O R G A N I Z A T I O N D E V E L O P M E N T
Linking the Employment Value Proposition (EVP)
to Employee Engagement and Business Outcomes:
Preliminary Findings from a Linkage Research Pilot
Study
Brian K. Heger, AT&T
Abstract
This article addresses an important business concept
called Employment Value Proposition (EVP), which de-
scribes the value or benefit an employee derives from his
or her membership in an organization. The EVP has been
suggested to be a determinant of employee engagement
and retention, both of which have an impact on critical
business outcomes. Specifically, this article describes a
pilot study which examines the relationships between var-
ious EVP and employee engagement measures and the
business outcomes of profit margin, productivity, voluntary
turnover, and accounts receivable. Using an on-line survey,
614 respondents rated the strength of their organizations’
EVP and self-reported their levels of employee engage-
ment. Results showed several important relationships
between EVP fulfillment and the intention to stay compo-
nent of employee engagement. However, relationships
between the employee measures and business outcomes
were not as robust. Recommendations for making human
capital investments and improving the design of future
linkage research interventions are discussed.
Introduction
Never before have we witnessed such a remarkable
transformation in the nature of work than what we have
seen in the past two decades. The wave of corporate re-
structurings, technological advances, and competitive
pressures that began in the early 1980s has rippled well
into the 21st century by revolutionizing the terms and
conditions of work and redefining the relationship
between employer and employee.
Much has been written about the “new employment rela-
tionship” and how it is characterized by diminished feel-
ings of employee loyalty, trust, and commitment.1 It is
interesting, then, to observe that the new employment
relationship coexists in time with a business practice
termed employee engagement, which is often touted as a
J O U R N A L
source of competitive advantage.2 The discrepancy be-
tween the new employment relationship and the desired
business outcome of achieving competitive edge through
human capital presents significant challenges to those
who are charged with retaining key employees and en-
gaging the workforce. These challenges are compounded
by a growing job market in which employees increasingly
reevaluate their firms’ Employment Value Proposition
(EVP)— the value or benefit an employee perceives by
serving as a member of the organization—and determine
for themselves the extent to which this “value” is com-
petitive. Employees who perceive their own organiza-
tions’ EVP to be less competitive than the EVP of other
organizations are likely to disengage from their own ei-
ther by reducing their contributions or by leaving their
organizations altogether.3 In either case, the outcome has
implications for a firm’s bottom-line.
The current landscape requires, first, that organizations
take a strategic approach to measuring the strength of
their EVP and, second, that they accurately analyze the
resulting data to make human capital decisions that ef-
fectively enhance employee engagement and business
results. The ability to link these measures can provide a
powerful roadmap for improving business performance
and gaining a competitive advantage.
Purpose and Overview
The purpose of this paper is to provide internal O.D.
practitioners with an approach to linking the EVP to
employee engagement and business outcomes. Over the
past few years, linkage research has been advocated as a
methodology for understanding the relationship between
employee, customer, and financial data.4 Linkage re-
search allows organizations to connect elements of the
work environment—as described by employees— to em-
ployee engagement and organizational outcomes such as
customer satisfaction and financial performance.5 How-
ever, few organizations utilize linkage research because
VOLUME 25 • NUMBER 1 • SPRING 2007 | P121
of the significant challenges it poses—ranging from the
technical (appropriating and combining different data-
bases) to the political (gaining and maintaining commit-
ment).6 Our goal is to help internal O.D. practitioners
overcome some of these challenges by sharing prelimi-
nary findings from a linkage research pilot study that
we recently conducted in one of our business units.
First, we will briefly describe the concept of employee
engagement—what it is and how it differs from employee
satisfaction. Second, we will discuss our rationale for con-
ducting this initiative and will share our methodology for
assessing the EVP and its impact on employee engage-
ment and business outcomes. Third, we will share our
preliminary findings and offer recommendations for im-
proving the design and implementation of future linkage
projects. Although the full implications of our research
are still being understood, we believe that our approach
and preliminary findings will encourage O.D. practitio-
ners to attempt their own linkage projects and overcome
some of the challenges that we faced. In doing so, the
O.D. Community can build a better understanding of
the practical application of linkage research and use
this knowledge to drive best practices that impact the
bottom-line.
Employee Engagement Defined
The past few years have brought an explosion of interest
in the area of employee engagement.7,8 This body of re-
search describes employee engagement as the intellec-
tual and emotional attachment that an employee has to
his or her work and organization. That is, employee en-
gagement involves both rational and emotional factors—
what employees think (the mind) and feel (the heart)
about their work and organization. Rational factors in-
volve the relationship that employees have with the
broader organization such as having the resources, tools,
and support they need to perform their jobs. Rationally
engaged employees understand how their work contrib-
utes to the success of the organization and have a clear
line of sight between their roles and company objectives.
