The Curious Case of the Compensation-Focused EVP

Introduction 

All the old-fashioned money-based wisdom and quips can be applied to attracting talent, money talks, you get what you pay for, and so on. So why do so few employer brands hang their hats on compensation? And are those brands justified in their allergic reaction to talking about money when trying to attract the hottest talent? 

I’ve seen more than my fair share of talent preference data over the years, and I’ve spoken to more than a few HR and business leaders working through their EVPs, trying to crack of more successful hiring practices. Due to the data gathered, that generally always highlights pay as being important, conversations about pay can't be avoided. However, in these conversations salary is generally set aside as taboo or undesirable when talking EVP. I wonder, with the world of work evolving at the pace that it is, is it time for a rethink about compensation in EVPs? 

Shock horror, talent wants to be well paid 

Although money isn’t usually the top stated preference when surveying talent, this is where we need to be smart with the data. There is a significant difference between stated preferences and observable preferences.  That is, it’s very easy for talent to say they’re looking for purpose, meaning and work-life balance over a high salary when surveyed. And it’s just as easy to brush off compensation as a hygiene factor and subscribe to the notion that most employers within a given industry pay about the same. Based on those assumptions you'd probably be right to conclude that there is little point in owning this ground and simply move on. However, the reality can be quite different.  

Observable preferences, which are still visible within the data if you know what to look for, can sit at odds to stated preferences. Despite talent stating they value quality of life benefits and purpose over salary, in the same survey these folk may still punt for employers who they associate less with those things and more with high pay. In other words, when push comes to shove, people will begrudgingly forego the softer things they want, but not their pay.

I think this resonates because we’ve all been there, either ourselves or someone we’re close to, trying to choose between career options and pay being one of, if not the, main factor in that decision making. After all, salary is much easier to quantify compared to more abstract things like purpose, culture, and quality of life.  

Salary reality tells us something different 

According to study after study, the number one reason that talent leave employers is pay. These studies from PEW Research Centre and SHRM are just a few. This brings into question the whole argument of pay being a hygiene factor and not being significantly different enough from one employer to the next within the same industry.

Job-hopping workers are problematic for organisations small and large. Excessive attrition is undoubtedly costing employers dearly. It's not just the lost people and cost of replacing them, it's the impact on culture, customers, growth and more. This plethora of downside is what makes retention one of the biggest people management challenges of the day.  Who is to be blamed and what should be done about it remains up for debate, though.  
 
As frustrating as it may be for employers, job hopping for many is seen as the fastest way to increase earnings. Not only that, staying in the same job for more than two years has been shown to have a detrimental impact on someone's earning potential cumulatively throughout their career – keeping them in some kind of salary slow lane. These articles from Forbes and Newsweek sum it up nicely.  The message is this, stay put at your peril.

You can hardly blame people for wanting to be paid as much as they feel they're worth on the open market. This means that until the day pay practices are brought under control, job hopping is here to stay. Which, depending on how you look at it, is either a problem or an opportunity.  Surely, with so many opportunistic workers looking for that next payday this could be a big opportunity for any employer brave enough to seize it. Sure, paying well to land top talent isn’t a new idea but being transparent and upfront about it is novel, and could potentially be a tactical masterstroke.  

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Talking money still feels dirty 

First, it helps to understand why employer brands shy away from talking about money. And, it must be said, the reasons for keeping quiet about compensation are compelling… 

It’s unsustainable 

The bottom line is usually this; somebody can always come along and pay more. Very few employers want to claim to be the best payer (or one of), and then have their feet held to the fire through the good times and the bad. Try getting this one past your CFO! 

Employees should join for intrinsic reasons 

The belief here, and it holds merit, is that employers want talent to join them for the right reasons, and money isn’t seen as one of them. The logic goes that if people join for the money, they’ll leave for the money, too. And, as idealistically fuelled as it may be, nobody wants to hire “those types” of people. Employers would much rather believe that people join them because they’re inspired by the purpose, aligned to vision, or share the same values. That way, the wisdom goes, they’ll stay longer and work harder. 

Compensation themed content is tricky 

Then there is the issue of content. How on earth does one go about crafting compensation focused content? Creating an inspirational and authentic story about Dave from Accounting and his new sports car might look good to a prospective candidate, but it will look crass to everybody else.  

It’s a pretty exclusive club 

To be able to claim you’re a top payer you need to be one, and most employers are not. If you’re not and you try to say that you are, things will unravel pretty quickly.  

Regional differences can be significant 

Depending on where you’re reading this, you may either be shaking or nodding you head right now. I say this as even though much of the EVP work I’ve done has been in developed markets, I’ve done my fair share in developing nations, too. In those markets, if you’re working with national champions, money is absolutely what they want to put front and centre in their EVP. The mindset to compensation-led employer branding in these markets it very different. And this is where I think there is something to be learned. If it works well in some places, why not in others?

The truth about money talk being dirty 

As much as in pains most employers to admit it, most people working for them do so primarily for the paycheque. Inspiration, purpose, and work-life balance are all great, undeniably so, but many people forego these things quite happily in order to draw a good salary at the end of the month. Except for a few noble charity workers, the same cannot be said in reverse.   

If it were a simple case of compensation being a hygiene factor and all the quality-of-life benefits being the cherry on the cake, we wouldn’t be experiencing such elevated levels of attrition. As well, job hopping and ghosting would be far less rampant. The fact is, pay is extremely important to people, and now more so than ever thanks to high inflation and an ever-widening affordability gap in areas like housing and education.  

All the above arguments for employers not talking about compensation openly can easily be taken apart if we use the right lens. It might be unsustainable to always pay people more, but it’s also unsustainable and very expensive to keep losing all your best staff and only having to pay more to replace them with less experienced people. It might be idealistically better if talent join you for the ‘right reasons’, but is it realistic? Isn’t it better to just call a spade and spade and acknowledge that most people join you for the money, so you might as well make it as good as you can to attract the best and keep them for as long as possible?  

As for creating content that isn’t crass and harmful to your culture, it is possible. It just takes talent and experience to craft and deploy.  

Fortune favours the brave 

I’m not suggesting that everybody rips up their EVP and starts talking about compensation throughout their employer branding and recruitment marketing. Clearly for many employers that would be a bad move. However, I am suggesting that, for the right employers, doing it well could give them a strategic advantage.  

It’s important for me to qualify what I mean by the right employer. I’m not just talking about those who’re well heeled, I’m talking about those who’re genuinely cognisant of the value of their people, and who’re confident that their workers feel valued, not just in terms of pats on the back but in terms of how they’re compensated. The employer would also need a high level of expertise to craft quality content in a compelling yet sensitive way.  

Compensation focused EVPs are certainly not for everybody, but they do pose a big opportunity for any employer who’s committed, brave, and skilful enough.  

Takeaways 

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