Implementing an Employee ValueProposition in the GCCA Case Study on TNT ExpressCase studyReference no 410-093-1
This case was written by Professor Abhilasha Singh, Institute of ManagementTechnology, Dubai and Jacqueline Mitchell, TNT Express. It is intended to beused as the basis for class discussion rather than to illustrate either effective orineffective handling of a management situation. The case was made possible bythe co-operation of TNT Express.
© 2010, Institute of Management Technology, Dubai and TNT Express.No part of this publication may be copied, stored, transmitted, reproducedor distributed in any form or medium whatsoever without the permissionof the copyright owner.
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Implementing an Employee Value Proposition in the GCC:
A Case Study on TNT Express
Prof. Abhilasha Singh, Institute of Management Technology, Academic City, Dubai, PO Box 345006 UAE E-mail – [email protected] Ms Jacqueline Mitchell TNT Express, PO Box 15321, Dubai UAE E-mail – [email protected]
ABSTRACT
In a highly competitive labor market, employee value proposition is becoming a solution
to attract and retain talent. The present case helps the readers to identify the factors of
Employee Value Proposition to build a credible, strategic and competitive EVP at TNT
Express in Kuwait, Bahrain and Saudi Arabia.
The case also focuses on the differences in the choice of factors selected by the
employees of TNT Express in three different countries that will help the HR
professionals in identifying the employee preferences and perceptions in determining the
EVP attributes that matter most to attraction and retention.
INTRODUCTION: WHY EVP?
In today’s world, an array of organizations ranging in all sizes, industries, and
geographies are facing problems of employee retention and of talent shortage. The
consequence of this entire situation has lead to an increased demand in supply
constrained labor markets. This shortage is manifested through a diverse and wide-
ranging set of challenges: a shortage of highly qualified graduates, pending retirements,
an aging workforce, and a lack of experienced talent. These supply problems are coupled
with rising demand for labor, creating two additional issues with which organizations
must contend: high turnover and wage inflation. In combination, these problems threaten
to disrupt operations across the globe, and require organizations to seek new and more
refined methods to attract and retain the talent they need for success.
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In current economic conditions where cost optimization is very important, it is ideal to
execute a system as a means of optimizing the performance of each employee thereby
achieving an efficient organization. Companies have begun to recognize the importance
of EVP. McKinsey and Co. have shown this importance through the statement given by
them which says that “Companies must therefore make talent management a top priority
- create and continuously refine their employee value proposition, and source and
develop
talent systematically.”
The fact is that to combat the problem of talent management especially attraction and
retention, the Employee Value Proposition needs to be implemented in organizations for
excellence.
Employee Value Proposition (EVP) is a set of 38 important factors (Fig.1) that
employees and labor market perceive as the value gained through employment. It is the
measurement of the balance between what an employee receives from their employer in
return of their performance on the job; a balance between ‘get’ and ‘give’. It drives
attraction of potential candidates and retention of the existing employees and it is built
upon the market realities and leverages the organizational strengths therefore aligning
with strategic objectives of the organization (CLC Research, 2006).
Figure-1
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SOURCE: CORPORATE LEADERSHIP COUNCIL RESEARCH 2006
An Effective Employee Value Proposition provides organization with three quantifiable
benefits:
Enhanced attractiveness: Organizations with effective Employee Value Propositions are
able to source from a much deeper talent pool in the labor market. According to the
findings by Corporate Leadership Council, 2006, the top-performing organizations draw
candidates from about 60% of the labor market, including "passive" candidates who
would otherwise be content to stay with their current job. Lesser- performing
organizations are able to source only from the most active 40% of the workforce.
Greater Employee Commitment: Organizations with effective Employee Value
Propositions enjoy significantly higher level of commitment from their employees. A
research by Corporate Leadership Council suggests that the most efficient organizations
have 30-40% of their workforce displaying high levels of commitment, compared to less
than 10% in underperforming organization.