In contrast, emotional factors refer to the sense of inspi-
ration and accomplishment that employees get from
their work and by being a member of the firm. Emotion-
ally engaged employees feel inspired to do their best,
are passionate about their work, and recommend their
company as a good place to work. Simply put, engaged
employees are intellectually stimulated and emotionally
inspired. They have the tools needed to perform their
jobs, are advocates of their organizations, have a desire
to stay with their employers, and willingly “go the extra
mile” for their organizations when needed.
P122 | VOLUME 25 • NUMBER 2 • SUMMER 2007
Employee Engagement: Going Beyond Employee
Satisfaction
Although the concept of employee engagement has
semblance of employee satisfaction, a growing stream of
research suggests a clearer distinction between the two
constructs. For example, the New Employer/Employee
Equation Study found that while 45 percent of employees
feel satisfied with their jobs, fewer of them are engaged.9
In particular, only 31 percent feel that their employer
inspires the best in them, still fewer (20 percent) feel
passionate about their jobs, and less than 15 percent
feel energized by their work.
Kahn lends further distinction between employee satis-
faction and employee engagement.10 According to Kahn,
employee satisfaction is a general cognitive evaluation of
an employee’s overall work experience and fulfillment of
basic employment needs. Measuring employee satisfac-
tion provides a barometer of employees’ general percep-
tions of their work environment, but it does not capture
how they express themselves intellectually and emotion-
ally in their day-to-day jobs. In fact, it is well established
that the relationship between employee satisfaction and
job performance is tenuous at best.11 Conversely, em-
ployee engagement has been shown to be strongly re-
lated to employee performance12 and other important
organizational outcomes including total shareholder re-
turn,13 operating margin,14 turnover and absenteeism,15
and customer focus.16 Although employee satisfaction is
a useful measure, these findings suggest that employee
engagement is a superior measure for understanding the
link between employee attitudes, their behaviors, and
business results.
The section that follows will describe an intervention that
we recently implemented in one of our business units.
Specifically, we will discuss how we used the Employ-
ment Value Proposition (EVP)—an employee’s perception
of the value or benefit he or she gets through association
with the firm—as a diagnostic tool for identifying high-
impact employee engagement and retention strategies.
We believe that employee engagement and retention are
largely influenced by an organization’s EVP, in that EVP
attributes (e.g. learning opportunities) serve to motivate
and retain a firm’s workforce. By understanding which
EVP attributes have the greatest impact on employee en-
gagement and retention, organizational leaders are better
equipped to devise and implement workforce practices
that enhance various aspects of business performance.
Rationale for Intervention
A business unit within our company that was experienc-
ing above average turnover enlisted our support to col-
laborate in the development of an employee engagement
and retention strategy. The business unit provides IT
solutions, program management support, and consulting
services to the external market. The organization is
unique in that its revenue stream is directly impacted by
the number of employees who are assigned to a client
account. Therefore, a position vacancy has an immediate
negative effect on revenue until a replacement can be
recruited, onboarded, and supported quickly up the
learning curve to work independently and productively.
The estimated costs of employee turnover for this busi-
ness unit are 150% of the departing employee’s annual
salary. This organization’s leadership team wanted to
identify the drivers of employee engagement within its
workforce so that it could establish a targeted action plan
that would increase its Employment Value Proposition
(EVP) and reduce employee turnover within its organiza-
tion. A pilot study was sponsored as the first step in a
series of sequential data collection over time. The intent
was to collect enough data so that linkages can be estab-
lished and our approach could be refined and applied
on a much broader basis.
Method
Sample and Overview of Procedure and Measures
The business unit for this study has 10 divisions compris-
ing 936 full-time company employees. All 936 employees
were sent an automated e-mail invitation from the orga-
nization’s Vice-President to participate in this study.
Six-hundred fourteen (614) respondents (66% response
rate) completed the survey during a 2-week time frame.
Participants were informed that the leadership team was
conducting research to understand the importance that
employees place on various aspects of their employment
and to assess the extent to which the organization was
fulfilling those expectations. The invitation included a
direct link to a website belonging to a third-party survey
vendor along with a Personal Identification Number
(PIN) each employee could use to access the survey.
Although the survey vendor could link the PIN back to
information in AT&T’s HR database for purposes of seg-
menting survey results by demographics, no person or
group within AT&T was able to access individual survey
responses. The employee survey included: 52 EVP attri-
butes, 11 questions on employee engagement, 1 question
on labor market opportunity, 1 question on overall
employee satisfaction, and 2 open-ended questions on
employee engagement. Business outcome measures were
gathered from existing archival data and included: profit
margin, productivity, voluntary turnover, and accounts
receivable.
