There is a popular term these days being used in personal development circles. The word is “intentional.” It means you are purposeful in what you do; that you live a life of meaning and make thoughtful choices. It is the opposite of being reactive. It is a term I recommend business leaders adopt as well when it comes to the development of their employee value proposition. To succeed in today’s environment you must become more “intentional” in how you define your offer as you attempt to attract top talent. Perhaps you think you already are (intentional), but humor me. Let’s spend a little more time exploring what it means to be intentional before you draw too many conclusions about whether or not you should describe your approach that way.
Before identifying how to become more deliberate in how you go about attracting and retaining top talent, let’s focus a little on why you need a compelling value proposition. There are a lot of reasons your pay strategy is probably not very competitive right now and you should understand why that matters.
A Critical Issue
Talent acquisition is the number one issue for most company owners and chief executives these days. I won’t belabor all the reasons why. I’ve been discussing this trend for about two years now, but the short version is that there are simply not enough highly skilled people to fill the demand for their abilities. This has led some companies to get into a kind of “scramble mode” in their recruiting efforts. They put together a value proposition on a person by person basis that they hope is “better than the next guy’s,” so they don’t lose the person sitting in front of them right now. “I just need to get this person,” is the mindset. “I’ll figure the rest out later.”
Well, I probably don’t have to tell you what “figuring the rest out later” leads to. At a minimum, it results in an incoherent employer brand. With a less than strategic approach to attracting and retaining the people you really need, you end up virtually making things up as you go along. While pay strategies and other elements of your value proposition need to be agile, they also need to be enduring or all you’ll end up with is chaos.
Today’s value proposition needs to be developed within a strategic framework that treats existing and potential employees as audiences to which you are marketing an opportunity. You have to assume your “brand” is competing against many others—and you need to differentiate yourself. If you don’t “get” this concept and master it, other “brands” will quite literally bury you when it comes to acquiring top talent.
What “Intentional” Looks Like
With that in mind, let’s discuss how you can become more intentional in the development of your employee value proposition. There are three things you must do.
1. Have a Recruiting Strategy. Yes, I acknowledge this is an obvious first step—but let me explain what I mean by taking a strategic (and therefore more intentional) approach to recruiting.
- You have defined the growth targets your business is committed to achieving.
- You know how your business model and strategy need to be both maintained and leveraged for those growth measures to be met. You also know the outcomes that need to be achieved for growth to occur at the level you expect.
- You know what kinds of skills are needed to maintain your business model and which are needed to leverage it for growth (these are not necessarily the same skill sets).
- You have identified the people already in your organization that have those capabilities.
- You have compared that list with the roles that need to be fulfilled; so you know what your talent “gap” is and therefore the kind of people you need to attract.
- You have prioritized the roles you need to fill and created a calendar of target dates for hiring the right talent to fill them.
2. Build a Talent Marketing Strategy. Yes…I said a marketing strategy. This is different than your recruiting design. Your recruiting ambitions will never be met if you don’t have a marketing strategy to push your message to the right people. If you have a successful marketing approach to recruitment, then your strategy includes or addresses the following elements:
- Your employer brand. You have defined what sets your organization apart from others culturally and in terms of the purposes it serves. You have a clear understanding of your business’s “personality” and what it values. Most importantly, you have branded these things just like you have branded your company’s product.
- Your audience “persona.” You have identified the make up of the employees who are best suited for a role your organization. You know what age range they fall in, whether they are married or single, what kind of purposes they are drawn to (generally speaking), what their ambitions are and what their life and work experience has been so far in their lives.
- The kind of recruiting experience your target audience relates to. You have figured out what your recruits need to know before they will believe they are the right person for your organization. You know how they will want to receive that information (what form should it take) and through what channel.
- The total rewards opportunity the employee expects to have. For example, you know whether the people you seek prefer a compensation opportunity that pays them modest guarantees with high or unlimited variable earnings potential or the other way around.
3. A Purpose-Focused, Performance-Centered Pay Strategy. The first thing this means is that you know what your value creation standards are. Regardless of what the talent you are trying to attract want, you have a clear philosophy about how value should be shared and with whom. This allows you to use pay as a strategic tool to both attract the kind of talent you want and to screen those who are applying for positions. If they don’t relate to your compensation philosophy, chances are they are not going to relate to a lot of other things about your culture in terms of performance expectations.
Beyond that, purpose-focused and performance-centered mean the following:
Purpose-Focused. This means you know the reason for every component of pay you are offering. You know what “job” it’s there to do and what kind of return you are expecting from your investment in that element. You also know what standard will define the earnings potential it represents (for example, the annual incentive potential will be between 20% and 50% of salary, depending on pre-determined and communicated performance standards).
Performance-Centered. In today’s business environment, as a general rule you want as much compensation tied to performance as possible; but not primarily individual performance. You want your people to understand that unless the company performs collectively, individual contributions are not really all that relevant. Your philosophy should be that variable compensation is “self-financing,” meaning it is paid out of value that has been created. If sufficient thresholds have not been met, then that component of compensation is not earned—or its payout is diluted.
As a general rule, this means the foundation metric for your incentive plans should be profits.
So there you have it. To become more intentional in the development of your employee value proposition, have a recruiting strategy, add a talent marketing strategy and make sure your pay strategy is purpose-focused and performance-centered. Focus on those three things and most others will fall into place fairly naturally.