Level up your Employee Value Proposition with Leadership Development
14 July 2022
Attraction, retention and remuneration a worry? Leadership development should be part of the solution
In the current inflationary environment, escalating wage costs are top of mind for every business owner and CEO. After years of being able to maintain the status quo, businesses are needing to mature their remuneration strategies and ensure their remuneration budgets can stretch as far as possible.
There’s a fine line between bumping up fixed salaries to meet the market for attracting and retaining talent and balancing a budget in an inflationary environment where a broad range of costs are on the increase.
Business models are being tested. On the one hand, the ability to pass on rising costs to customers through pricing strategies is critical. On the other, keeping control over and some flexibility around cost base is equally important.
For many mid-market and emerging businesses, salary costs are the biggest line item in the P&L and the current environment provides a significant challenge for many.
What to do?
Business owners and CEOs need to mature their thinking around remuneration strategy and think more broadly than the typical salary and bonus equation. It’s no longer just enough to meet the market on salary.
The current environment demands new approaches to both remuneration and employee retention. Here’s where the Employee Value Proposition becomes critical.
What is an Employee Value Proposition?
An Employee Value Proposition comprises the sum total of remuneration and reward – including monetary, beneficial, structural and developmental rewards to employees who achieve specific business goals. It is the package of elements that sets your employment environment apart from other companies and creates value in the eyes of an employee.
It encompasses the following:
Salary and overall compensation
Training and development opportunities
Work-life balance and flexible schedules
Rewards and recognition
Importantly, this holistic approach does not simply add layers of fixed costs onto the wages item in the P&L. It meets employees demands in a variety of ways by providing other elements of reward and incentive that are of perceived value. It is also often goes to the heart of a company’s purpose and values.
Business owners and CEOS can retain some flexibility and control over the fixed salary component whilst providing benefits and development components as part of the strategy. Most importantly, these components can be tied to performance goals – providing alignment with the business in terms of ROI.
Leadership development as a key component of remuneration strategy
Research has demonstrated that professional learning and development is a key retention driver:
Applying a total rewards mindset to remuneration sets the platform for business owners to introduce leadership development as part of the remuneration mix. Well-structured leadership development programs will be well received by leaders and valued employees as the program will be viewed as an investment in them personally to develop their capability and enhance their career path.
From the business owner and CEO’s perspective, leadership development programs provide a valuable lever to increase total reward for the employee that supplements base salary and differentiates the employee value proposition. This in turn provides a powerful retention tool.
Most importantly, however, enhanced capability amongst leaders and managers will help to underpin high performance and deliver results for the business.
The equation is simple: invest in leadership development as part of the solution to attract and retain your talent, drive performance and generate outsized returns (ROI).
The relationship between creating a strategy, executing it and developing leaders is becoming more and more important for success in business. By putting these three elements together, companies can get the best out of their staff and really benefit from the results.