Employee Survey Measures
E1. Employment Value Proposition (EVP) Ratings.
The initial content for this measure consisted of 52 EVP
attributes that we constructed upon guidance from the
external research on the EVP and input from the busi-
ness unit’s leadership team. Content selection was based
on attribute themes that emerged in the research as
drivers of retention and engagement, and which the
leadership team deemed actionable or unique to its orga-
nization. Each attribute was given a name (e.g. mentor-
ing) and a definition (e.g. opportunity to spend time
with a mentor within AT&T).
Using a 7-point Likert scale ranging from 1 (extremely
unimportant) to 7 (extremely important), employees were
asked to rate the importance they placed on each of the
52 EVP attributes (importance score). Next, using the
same 52 attributes and a 7-point Likert scale ranging
from 1 (extremely ineffective) to 7 (extremely effective),
employees were asked to rate the organization’s effec-
tiveness at fulfilling these areas (fulfillment score). Last,
we calculated EVP discrepancy scores by subtracting
the employees’ fulfillment rating from their importance
rating for each attribute. For example, if an attribute was
given an importance rating of 7 (extremely important) and
a fulfillment rating of 1 (extremely ineffective), the result
is a discrepancy score of 6. The higher the discrepancy
score, the weaker the EVP is for that attribute. Converse-
ly, lower discrepancy scores indicate greater strength of
the EVP. The discrepancy scores were intended to serve
as independent variables for measuring variation in
employee engagement (one of our other employee mea-
sures). Our hypothesis was that lower EVP discrepancy
scores would indicate higher levels of employee engage-
ment. We also used the fulfillment scores and importance
scores as separate independent variables. This methodol-
ogy was adopted from similar studies conducted in the
academic literature on the psychological contract. 17, 18
Based upon factor analysis and internal consistency tests
of the actual survey results, the EVP content was later
modified to include 41 of the original 52 attributes that
were on the initial survey. As shown in Figure 1, these
41 attributes were grouped into 11 EVP categories.
Figure 1. Final EVP content structure of 11 categories and 41
attributes.
VOLUME 25 • NUMBER 2 • SUMMER 2007 | P123
E2. Employee Engagement Measures. Drawing on
validated employee engagement models from the exter-
nal research,19, 20 our working premise for this study was
that employee engagement is one concept comprised
of three distinct components: discretionary effort, organiza-
tional advocacy, and intention to stay. Each component
captures a unique aspect of employee engagement and
can manifest itself through rational and emotional
engagement, or both (see earlier part of this paper for
the distinction between rational and emotional engage-
ment). For this study, we developed 11 questions to
measure the three aspects of our employee engagement
model. We conducted a factor analysis and internal
consistency tests of the survey results to ensure that each
question was a reliable measure of its respective compo-
nent. The analysis confirmed our three-component
model, but warranted the removal of three questions. We
aggregated the remaining eight questions to form an
overall employee engagement index. For employee en-
gagement measures A through C, a 5-point Likert scale
was used: 1 (strongly disagree) to 5 (strongly agree).
A.Discretionary Effort. Discretionary effort was
measured using a three-item index that assesses an
employee’s tendency to go beyond the performance
requirements of his job. It includes survey items that
measure an employee’s willingness to look for new
and better ways of doing her job and helping cowork-
ers. The internal consistency reliability (Cronbach’s
alpha) is .72 for this scale.
B. Organizational Advocacy. Organizational Advocacy
was measured using a three-item index that assesses
the degree to which an employee speaks positively
about the organization, promotes the positive aspects
of working for AT&T, and would recommend the
company as a good place to work. The Cronbach’s
alpha for this scale is .73.
C.Intention to Stay. Intention to stay was measured
using a two-item index that assesses an employee’s
desire to remain employed with the organization. It is
based on survey items that measure actual job search
behavior and the frequency with which an employee
thinks about leaving the organization. The Cronbach’s
alpha for this scale is .79.
D.Employee Engagement Index. In order to capture
an overall measure of employee engagement, we cre-
ated a fourth engagement measure that consists of the
equally weighted sum of each of the three independent
engagement measures (measures A through C).
E. Open-ended Questions. To supplement the quanti-
tative findings of this study, we asked employees two
open-ended questions on employee engagement: (1)
What can the organization do to strengthen your de-
sire to remain with the company? (2) How could the
organization enable you to be more effective in your
P124 | VOLUME 25 • NUMBER 2 • SUMMER 2007
job. Each question included a drop-down menu of
category themes (e.g. communication, resources, etc.)
that employees could select, and a text box in which
they could write their comments.