Compensation Saving: Organizations with effective Employee Value Propositions are
able to reduce the compensation premium that is required to attract the new candidates.
As highlighted by a study by Corporate Leadership Council, the leading organizations are
able to spend 10% less on base pay as compared to underperforming organizations.
TNT EXPRESS: BRIEF PROFILE
Established in 1946 TNT is now a global integrator and provides its services in more than
200 countries. TNT, through its two divisions, Express and Mail, is part of the global
transportation and distribution industry, and dedicated to providing delivery solutions to
its customers. The global transportation and distribution business is a vast industry which
is estimated to be worth over US$3,500 billion. TNT serves more than 200 countries, is
present in 64 countries and employs around 160,000 people. Its revenue in 2009 was over
10 billion Euros. TNT Express is in the business of transferring goods and documents
around the world tailored to its customers’ requirements. It is TNT’s business to deliver
the “business” of its customers at the right time and at the right place. With 30,000
vehicles and 48 aircraft, it is the largest Express operator in Europe. In 2009 TNT won a
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number of awards including the Clinton Global Initiative Corporate Citizenship Award
and was the top scoring company in the Dow Jones Sustainability Index.
In a competitive market, the right strategy is a key to survival and success. TNT is
reviewing its strategy in the world after the global recession. One strategic area is that of
the Emerging Markets which includes the Middle East.
The Human Resources function at the TNT Express Head Office develops policy and
tools to be used by Regional Centers and Country Operations. Understanding that ‘one
size’ does not fit all, the tools are flexible enough to be localized where required, so
enabling HR to integrate into local business needs.
One key factor behind their spectacular track record is the HR function and the
enthusiasm, dedication and professionalism of the people. TNT values its people,
motivates them, empowers them, recognizes their contribution and rewards them. It has a
"Sure We Can" culture, where employees are encouraged to be innovative and to show
commitment to their job. The key objective of Human Resource at TNT is to develop
people and their competency at all levels and in continuing efforts to aspire to be the best
employer TNT has moved beyond people management and had introduced EVP, to prove
their mission.
“Our ambition is for our people to be a competitive advantage for TNT Express and for
TNT Express to become recognized as a preferred employer in the Express industry.”
– HR Express Statement
WHY EVP AT TNT EXPRESS?
The Regional General Manager MEA called the HR Manager into his office. He asked,
‘Why is it taking so long to hire an Operations Manager in Bahrain and a Sales Manager
in Saudi Arabia”.
The HR Manager explained, ‘The talent we need is hard to find in the region. It is
difficult to find candidates who want to work in these countries’. The Regional General
Manager considered this for a moment, and said, ‘It is up to you to ensure that we can
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always attract candidates for our jobs. I want these immediate vacancies filled within 4
weeks and I want a permanent solution to this problem’.
The HR Manager returned to her office. She could meet the deadline for hiring but how
should she go about creating a long term strategy to ensure the creation of a larger pool
of candidates for TNT in the Middle East. There were other positions which were also
difficult to recruit in the region. The only way would be to raise the profile of TNT as an
attractive employer. She recalled a presentation about Employee Value Proposition at
Divisional HR Conference 2 years ago, and the work that had been done in this area
afterward. The benefits of EVP were candidate alignment to the organization, a greater
talent pool and better retention which would answer her immediate issues. After doing
some further reading, she decided that creating and implementing EVP in an arena of
increasing competition for talent would be a lasting and successful strategy for TNT.
TNT Express, known for its journey towards bringing excellence at work place, sensed
an urgency to introduce EVP and conducted a pilot study in three countries namely,
Kuwait, Bahrain and Saudi Arabia to create an Employee Value Proposition that
highlights the most competitive and strategically relevant aspects of TNT Express and
further to identify human resource investments that matter most in attracting and
retaining the talents.
The HR manager Ms. Jackie planned a structured study to be implemented in two phases.
The first phase of the study was to identify the factors important for attraction and
retention of talent and also to bring out the differences, if any, in the choice of factors
selected by the employees of TNT express in three major countries.
