Many human resource professionals are starting to perceive their roles as similar to those in the sales & marketing group of the corporate hallway. In many aspects, leaders in human resources are responsible for managing a complex product comprising culture, environment and reward elements.
Each element has different cost/value drivers, communication channel needs, process and delivery components, varying preferences across segments, and even shelf life (i.e. flexible spending accounts). In short, it is about appealing to the sensibilities of the employee-customer, and maintaining a connection with them, in order to retain them and recruit talent similar to them.
Given that HR guides the strategic development of the employee value proposition and the accompanying corporate culture and competitive advantage, employer brand and differentiator it creates, many HR professionals are beginning to embrace many of the same tools used by marketing, in order to enhance and add value to their organisations.
Many HR professionals are beginning to embrace the same tools used by marketing in order to enhance value to their organisations.
HR & the Marketing Model
Like marketers, organisations strive to recruit and retain customers — employee customers — often in an extremely competitive labour markets. Talent can enable or constrain competitive success. As the war for talent intensifies, greater significance will be placed on acquiring and retaining talent – whether they be star performer or reliable workhorses.
The concept is creating an employee value proposition that satisfies the needs of workers and is aligned with the strategic objectives of the organization. Although not a sale in terms of an overt and conscious decision by the employee to enlist with the firm, the sale is reflected in other ways. These come in the form of engagement metrics, reduced attrition, lower employee acquisition costs and improved productivity.
Listening to Employees
Marketers know how important it is to continuously collect consumer feedback via market research. Insights from market research aid business leaders shape product and communication strategies by instilling fact-based, decision-making processes. Evidence-based policymaking occurs, rather than intuition.
Many organisations conduct biennial employee surveys providing feedback on employee engagement, satisfaction and attitude. Ultimately, managers can identify the key drivers behind these metrics. However, many of these studies are ill-suited to guide decision-making on allocating limited total reward dollars to address the needs of employees and the organisation.
Companies don’t wait two years for customer feedback about products. In many ways, the ’employee-customer’ requires as much attention as the revenue-generating customer. To provide this level of attention, it’s crucial that employers approach the workforce directly and listen to their employees — on a regular, and continuous basis — to identify problems.
Problem? Value Misalignments
If an employee customer puts a significantly lower value on a particular company benefit than on other reward components, there is a misalignment in perceived value. There are two root causes for these value misalignments.
Firstly is that the employer too often relies on industry data when selecting a particular reward for inclusion in the employer’s benefits offering without clearly understanding what its own employees want out of their total rewards package or its own operational context. For instance, a firm thought providing employees with legal assistance would be valued and help make the employer more competitive amongst job seekers.
After two years of expense and administration, internal survey and usage data clearly showed that employees valued this benefit the least of all those provided by a large margin. It didn’t fit this employer and this workgroup. Money budgeted for this benefit was wasted and could have been spent more effectively.
The second cause for value misalignments is more complex. A lack of awareness, understanding or both could result in this. With the complexity and wide range of benefit choices today, employees often fail to understand exactly what employers are offering in their benefit packages. Staff are faced with making complex benefit choices from various savings and retirement vehicles (e.g. consumer-directed health care options, and complicated copays and deductibles).
While consumers generally value choices, in the world of employee benefit plans you’ll see employees overwhelmed and under-informed, resulting in suboptimal choices that benefit neither employee nor employer. It is important that a company survey or focus group approach be constructed to yield specific data identifying both the misalignment and the level of understanding of various benefit components.
This ensures the underlying cause of misalignment can be addressed. In many instances, the value misalignment caused by a lack of understanding can be effectively corrected with a clear communication strategy. The organisational benefit of understanding these elements can be substantial, despite taking different forms.
The prospect of finding undervalued benefit dollars that can be pocketed or applied to other rewards is one. Additionally, where a particular benefit is highly valued, there is the possibility of obtaining additional contributions from the employee-customer, but without affecting satisfaction. This is similar to asking retail consumers to pay more for a higher-value product. Finally, it is possible to see benefits administration savings (e.g. fewer questions about benefits) and lower attrition (e.g. reduced costs and greater productivity).
Employee feedback that is both quantitative and actionable helps the employer find the right combination of contribution and satisfaction. These value misalignments can easily be identified by leveraging many of the same tools long used by our colleagues in marketing (such as preference measurement and conjoint analysis). Ultimately, this allows the organization to make decisions with confidence and based on facts.
Achieving Continuous Improvement
When companies apply Lean and Six Sigma disciplines to the processes, systems and activities to their business operating system — the same system that produces its products and services — speed, efficiency, and quality often are the results. Continuous improvement is an ongoing process that is part of enterprise activities and applies to the HR department as well.
A quantifiable understanding of employee-customer value drivers allows an employer to observe and respond to changes in reward dynamics and make decisions about how to best address any misalignments. For example, there could be an increasing gap between choices made by older and younger employees with regard to healthcare and savings/investment options.
Additionally, the balance between health and wealth concerns has become very important. More holistic approaches are taken regarding how employee customers want their benefit dollars used. Simply reflecting demographics in reward offerings doesn’t lead to higher satisfaction. Whenever possible, employers should seek preference data that, when combined with demographics, shows a path to effective alignment.
This approach is similar to another instrument in the marketing toolkit – segmentation; the process of grouping consumers with similar needs and identifying little clusters of consumers where preferences and needs are similar within the group but are different across groups.
Marketers know that different consumer groups vary in their desires. By understanding these differences, marketers can either design product(s) to address the unique needs of a specific group or communicate a product’s benefits differently to different audiences. Consider how General Motors has different lines of automobiles: Cadillac is designed for one group, Pontiac for another.
As an example of the latter, consider Procter and Gamble laundry detergent: one product whose advertising is tailored to different audiences. There are an unlimited number of alternative approaches to segmentation, but a key consideration is to produce segments that are actionable.
Secondly, if executed properly, then the activity of asking for feedback, in itself, promotes a feeling of engagement among employee customers. In many cases, plain-vanilla response choices (e.g. “satisfied,” “somewhat satisfied,” “dissatisfied”) are poorly designed questions. These responses lack depth, without use in indicating the effect of remedial action if taken.
Additionally, it’s difficult to gauge the satisfaction and preferences for new features that might come in two distinct forms: an extension of an existing benefit (e.g. moving from 5 times annual salary life insurance toward 10 times annual salary life insurance) or the introduction of an entirely new benefit (e.g. pet insurance or wine club membership).
Closing the Debate
It’s important to include controversial subjects. If a company has closed its defined benefits plan and only maintains a defined contribution plan, gathering quantifying feedback from staff will help gauge the depth of dissatisfaction and attrition risk. Survey tools that let you understand — qualitatively and quantitatively — the staff’s preferences, are critical in this matter.
It’s important to seek feedback on a regular basis. Many companies seem reluctant to do so, with this reluctance stemming from experience with surveys that were long, complicated and expensive to administer. By deploying today’s new technology, valuable feedback can be obtained, requiring only a minor expenditure of employee time and yielding actionable insights.
Most importantly, employees must have a sense that the questions are relevant in a survey. If people are asked for thoughtful and meaningful feedback on subjects central to their working lives, they’ll respond honestly, completely and be willing to do so frequently.
Seeking periodic employee feedback about their wants and needs may be the most sincere indication of management interest and concern. Whether for marketing or HR, relevant and actionable data drives businesses forward and helps leaders make better decisions, supported by data. Consistently listening to employees and measuring their preferences will promote employee satisfaction and help manage rising benefit costs, creating the classical win-win relationship for both employees and employers.
Questions or insights? Contact Bronwen Appel at email@example.com