E3. Employee Satisfaction. Our survey included one
question to measure employees’ overall satisfaction with
the company. We included this question for trending
purposes since it has been asked for over 25 years on
previous AT&T employee surveys. Its inclusion also
allowed us to test our hypothesis that employee satisfac-
tion differs from employee engagement. A 5-point Likert
scale ranging from 1 (very dissatisfied) to 5 (very satisfied)
was used for this question.
E4. Labor Market Opportunity. This measure was
used as a moderating variable consisting of one question
that gauges an employee’s perception of how challenging
it would be to obtain a job outside of AT&T that is of
equivalent or greater pay and status. One of our hypoth-
eses was that the relationships between EVP fulfillment
and intention to stay would be moderated by the quality
of alternative jobs available. For example, employees who
believe that it will be difficult for them to find similar
employment elsewhere are likely to remain with the
company even during periods in which their EVP needs
are not being fulfilled.21 In such a case, perceptions of
low EVP fulfillment are less likely to translate into lower
levels of intention to stay. Moderating variables are im-
portant to include in linkage research since they enhance
the predictive ability of the linkage model and may help
to explain counterintuitive findings.22 A 5-point Likert
scale ranging from 1 (strongly disagree) to 5 (strongly
agree) was used for this measure.
Business Outcome Measures
B1. Profit Margin. Financial measures for this study
were available for six major divisions. To calculate a sim-
plistic rate of profit margin for each of these divisions, we
used revenue, operating costs and average headcount for
a 4-month period leading up to the survey. In combining
these measures to estimate profit margin, we were able
to control for the size of the organization, which was
needed due to the wide variation in revenue and
headcount between the divisions.
B2. Productivity. Productivity data were available
for 39 sub-divisions. Productivity was computed as the
percent of an employee’s work time that is billed to the
client; the higher the percentage, the more productive
the organization. This was a cumulative measure span-
ning 5 months of performance leading up to the survey.
B3. Voluntary Turnover. Turnover data were available
for 53 sub-divisions. Voluntary turnover was calculated
as the percentage of employees who resigned in the
5 months prior to the survey. It does not include
involuntary terminations.
Figure 2. Linkage model of the EVP, employee engagement, and business outcome measures.
B4. Accounts Receivable. Since this business unit did
not have a good customer satisfaction metric, Accounts
Receivable (AR) data, which were available for 39 sub-
divisions, was used as an additional business metric for
this study. Since we were looking for an indication of
business performance, the metric we used was the pro-
portion of AR that was unpaid after more than 180 days.
Using the proportion rather than actual dollars served to
control for the different organization sizes.
An example of the linkage model illustrating the
hypothesized relationships between all of the employee
measures and business outcomes is shown in Figure 2.
Data Analyses
Relationships between employee survey responses and
business outcomes were tested at the appropriate level for
which data were tracked (e.g. survey results for the 39 sub-
divisions that had productivity data compared to produc-
tivity outcomes for those same sub-divisions). Correlations
were calculated to estimate the relationship between each
EVP attribute measure (importance, fulfillment, and dis-
crepancy) with our four employee engagement measures
and four business outcome measures. We also conducted
correlation analysis between each engagement measure
and our four business outcome measures. We used a vari-
ety of multivariate analyses (e.g., multiple regression, path
analysis) and other structural equation modeling methods
to examine the relationships between all of the employee
measures and business outcomes.
Preliminary Findings, Lessons Learned,
and Recommendations
1. “Importance” scores provided marginal value. The
first part of our analysis looked at the importance that
employees placed on 41 attributes of the EVP. Results
showed that most employees rated each of the attributes
as “very important” or “extremely important,” providing
little variance in employee responses. Although we ex-
pected more variation in EVP importance scores, these
results were not totally surprising when considering that
our attributes are anchored in the most current research
on employee engagement and retention. That is, many of
the attributes that we included on our survey have been
shown to be important to the general workforce. With
almost no variability, the importance scores did not pro-
vide any additional value for the analysis. Likewise, there
was no need to utilize the discrepancy score for each at-
tribute, since the discrepancy scores did little more than
reflect the fulfillment scores. Instead, we utilized the ful-
fillment scores as our independent EVP measures since
this is where we saw the greatest variability.