After thoughtful consideration of all relevant factors, the second phase of the study was
aimed to identify the competitive aspects of the value proposition that best aligns with
TNT’s strategy, culture, HR investments and competitive differentiation with the
employment value proposition, to achieve the desired results.
She planned a systematic study to collect the data through survey on employees’
preferences and perceptions to determine the Employee Value Propositions’ factors of
attraction and retention. This survey also took into consideration the differences in the
choice of factors selected by the employees.
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In the second phase of the study, she took maximum involvement of management teams
to define the Employee Value Propositions which is aligned with TNT’s strategy and
culture and was supported by HR investments by assessing the costs and differentiation
that comes with the factors suggested by the Employees.
The data was collected for phase one, on employee preferences and perceptions to
determine the EVP attributes that matter most to attraction and retention by conducting
employee surveys which were a prime source of the data. This survey was conducted for
Stream 1 employees who are not involved in people management and Stream 2/3
employees who manage people and teams. The survey involved the set of 38 factors in 3
different sheets seeking different kinds of information.
To arrive at attraction factors, employees were asked to rate the factors taking into
consideration their importance when they are applying for any job but to discover what
employees perceive about all 38 factors, employees were asked to grade TNT’s
performance on the factors listed selecting the category which best fits.
Also, to arrive at retention factors, employees were asked to choose top 10 most
important factors that matter the most for their choice of employer.
The second phase of the study was focused on management teams to define an EVP that
is relevant to strategic priorities and the organization’s culture, supported by HR
investments, and differentiated from competitors.
PILOT STUDY AT TNT EXPRESS:
Jackie was not sure about the implementation of EVP and after giving a serious thought
to it; she planned to go for a pilot study.
Keeping in mind the stated objectives, the data was collected and results were analyzed.
Attraction data was analyzed by collecting the data from employees who had served TNT
for a period of six months or less. Analysis for stream1 and stream 2/3 were made
separately since the research showed that level segmentations could show differentiated
factors. The analysis was done using MS – Excel by assigning weights for each category
(e.g. Very Good = 5, Good = 4 and so on). The employee perceptions were analyzed to
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identify the strengths and the weakness of TNT in the three countries- Kuwait, Bahrain
and Saudi Arabia.
Table: 1 Factor Selected by Employees at Kuwait
Top EVP Factors Resulting from Analysis
Stream 1 Stream 2/3
Attraction Retention Attraction Retention
Health Benefits Vacation Future Career Opportunities
Manager Quality
Communication with Co –workers
Health Benefits Recognition Future Career Opportunities
Development Opportunities
Compensation Respect Compensation
Future Career Opportunities
Retirement Benefits Communication With Co –Workers
Social Responsibility
The Table: 1 shows clearly the top factors selected by the stream 1 employees at Kuwait
for attraction are health benefits, communication with co-workers, development
opportunities and future career opportunities. The attraction factors for stream 2/3
employees were future career opportunities, recognition, respect and communication with
co-workers. The retention factors for both streams had the compensation factor in
common but stream 1 employees chose vacation, health benefits and retirement benefits
whereas stream 2/3 employees chose quality, future career opportunities and social
responsibility as other top factors for retention.
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Table: 2 Employee Preferences & Perceptions at TNT Kuwait for Stream 1 & Stream 2/3
Employee Preferences & Perceptions at TNT Kuwait for Stream 1 & Stream 2/3
Table 2 clearly shows the employees preferences and perceptions with regards to EVP
factors of attraction and retention for Stream 1 and Stream 2/3. The factor which is
common in attraction and retention for stream 1 is Health Benefits as per the employees’
preferences and perceptions. Future Career Opportunities is the common factor for
attraction and retention for Steam 2 and Stream 3 in Kuwait. Also results indicate that
candidates give high importance to Respect and Communication with Co-Workers as the
factors for attraction to TNT, while the existing employees consider Manager Quality and
Social Responsibility as the most important for retention.
