workers” (age 55+) • Meaningful work and responsibility • Opportunity to learn • Congenial and respectful workplace • Fair pay • Benefits that reflect the value of their experience and retirement preferences • Flexible employment relationships • Retiree return programs • Project-based assignments

21. An EVP for the Future Workforce • EVP for Mid-Career Workers” (Born 1951-70) • Comprehensive benefits plans • Flexibility to meet work and life commitments • Stimulation, variety, change of pace • Enjoy work with a service component • Opportunity to leverage existing skills while learning new ones • Mentoring for knowledge and skills transfer • Availability of training and development

22. An EVP for the Future Workforce • EVP for Newer Workforce Entrants • Individual responsibility and freedom to make decisions • Sociable and enjoyable work environment • Opportunities to learn and grow • Opportunities to contribute right away • Pay for performance • Team-based work • Lots of feedback, frequent and positive input • Manager who is a show horse and a plow horse • Boss as mentor • Open communications and accessibility • Very fast responders and expect the same • Focus on effort vs. results • Flexible everything – work schedules, workplace, work policies

23. An EVP for the Future Workforce • Common Core EVP Attributes • Development opportunities • Compensation • Respect • Manager quality • Delivering an EVP Across Generations – ACORN Imperatives • Accommodate employee differences • Create workplace choices • Operate from a flexible management style • Respect competence and initiative • Nourish retention from GenerationsAtWork, Zemke, Rains, Filipszak

24. The Importance of Flexibility • Key to Being An Employer of Choice • Provide employment value across talent segments • Increase engagement and reengagement • Flexible Work Arrangements • Customization of schedules, hours, and career paths • Time off • Telecommuting • Organization of work • Elastic job content • Efficient systems and processes to eliminate nonessential work

25. The Importance of Flexibility • Flexible Learning Opportunities • Lifelong learning for all employees • Leverage information technology • Knowledge networks • Action-learning experiences • On-boarding new employees • Flexible Compensation & Benefits • Customization • New variables in benefit segmentation • Educate employees and retirees • More kinds of incentive compensation • Fairness vs. equity • Key resources required for productivity

26. How to Create an EVP for Your Organization Defining Relevant EVP Attributes • Identify attributes that matter most to attraction and retention • 7 core attributes • Segment-specific • Select attributes that represent your organization’s strengths

27. How to Create an EVP for your Organization Find Competitive Opportunities • Study what your competitors don’t do as well • Review which attributes aren’t promoted by competitors • How to find out which EVP attributes matter • Published research • Employee preference surveys • Focus groups (segmented) • Data collected from job seekers • New employee follow-up

28. How to Create an EVP for your Organization Assess Strategic Alignment • Determine which attributes best support your organization’s strategic objectives and culture • Evaluate level of HR investments

29. How to Create an EVP for Your Organization Define Your Competitive EVP • Focus on most competitive and strategically relevant EVP attributes • Focus on opportunities that offer: • Competitive differentiation • Strategic alignment • Low implementation costs

30. SRP’s EVP Relevant EVP Attributes • Organizational Stability • Compensation • Development Opportunities • Manager Quality • Collegial Work Environment • Respect Organizational Stability • Rich history • Stability of ownership and leadership • Well-managed • Makes good business decisions • Reputation • Good corporate citizen • Environmentally responsible • Honest in dealings with customers and employees • Understands its mission and strengths

31. SRP’s EVP Compensation • Market-based pay • Corporate-wide incentive program • Spot awards • Defined benefit plan • 401(k) plan • 100% immediate vesting • Pre-tax, after-tax and Roth • Company match at 80% • Health/Benefits • PPO and 2 HMO’s • Preventive health and wellness coverage • CHAMP • Hearing and vision

32. SRP’s EVP Compensation (cont.) • Retirement and financial planning • Retiree medical coverage • PERA Club recreational services • Voluntary benefits • Long term care insurance • Auto and homeowners coverage • ID theft protection • Group legal • Work/life programs • Lots of benefits communications

33. SRP’s EVP Development Opportunities • Tuition assistance • On-site bachelor’s degree program • Leadership series • Apprenticeship program • Certification support • Extensive classroom training schedule • Online training • Community involvement and leadership assignments • Ongoing technical training • Professional and industry association participation

34. SRP’s EVP Manager Quality • Thousands of years of experience • Industry experts • Continuous investment in leadership development • Accessibility and approachability • Active engagement in the community Collegial Work Environment • Begins with on boarding new employees • Foster principles of teamwork, cooperation and interdependency • Building an inclusive environment • Recognize longevity and service

35. SRP’s EVP Respect • Safety • Onsite EAP resource • Harassment-free workplace policy • Positive discipline • Wide communication and equitable application of policies • Investment in communications • Doing the right thing • Take care of each other Overall: We strive to treat every employee with dignity and respect and ensure the fair and consistent application of policies, programs and practices

36. Marketing Your EVP to Candidates • Ensure that communications during recruitment process are: • Candid (reflects reality) • Accurate (enable self-selection) • Consistent (impact new hire commitment) • Broader labor market distrusts traditional channels • Job ads and third-party job boards are typically trusted by less than half of labor market • Organization’s website is trusted by 63% of candidates • Online forums (blogs) are least trusted (22%) • Most trusted channels are: • Current employees 81% • Friends/family 72% • Former employees 65%

37. Common employment value proposition (EVP) communication channels not trusted; trusted channels not advocates for the organization

38. Few organizations have a significant population of employees who actively promote the employment value proposition (EVP) and the vast majority have a large percentage who do little to promote the organization

39. Marketing Your EVP to Candidates • Keys to Building Employee Advocates • Trust essential to employees’ willingness to promote the organization • Empowerment creates sense of ownership and increases likelihood employees will promote organization • Communication of values strengthens employees’ perception of what organization stands for and increases effectiveness in promoting it • Successful Communications Emphasize: • Organizational reality • Message consistency • Self-assessment

40. Summary • Knowing Your Employment Value Proposition is Critical to Attraction, Commitment and Retention • Select Core Attributes as Foundation for Your EVP • Differentiate From Your Competitors • Align With Your Organization’s Strengths COMMUNICATE Your EVP Internally and Externally

41. Selected References WorkforceCrisis, Ken Dychtwald, Tamara Erickson, Robert Morison, 2006 AttractingandRetainingCriticalTalentSegments, Corporate Leadership Council, 2006 It’s2008: DoYouKnowWhereYourTalentIs?, A Deloitte Research Study, Deloitte Development LLC, 2004 LeveragingtheNewHumanCapital, Sandra Burud, Marie Tumolo, 2004 DrivingPerformanceandRetentionThroughEmployeeEngagement, Corporate Leadership Council, 2004 “What It Means to Work Here,” Harvard Business Review, March, 2007 Great Place to Work Institute, www.greatplacetowork.com Families and Work Institute, www.familiesandwork.org Society for Human Resource Management, www.shrm.org Center for Creative Leadership, www.ccl.org GoodtoGreat, Jim Collins, 2001 “The 100 Best Companies to Work For,” FortuneMagazine, Robert Levering, March 2007 “The Rewards of Work: What Employees Value,” Sibson Consulting Group, Nextera, WorldatWork, 2001 “Engaging the Massive Middle,” Beverly Kaye and Sharon Jordan Evans, 2007 “Leveraging Employee Engagement for Competitive Advantages: HR’s Strategic Role,” Nancy R. Lockwood, March, 2007