Moving forward, one suggestion for obtaining a more
balanced importance score distribution is to have em-
ployees force rank a fixed number of attributes into
three categories of importance—critically important, im-
portant, and less important. This approach, sometimes
referred to as Q-Sort, would expose the “relative impor-
tance” that employees place on attributes that would oth-
erwise receive a rating of “very important” or “extremely
VOLUME 25 • NUMBER 2 • SUMMER 2007 | P125
important” when rated independently. A more sophisti-
cated alternative to force ranking is conjoint analysis—a
technique used by the Corporate Leadership Council in
their research on employee preferences.23 Conjoint anal-
ysis asks respondents to make tradeoffs between a series
of job attribute pairs (e.g. base pay vs. vacation) and vary-
ing levels of those attributes (e.g. 10k base pay increase
or 2 weeks vacation). As respondents indicate which at-
tributes they are most and least willing to give up, the
“true” importance structure of all attributes is discovered.
Although conjoint analysis is the more rigorous and pre-
cise of the two alternatives, we believe that the forced
ranking option provides a better balance of rigor and
practicality for most organizations. Regardless, either
alternative will yield a more accurate picture of EVP “im-
portance” scores, since they imitate “real world” decision-
making behavior where employees are forced to choose
and make tradeoffs among several alternative attributes.
2. Discretionary effort scores yielded less variance
than expected. Although employees showed greater
variability in their responses on the intention to stay and
organizational advocacy components of employee engage-
ment, most respondents rated themselves highly on the
discretionary effort measure—reporting that they often
go above and beyond what is expected of them. These
results may be due to a few reasons.
First, it is possible that employees within this business unit
do indeed exhibit higher levels of discretionary effort by
willingly exceeding the performance requirements of their
jobs. Second, given the resource constraints that high
employee turnover has placed on this business unit, it is
also likely that many employees may have felt “obligated”
or“required” to assume the responsibilities of those em-
ployees who have left the organization. As such, our dis-
cretionary effort measure may have been tapping into
employee behaviors that are not as “discretionary” as they
may appear. Finally, high discretionary effort scores may
be due to social desirability bias—where individuals have
a tendency to over-report socially desirable personal char-
acteristics and under-report socially undesirable character-
istics.24 By asking employees to self-report discretionary
effort, we were essentially asking them to rate an aspect
of their performance. As such, employees may have been
inclined to inflate their discretionary effort ratings.
To the extent that social desirability bias may have re-
duced the validity of our discretionary effort results, one
recommendation for minimizing its effects in the future
is to have employees’ self-report discretionary effort
using Behaviorally Anchored Rating Scales (BARS).25 Unlike
the Likert scale used for our study—where employees
answered how often they go above and beyond—BARS
can be used to capture specific and varying levels of
discretionary effort (e.g. volunteers for additional work
assignments). This approach makes it more difficult for
P126 | VOLUME 25 • NUMBER 2 • SUMMER 2007
employees to endorse a higher rating of discretionary
effort and is more likely to result in greater variance. Still,
since this approach does not fully eliminate social desir-
ability bias, some O.D. practitioners may argue that the
best method for measuring employees’ discretionary effort
is to obtain ratings directly from independent sources,
such as the supervisors and co-workers of those employ-
ees being rated. Despite the intuitive appeal of this ap-
proach, we believe that it may not be feasible for some or-
ganizations since its implementation requires more time,
effort, and logistical planning (e.g. multiple independent
ratings must be aggregated and linked back to individual
employee survey responses). Further, since some forms of
discretionary effort are subtle and therefore difficult for
independent raters to objectively assess, independent rat-
ings may weaken the validity of the survey results. There-
fore, we believe that the BARS approach to self-reporting
discretionary effort is the most viable alternative.
3. Various relationships between EVP fulfillment
scores and intention to stay. Again, the primary goal of
this research was to understand the relationship between
EVP fulfillment and intention to stay. As shown in Figure
3, we plotted the correlations of the 41 fulfillment scores
and the intention to stay results at the business unit level
(614 respondents). We segmented the correlation matrix
into four regions to illustrate the strength of the relation-
ships and the potential for improving each fulfillment
score. A few of these findings are noteworthy.
First, Region I of the matrix shows attributes that are
high-impact (higher correlation with intention to stay,
p = < .0001) and offer the most opportunity for improve-
ment (fulfillment scores fall below the mean). Although
the 13 attributes in Region I provide a logical starting
point for developing retention strategies, we recommend
prioritizing them against the criteria of costs, benefits,
and scalability before determining a retention strategy.
For example, of the 13 attributes in this region, 7 of them
are related to the EVP categories of Learning and Develop-
ment and Compensation—both of which require the use of
finite resources (e.g. financial, mentors). As such, these
strategies are restricted in the number of employees that
they can impact. Likewise, providing all employees with
job fulfillment (r = .48) and challenging work (r = .39) has
limitations since not all jobs lend themselves to variation,
and managers are restricted in the number of employees
they can impact due to span of control. Rather than apply
these limited strategies broadly, we will further analyze
the survey results of critical employee segments, such as
high-potentials and mission-critical groups, to determine
whether these attributes are areas of concern within
these populations. Although we plan to identify strate-
gies that will impact the broader population, critical
employee segments will be a priority when it comes to
allocating limited resources—given that these employees
bring disproportionate value to the organization.