• Health Benefits • Recognition (Attraction)
• Communication with Co‐Workers (Attraction)
• Manager Quality(Retention) • Social Responsibility(Retention) • Respect(Attraction)
• Compensation (Retention) • Future Career Opportunities
(Attraction) • Retirement Benefits (Retention) • Compensation(Retention)
• Development Opportunities (Attraction)• Vacation (Retention) • Future Career Opportunities • Communication with Co‐
Workers(Attraction)
TNT Employee Perception
Low
High
HighFactors Attraction/Retention ‐ Perceptions
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Table: 3 Employee Preferences & Perception at TNT Bahrain for Stream1 and Stream
2/3
Employee Preferences & Perceptions at TNT Bahrain for Stream 1 and Stream 2/3
Interpretation of Table 3 makes it evident that there are no factors that are common
between the Stream 1 employees for attraction and retention. However between Steam 2
and Stream 3, Health Benefits are the most important for attraction and retention. Finally
candidates in Bahrain feel that Communication with Co-Workers is what attracts them
most to TNT while Health Benefits, Retirement Benefits and Senior Leadership
Reputation are the factors that play an important role in retaining the existing employees.
• Health Benefits • Health Benefits(Retention) • Retirement Benefits (Retention) • Senior Leadership Reputation
(Attraction) • Communication with Co-
Workers(Attraction) • Future Career
Opportunities(Retention) • Future Career
Opportunities(Attraction • Retirement
Benefits(Retention)
• Meritocracy(Attraction) • Recognition(Attraction) • Manager Quality(Attraction) • Compensation(Retention) • Vacation(Retention) • Development
Opportunities(Attraction)
High
Factors Attraction/Retention ‐ Perceptions
TNT Employee Perception
Low
High
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Table: 4
Employee Preferences & Perceptions at TNT Saudi Arabia for Stream1&Stream 2/3
• Manager Quality(Retention) • Development
Opportunities(Retention)
• Vacation • Development
Opportunities(Retention) • Organization Stability(Attraction) • Manager Quality(Attraction) • Health Benefits(Retention)
• Health Benefits • Compensation(Attraction) • Work Life
Balance(Retention) • Recognition(Attraction) • Organization
Stability(Attraction)
• Compensation • Future Career Opportunities
(Attraction)
Legend:
Text in Black – Stream 1
Text in Bold – Common factor of attraction and retention
Text in Red – Stream 2/3
Text in Bold – Common factor of attraction and retention
Employee Preferences & Perceptions at TNT Saudi Arabia for Stream1&Stream
2/3
Table 4 shows that according to the employees of Stream 1 in Saudi Arabia, Health
Benefits and Vacation are the common factors for attraction and retention in TNT,
whereas employees of Stream 2 and Stream 3 have rated Compensation as the common
factor for attraction and retention. Organization Stability is a factor of high importance
for attraction of employees of Stream 1 while Development Opportunities is of high
importance for retention of existing employees. Vacation is the common factor as well as
of high priority for both attraction and retention for Stream 1 employee. For Stream 2/3
employees, Manager Quality is a very important factor for attraction while Health
Benefits is the important factor for retention.
