Business leaders often expend significant energy and effort trying to get $10 million in workforce productivity while only spending $9 million on personnel expense. They are disproportionately focusing on cost control at the expense of getting added value from their people. We’ve seen examples before: opting not to fill all available positions in order to save money, tweaking benefits to reduce employer costs, etc.
Too few leaders make the optimal investment decision: focusing on the value added, not expenses saved, part of the equation. Unfortunately, this approach generally results in a less engaged workforce that does not maximize its potential contributions through discretionary efforts. So how can savvy business leaders otherwise invest their efforts to obtain $12 million in value from a $10 million payroll budget? By becoming an employer of choice.
Becoming an Employer of Choice
An “Employer of Choice” is a workplace with practices and culture that allow the employer to attract and retain the best talent, talent that will maximize the business strategy. In other words, an employer of choice is a place where great people choose to apply and, once hired, stay.Those great people are much more likely to add value through discretionary effort beyond the basic requirements of their role. Cultivating an employer of choice status increases the likelihood of maximizing the return on investment in an organization’s talent and business strategy.
Walk the Walk
We’ve all heard some version of the common C-level executive phrase, “Our employees are our most valuable asset.” Yet, most leaders make the critical mistake of treating this asset as a cost center rather than value driver; thus, they do not appropriately invest in it. Rather than managing to the inputs, such as personnel expenses, a savvy leader should deploy strategies to maximize the outputs such as innovation, productivity, and increased efficiency.
Think of being an Employer of Choice as social capital, which magnifies the contribution of individuals into values greater than the sum of their components. Many of us continue to use outdated performance management practices rooted in a 1950s mindset. Our methods for marketing to customers, distributing products, and financial planning long ago moved past the midcentury model; why shouldn’t our performance management do the same? Our approach to people must catch up to the 21st century. In an organization that is an Employer of Choice, leaders seek to optimize performance rather than manage .
Increasing Value to All Stakeholders
Business today takes more into account than just the shareholder’s interests. Increasingly, we see enterprises focus on increasing the value to all stakeholders: employees, customers, suppliers, and shareholders. Employees want to contribute to a higher purpose, one that leverages individual uniqueness and allows businesses to become not only more efficient, but better. Employers of Choice are able to tap into individual’s desires, which results in voluntary contributions beyond the base requirements of the position.
Leaders can intentionally create Employer of Choice status for their organization by implementing a straightforward and focused strategy. Here’s how:
- Reframe the organization’s thinking by demonstrating the relationship between investments in talent and variables such as revenue, gross margin, profitability, etc.
- Identify the characteristics of ideal candidates for employment rather than minimum qualifications upon which candidates are evaluated
- Educate leaders on the economic value of the talent (employees) entrusted to them and encourage leaders to be cultivators of talent ROI rather than managers of personnel costs
By creating an Employer of Choice workplace, treating the employees professionally and as valued members of the business, employees start giving discretionary effort which generated greater returns (sales) on the investment (payroll dollars) made in the employees.