Figure 3. Correlations between the 41 EVP fulfillment scores and intention to stay index for the entire business unit.
One attribute in Region I that we plan to widely address
is resources (r = .37): making sure that all employees have
the resources and information they need to do their jobs.
This attribute is the cornerstone of rational engagement
and provides a foundation upon which emotional engage-
ment can be built. We suspect that resource issues may be
tied to the process efficiency (r = .28) concerns identified in
Region III; deficiencies in these two areas (resources and
process efficiency) may be what are leading to elevated
workloads (r = .37), see mid-point of Figure 3. Our plan
is to conduct a segment analysis of the survey results to
pinpoint whether these concerns are systemic or specific
to a particular employee segment. We will also analyze
the written responses to the open-ended questions to
determine the best corrective actions for improving
these areas.
For additional broad-impact retention strategies, we can
draw from attributes in Region II (higher impact and
higher fulfillment). Although these attributes offer less
room for improvement, they have stronger relationships
with intention to stay than the remaining two regions
(III and IV). We recommend that the leadership team
continue to build on attributes in this region that have
the potential to impact multiple employees simultane-
ously, such as leaders providing open and honest communi-
cation (r = .43), communication of goals (r = .38), and
showing concern for employees (r = .38). Further, this re-
gion has four attributes related to Performance Manage-
ment that can be leveraged to optimize the organization’s
performance management platform. Not only are all of
the attributes mentioned scalable, but they are low-cost
and likely to sustain returns beyond the initial invest-
ment since they are aspects of organizational culture.
Lastly, there are a few attributes in Region IV that have
higher fulfillment scores, but weak relationships with in-
tention to stay, (p = < .0001). They include: profit sharing
(r = .18), retirement savings plan (r = .21), competitive health
benefits (r = .21), value of health benefits (r = .22), and paid
time off (r = .23). We suspect that weaker relationships in
these areas may be due to a large portion (over 50%) of
this business unit’s members having low tenure and
being younger in age relative to the general workforce.
That is, for many of the respondents, the attainment of
these attributes may appear to be out of reach and less
tangible than the shorter-term rewards, such as base
pay and bonus, which had stronger relationships with
VOLUME 25 • NUMBER 2 • SUMMER 2007 | P127
Figure 4. Marginal returns on intention to stay when focusing retention strategy beyond 3 EVP categories.
intention to stay. Further, these results are in line with
external research that suggests the current generation of
young employees does not place nearly as much impor-
tance on paternalistic attributes of an employer. 26 As
such, there is no action needed relative to these attri-
butes regarding this business unit’s retention strategy.
4. A few areas of focus are all it takes to impact in-
tention to stay. In addition to understanding the correla-
tion between each EVP fulfillment score and intention to
stay, we assessed the impact of multiple EVP attributes
on intention to stay. Although correlation analysis can
help to explain the relationship between an EVP attribute
and an employee’s desire to remain with the company, its
limitation is that it does not allow us to understand the
simultaneous impact of multiple attributes on intention
to stay. Since the impact (correlation) of each attribute is
not additive, we utilized multiple regressions to cancel
out the overlap or shared variance of multiple attributes.
As shown in Figure 4, regression analysis of the 11
overall EVP categories found that most of the variance
in intention to stay was explained by 3 categories. For
example, the most variance that the best single EVP
category (Day to Day Work) accounted for in intention to
stay was 23%. That is, improving attributes associated
with Day to Day Work can influence an employee’s desire
to remain with the company by up to 23%. The most
variance that the best two-category combination (Day to
Day Work & Learning and Development) accounted for in
intention to stay was 29%, an increase of (+6) over the
one-category model. The best three-category models
accounted for 32% (+3) of the variance in intention to
stay. Many of the best three-category models included:
Day to Day Work, Learning and Development, and Compen-
sation. Beyond three EVP categories, there were marginal
P128 | VOLUME 25 • NUMBER 2 • SUMMER 2007
returns on intention to stay. For example, all 11 catego-
ries explained 35% of the variance in intention to stay
scores, only 3 points above the three-category model.
This analysis confirmed that the leadership team should
build its retention strategy on no more than three core
areas in order to get a higher return on its investment.
We conducted additional multiple regressions to identify
the optimal number of attributes within the best three-
category models that were needed to gain the most
potential impact on intention to stay. In general, only two
attributes in each category were needed to achieve the
maximum potential impact. The good news is that there
were several two-attribute options in each category that
can produce a similar increase in intention to stay.