High
Low
TNT Employee Perception
Factors Attraction/Retention ‐ Perceptions High
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Table: 5
Differences in Employee Preferences & Perceptions at TNT
in
Kuwait, Bahrain & Saudi Arabia
COUNTRY STREAM 1 STREAM 2/3
KUWAIT
1. Health Benefits 2. Communication with Co-Workers
3. Development Opportunities 4. Future Career Opportunities 5. Vacation 6. Compensation
7. Retirement Benefits
1. Future Career Opportunities
2. Recognition
3. Respect
4. Communication with Co-Workers
5. Manager Quality
6. Compensation
7. Social Responsibility
BAHRAIN
1. Manager Quality 2. Senior Leadership Reputation
3. Meritocracy
4. Recognition
5. Future Career Opportunities
6. Compensation
7. Health Benefits
8. Retirement Benefits
1. Health Benefits 2. Communication with Co – Workers
3. Development Opportunities 4. Future Career Opportunities
5. Vacation 6. Compensation 7. Retirement Benefits
SAUDI ARABIA
1. Compensation 2. Vacation
3. Health Benefits 4. Organization Stability
5. Manager Quality
6. Vacation
Development Opportunities
1. Future Career Opportunities
2. Compensation
3. Manager Quality
4. Organization Quality
5. Development Opportunities
6. Health Benefits
7. Work Life Balance
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Differences in EVP Factors at TNT in Kuwait, Bahrain & Saudi Arabia
Table 5 shows the differences in the choice of EVP factors at TNT in three countries
Kuwait, Bahrain & Saudi Arabia, chosen for the pilot study. The priority factors out of
38 EVP factors differs in each country, which will serve as basis for the management to
device an Employee Value Proposition, relevant to the strategic priorities and
organization’s culture of TNT express.
The results of the first phase were presented to the management teams at TNT Express
Kuwait and Bahrain separately for Stream 1 & Stream 2/3 and the top 4 factors for
retention and attraction were taken.
Also, the employee perception of the selected factors was shown to the management and
a discussion to device an Employee Value Proposition that was relevant to the strategic
priorities and organization’s culture, was initiated. The Employee Value Proposition had
to be supported by HR investments, and differentiated from competitors by assessing the
implementation costs, and competitive differentiation afforded by proposed EVP factors.
With the above mentioned employees’ response and thorough implementation of both the
phases of study, the HR manager was very clear about the importance of EVP and the
impact of internal and external factors like culture on employees’ perceptions.
Jackie said, “It was clear that the TNT country operations involved in the study were
quite different in what they wanted their EVP to communicate, due to their different size,
maturities and cultures. The ability to differentiate from the main competitors also
differed between locations”.
IS EVP THE ONLY ANSWER FOR TNT EXPRESS?
The present knowledge age is demanding a must change in the way of thinking to
bring a conceptual revolution. A revolution, to destroy the obsolete and to give birth to
the energetic and the living. Acquisition, reorganization, downsizing and job cuts are
becoming the hallmark of the upheavals of the knowledge age. These are the inevitable
birth pangs of a vibrant tomorrow. The HR department at TNT knew that the time has
come when we need to introduce EVP to achieve competitive edge. Today the
conventional premise that capital is rare and expensive and the people are abundant and
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cheap is no longer valid. Today, the capital is mobile and cheap (as compared to people);
because it is global. People, especially competent people, are becoming rare because of
the same reason. Globalization has opened new vistas for them. There was a time when
people were regarded as an item that increased costs. Today, every additional person,
with effective skills and competencies, means additional profit. In the Industrial era the
companies hired "hands". Obviously hands have limited productive potential. Today a
company recruits people, it employs additional minds, and a creative mind has unlimited
profit potential. Thus there is a qualitative difference in the field of Human Resource
Management between the industrial age and knowledge age. In industrial age HR was
one of the numerous functions amongst manifold operations. In knowledge age, HR is at
the heart of business. Every successful business leader in the knowledge age is a
successful human resources manager. These imperatives point out that the organizations
can no longer be complacent with their human resources or else they will perish in this
competitive age.
Thus, the importance of an effectual employment value proposition (EVP) cannot be
undervalued as it helps to attract, motivate and retain the most priceless assets of a
company, its employees. In a highly competitive labor market where top talent becomes
increasingly scarce, it makes sense for a company to invest in a strong employment value
proposition (EVP) in order to get the best results from their recruitment efforts.
Although, the notion of the EVP is not new and has been around for decades, still many
organizations have yet to realize the significance of having a strong EVP.
Jackie’s initiative of implementing EVP at TNT Express in three countries made it very
clear that ignoring the implementation of EVP can be a costly mistake, especially with
the continuing strong demand for talent across many industries and professions.
