Recap & Takeaways from ScalingNYC 4.0 - The Value Exchange - An Organization & Their People

As we’ve learned from previous panels, scaling organizations wrestle with the topic of talent every day, given their people are the sources of competitive advantage, while being their biggest expense. Like any intangible asset, people are incredibly difficult to quantify and their value typically varies over time.

So we asked ourselves a very simple question – How is value exchanged between an organization and their people?

In our initial research, we observed the adoption of two progressive frameworks – Employee Lifetime Value (ELTV), as a method for measuring and driving the contribution and engagement of employees, and Employer Value Propositions (EVPs), as a tactic for articulating the value an organization provides their employees.

To dig deeper, and ultimately expose the ScalingNYC community to these insights, we sat down with Joris Luijke, VP of People at Grovo, Ciara Lakhani, Head of People & Culture at Compass, Cheryl Roubian, Director of Talent Management at Greenhouse, and Peter Phelan, Founder and CEO at ValuesCulture, to understand what motivated them to develop these frameworks and the lessons they’ve learned applying these concepts during rapid growth.

Defining Employee Value Propositions (EVPs)

Like the value propositions used to communicate the benefit of a product or service, employers are tasked with communicating the value an employee derives from their time with the organization.

This is no easy feat, and as such, many organizations look to outside consultants like Peter Phelan for help. Peter kicked off the panel by explaining that EVPs are typically grounded in a clear manifestation of an organization’s mission, vision and purpose. They are essentially a carefully curated and defined language or communication tool for the business, a way to set proper expectations. Generally speaking, most founders go through the exercise of establishing a mission statement and values at the inception of their venture, though businesses almost always evolve as they scale so where does this leave the EVP?

A majority of Peter’s work is based on answering this question by helping founders re-calibrate their EVP to ensure relevance and accuracy. Most tactics focus on first getting the leadership team to agree on a collective view, and then validating these assumptions via an organization-wide survey or vote, which might also be combined with structured competency assessments, etc. More often than not, the initial assumptions aren’t totally accurate. For instance, during one of Peter’s engagements, the leadership team cited transparency as a core value, only to find out that the organization was indeed transparent with their clients, though this did not exactly translate to the internal culture, scoring very poorly on the survey. The result was an ‘aha’ moment that led the organization to refine their EVP to hold transparency as an aspirational value, something they wanted to adamantly pursue. Moving forward, new hires and existing employees now have accurate expectations, preventing unnecessary frustration or confusion.

‘We’re constantly gathering feedback and maintaining an open culture where people feel very comfortable to contribute their ideas to my team, to the CEO, to anyone in leadership…’ – Ciara Lakhani

It follows then that a legitimate EVP is rooted firmly in tight feedback loops to maintain a pulse on the culture of the organization. Intentional, open conversations and anonymous surveys are a great way to achieve this, leveraging data to validate gut perceptions.

‘The value that we give back is a career. It's the first step to their next role...’ - Joris Luijke

Outside of requiring consistent validation and recalibration, we learned that EVPs are typically most powerful when they are catered to individuals. In this context, EVPs are often outside the scope of an organization’s mission, vision, and values; instead, they are founded on how an organization impacts an employee’s specific goals and career aspirations. At Grovo, Joris’ team learned this lesson during their dealings with the sales organization, specifically with the role of Sales Development Representative (SDR). They observed noticeable turnover, given SDRs are accountable for really high levels of productivity with closely monitored accountability, which can often lead to burnout. Retaining these talented employees, relied on thoughtfully setting proper expectations upfront and structuring potential career paths after they demonstrated success and earned the right to grow within the organization.

We concluded that EVPs are not a static, set-it-and-forget thing. Indeed, they evolve dynamically, and an organization must stay in touch with themselves and their people to ensure the EVP stays current and useful. Similarly, there is not a one-size-fits-all approach. EVPs resonate differently with different audiences (teams vs individuals, etc.), which makes catered approaches the most powerful.

Defining Employee Lifetime Value (ELTV)

We then pivoted the conversation to consider the other side of the value exchange, starting with an overview of ELTV from Cheryl. She taught us that it’s easiest to consider ELTV graphically with output on the y-axis and time on the x-axis. To oversimplify, we can then plot an employee’s ‘performance curve’ in accordance with the employee lifecycle – starting as a recruit who formally joins the organization on their first day, progressing to a fully contributing employee through to their last day (here’s a more detailed overview). It costs money to recruit someone, so their starting value for the organization is negative, until they are ramped up and contributing in a tangible way. An employee’s value then is their net output minus the expenses and lag time of bringing them onboard and up-to-speed. As she wrapped up, Cheryl emphasized that ELTV is not intended to be a hard number, but rather, a framework for thinking about the touch-points of the employee lifecycle, to then intervene with the intention of improving outcomes.

‘Realize managers have a disproportionate impact on [ELTV]. As a people team, focusing on managers, is probably a good thing.’ – Joris Luijke

By coaching managers to optimize certain touch points, like the onboarding process, business leaders create leverage, or exponential returns on their investment of time, given one manager can improve the onboarding experience of numerous employees.

‘We put a lot of support into both management development, but also the ramp for each employee themselves.’ - Ciara Lakhani

We then spoke more directly about onboarding strategies. Ciara explained that Compass’ current approach stretches out to an employee’s first 90 days experience. Aside from building-in onboarding tasks for managers to fulfill, and assigning ‘buddies’ to help socialize new employees, Compass utilizes inter-disbursed training sessions aimed at creating exposure, where different teams present on what they are working on, or educate the audience on their discipline. Additionally, Compass holds periodic leadership roundtables, which allow new hires to ask questions and engage directly with the C-level in a very open format.

‘If you keep asking about what actually truly motivates them, what they love about their job, and what they loath about their job, you get the more interesting answers.’ – Joris Luijke

Many business leaders have proclaimed that mediocrity is the true enemy of excellence (as opposed to outright failure). This notion has pretty profound implications at a scaling company where they need the very most from their people. Outside of straightforward intervention touchpoints, like onboarding, another critical consideration is plateaus, when an employee’s performance stops trending in an upward or positive direction. This is especially concerning for top performers, so our panel unanimously agreed that leaders should start by focusing on their stars. They recommended constantly engaging these employees, perhaps through simple and consistent conversations, to flush out the fundamental source of their passions and strengths. An engineer likely enjoys building things, but do they prefer working individually or on teams? Do they like to work fast or take their time? These nuggets of insight allow leaders to tweak and realign employees over time to unlock more value.

In consulting, we find ‘why’ to be the most powerful word, as it allows you to dig deeper. Never stop at first-level answers because they typically just graze the surface. Ask ‘why?’ again, and again, until you peel back the superficial layers to find what’s actually valuable.

- Wrap Up -

From the onset, we knew this topic was challenging, as abstract issues like people and value creation have always been a focal point of business discussion and heated debates. That is why navigating these issues has perhaps been one of the most productive panels we’ve held at ScalingNYC. We learned that an organization must be very intentional in establishing what they stand for and how they pursue alignment in the way they communicate this to customers, employees and the world. Further, they must be intentional in their thought process and frameworks are very useful guides, though they don’t have all the answers. At the end of the day, nothing matters if you lose touch with reality, or settle with what has worked in the past. Intentional effort must also be placed on a commitment to keeping an accurate pulse on things, a commitment to the practice of understanding employee perceptions, passions, and goals.

If value is exchanged back and forth between an organization and their people, it serves leaders to do everything they can to prevent this value from eroding or slipping through the cracks along the way.