These findings are important since they reduce the likeli-
hood of over-investing in retention strategies that would
yield a marginal return. If, for example, we relied exclu-
sively on the correlation matrix (Figure 3), we would have
been led to believe that improving all four Learning and
Development attributes in Region I would have yielded
the most potential increase in intention to stay through
learning and development activities. However, multiple
regressions revealed that improvement in only two of
these attributes was needed to achieve the maximum po-
tential increase in intention to stay. Further, it informed
us that any combination of these four attributes would
produce a similar result.
5. No relationships between intention to stay and
voluntary turnover (at this time). One goal of this
research was to test the extent to which our intention to
stay index correlates with Voluntary Turnover. However,
because this study was a pilot, the turnover data available
for our research preceded the collection of intention to
stay data. As such, we were forced to test the relationship
between the intention to stay scores of those who are
still employed to the turnover data of those who have
already left the organization—an incorrect temporal
sequence. Our plan is to wait 9 to 12 months and then
track the individual intention to stay scores to actual
turnover at the individual level. This approach will allow
us to determine whether the intention to stay scores for
employees who resigned was significantly lower than
employees who stayed with the organization. If we are
able to validate our intention to stay index as a predictor
of voluntary turnover, we will conduct an analysis to
identify the specific EVP attribute scores of those who
left the organization and compare them to those who
stayed. If statistical analysis shows, for example, that
those who stayed rated the mentoring attribute as “highly
fulfilled,” and those who left rated it “highly unfulfilled,”
we can make the inference that mentoring is a driver or
leading indicator of retention/turnover. Over time, these
additional data points will allow us to move our analysis
from correlation to causation. Despite our recommenda-
tion to track intention to stay and retention/turnover
results at the individual level, we recommend that only
the third-party vendor be privy to the individual survey
results so that promises of confidentiality are upheld.
6. Few but interesting relationships between employ-
ee measures and business outcomes. An important
piece of our research was to understand the relationship
between various employee measures and four business
outcomes. Although we found only two significant rela-
tionships between the employee measures and business
outcomes, these findings provide useful insights.
First, employees in units with higher Productivity were
more likely to say that the business unit was highly effec-
tive in the EVP category of Pay for Performance (r = .28, p <
.10). That is, the business unit differentiates salary increas-
es and bonus payments between high and lower perform-
ing employees. This finding is noteworthy, especially since
there were no significant relationships found between the
business outcome of Productivity and the EVP attributes
of base pay and bonus. This result implies that base pay and
bonus in general are not the major issues when it comes
to productivity. Rather, it is whether employees perceive
that these financial rewards are based on a pay for perfor-
mance philosophy. We suggest that the leadership team
continue to establish and communicate a clear framework
for cascading performance goals and objectives through-
out the organization, and which ties an employee’s bot-
tom-line results to his or her salary increase and bonus.
A second notable finding is that highly Productive em-
ployees were more likely to say that they could easily find
a job (Market Opportunity) outside of the company that is
of equivalent or greater pay and status (r = .35, p < .04).
The implication is that highly productive employees be-
lieve that their current productivity level enhances their
marketability to potential employers. Given this finding,
we plan to monitor the market opportunity and intention
to stay scores of these productive business divisions so
that we can gauge retention risk on an ongoing basis. We
will use these measures as leading indicators to help the
leadership team detect and mitigate potential departures
that pose the greatest threat to productivity.
In answer to the question that asks why more significant
relationships were not found between the employee
measures and business outcomes, we considered three
possible explanations. The first focuses on the time peri-
ods over which business metric data were collected. Due
to logistical issues, we were only able to obtain business
metric data for 5 months leading up to the survey. We
believe that fluctuations in random variables (e.g. sea-
sonality) that occur over shorter periods may have led to
a less reliable measure of performance. Moving forward,
we recommend averaging business outcome variables
over longer time periods, such as year-to-year sales.