It is important here to mention that the management’s decision on the EVP focus area
was based on the few important parameters like current strength or weakness of TNT,
aligning TNT’s strategy with chosen factors of EVP, and financial implications of
implementing the EVP factors.
Based on these parameters, the management decided to focus on three of the Employee
Value Proposition aspects, that best aligned with strategic goals and offered the best
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opportunities for labor market differentiation at the same time representing current
strengths of the organization.
Management teams in Saudi Arabia, Kuwait and Bahrain were asked to pay special
attention to the identification of EVP aspects that are best aligned with the company’s
strategic objectives and provide the highest opportunities for competitive differentiation.
To assess the strategic relevance of each of the seven identified EVP factors, they
considered its alignment with the business objectives, company’s culture and
organization’s values. To identify the best opportunities for competitive differentiation
among the EVP factors, the management team assessed areas of current strength, areas of
current focus by closest competitors, and areas currently not well delivered by
competitors.
Finally, Jackie prioritized those HR programs and policies that have the highest impact
on reinforcing the EVP, where there is room for improvement, and where return on
investment is highest.
The identified EVP factors were taken into account and the HR activities that contributed
to the EVP factors at TNT were assessed for their impact and then further assessed for
improvements where it was believed that there could be a greater impact on talent
attraction and retention.
Lastly, based on the discussions with the employees, about the best way to communicate
a message internally, communication strategies were suggested. She prepared a
document for the HR department on ways to spread the message across the organization
about Employee Value Proposition at TNT Express. Communication strategies were
suggested for both internal and external communication. After identification of the EVP
factors, now she is happy with an EVP Express statement that was written separately for
Saudi Arabia, Kuwait and Bahrain based on the factors.
The pilot study has concluded that developing an EVP has become the key to success in
acquiring and retaining talent and is no longer an option. The development of employee
value proposition at TNT is not only to make itself appealing to external job candidates,
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but also for learning culture, high performance work practices, better management style
and growth opportunities, which is reflected in the perception of people having perceived
organizational support, high motivation, pride in identifying with organization and happy
to work there and thus are willing to ‘go the extra mile’ for the company they are
working.
Needless to mention that EVP captures the essence of what a company wants to stand for
in candidates and employees mind relative to competitive employers. The management
teams of TNT Kuwait, Bahrain and Saudi Arabia were involved to define the Employee
Value Propositions which is aligned with TNT’s strategy and culture and was supported
by HR investments by assessing the costs and differentiation that came with the EVP
factors suggested by the Employees.
Excited with the results Jackie strongly feels that even though the study was very
encouraging, it has raised many issues at the macro and micro level. She was left
unanswered on many questions:
The HR Manager Ms. Jackie Mitchell sitting in her office is thoughtfully considering how
she should now progress the results of the studies. It was clear that the employees in the
countries had very definite views on what they looked for in an employer. The EVP areas
which the management teams wished to focus on and where the employees had rated
them as weak in TNT were areas which were acknowledged to be requiring solutions. In
order to leverage these results to raise TNT’s profile in the countries involved in the
study, and to meet the objective of attracting talent, funding and in some cases policy
changes would have to be made. How could she get support at the Regional level for
financial investment while the country was in a cost optimization phase?
At what level of the organization should the implementations be initiated?
At the MEA Regional level, the Regional General Manager had a broader knowledge
and regional level view of the people management activities, and demanded some
consistency across the region, at the same time considering the differences caused by
government driven regulation. Many business decisions were driven by this approach.
Also, TNT branding in terms of consistent communications and approach to employees
and customers was considered to be critical and very regulated within TNT.
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Further what would be the real return on investment and how could this be measured
was the most important question which she knew would be raised by the management
and thus she had to answer?
She also considered the raised expectation of the employees in carrying out the survey.
How should she go about communicating the results and actions back to employees?
What result would establish that TNT met their requirements?
REFERENCE:
Attracting and Retaining Critical Talent Segments, Building a Competitive Employment
Value Proposition, Corporate Leadership Council, Corporate Executive Board, 2006.
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