A second reason that may explain the weak relationships
between the employee measures and business outcomes
has to deal with the sample size used for this study. Since
linkage analysis requires that individual employee survey
responses be aggregated to the same level at which busi-
ness metrics are captured, we were forced to reduce the
number of single employee observations from 614 to 6
divisions or 53 sub-divisions depending on the business
metric. The reduction of data resulted in the loss of
statistical power and may have obscured meaningful
relationships between the employee measures and
business outcomes. For future linkage projects, we will
ensure that the unit of analysis provides sufficient data
points. Some have suggested that a sample in excess of
100 units may be needed to establish such linkages.27
Third, weak relationships may also be due to the divi-
sions and sub-divisions being too homogenous. That is,
they all do very similar contracting work and are exposed
to similar workforce practices. This condition may have
led to uniformity of responses and low variability. With-
out variance, no relationships can be detected. To address
this issue in the future, we recommend testing for group
homogeneity through a statistical comparison of within-
group and between group variance to justify the level
of aggregation.28
7. Developing a conceptual model is essential for
gaining leadership team support. Lastly, it is important
to mention the critical role that a conceptual linkage
model plays in mobilizing the linkage intervention. Be-
fore collecting any data, we developed a model (example
shown in Figure 2) that illustrated the hypothesized
linkages between our employee measures and business
outcomes. The model forced us as the designers to iden-
tify and organize the variables of our study into a holistic
framework and take inventory of the measures that were
VOLUME 25 • NUMBER 2 • SUMMER 2007 | P129
needed to implement this study. The model served as a
roadmap that we used with the leadership team to so-
cialize our approach and test our assumptions about
their organization. The leadership team helped us to
refine the model by recommending business metrics
that were most important to them. By introducing the
employee survey in the context of business metrics, the
leaders quickly saw the value of conducting the study.
We also provided the leadership team with a “mock”
PowerPoint presentation that we created using fictitious
data in order to give them a sense of the potential output
our analyses could produce. We used compelling and
easy to read graphical charts that distilled various data
points into succinct and insightful key takeaways. The
conceptual model and mock analysis made the project
more tangible to all stakeholders and generated enthusi-
asm amongst the team. We also utilized these materials
with a business metric team who helped us to under-
stand the business unit’s financial metrics and collect
business data for this study. Each of these preliminary
activities was essential to our linkage intervention and
was the cornerstone for mobilizing stakeholder support.
Conclusion
Since the full implications of our pilot study are still
being analyzed, a complete review of our findings is not
feasible at the time of this publication. Further, given the
proprietary and confidential nature of survey instruments
and results, we are limited to sharing our general insights
and recommendations. Nonetheless, our shared ap-
proach, preliminary findings, and recommendations
have provided some ideas for internal O.D. practitioners
to consider as they design their own linkage research
interventions. Although our recommendations may be
more apparent to consulting firms specializing in linkage
research, they may be less evident to internal O.D. practi-
tioners who must manage multiple interventions that
require different levels of expertise. For these practitio-
ners, it is our hope that we have provided the foundation
to initiate linkage efforts within their organizations.
For our own next steps, we plan to further analyze our
data and use this information to refine and improve our
approach. We expect to conduct more linkage projects
so that we can expand our current data and utilize the
updated findings to quantify the financial benefits of
improving employee engagement. The enhanced dataset
we expect to obtain through future linkage projects will
enable us to uncover the unique EVP needs of diverse
employee segments (e.g. generational, geographical,
functional, etc.), and will allow us to make targeted
human capital investments that yield a greater return to
the company’s bottom-line. Despite the limitations of
our pilot study, we believe that it has provided a critical
first step in helping our business leaders understand how
P130 | VOLUME 25 • NUMBER 2 • SUMMER 2007
they can leverage employee survey results to achieve
business results. As our continued work in this area
reveals new insights, we expect to share our findings
in a future edition of this journal.
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Acknowledgments
I would like to thank Mary Kay Ross & Sharon Snyder of
AT&T and Art Wohlers, Ph.D of Survey Research Associ-
ates, Inc. for their assistance on this project and comments
on an earlier draft of this paper. I also want to acknowledge
Jerry Kehoe, Ph.D for his comments on a previous version
of this paper. I am thankful to the HR leaders and business
leaders of AT&T who supported this initiative and who un-
derstand the strategic value of employee surveys. Last, I
want to thank my wonderful wife, Jody, for her support and
encouragement throughout the writing of this paper.
Author’s Reflection
Although AT&T continues to go through several struc-
tural changes as a result of recent acquisitions, at the
time of this O.D. initiative, O.D. support for the company
was generally provided by my team, which included two
employees whom reported directly to me. My team was
part of the Workforce Strategy and Policy Organization
(WSPO), which was part of the Human Resources func-
tion. The WSPO was headed by an HR Vice-President, to
whom I directly reported, who in turn reported to the
Executive Vice-President (EVP) of HR. The EVP of HR
VOLUME 25 • NUMBER 2 • SUMMER 2007 | P131
was a member of the company’s Executive Committee
and reported directly to the CEO.
The WSPO was responsible for developing corporate-
wide HR strategies, tools, policy, and processes that sup-
ported various initiatives including: succession planning,
leadership development, talent acquisition, employee
surveys, diversity, and people planning, to name a few.
In addition to providing overall direction and support to
the firm in many of these areas, my team provided con-
sultation to internal business clients who needed support
in developing and implementing customized O.D. and
talent management solutions.
Since the business client for this initiative had an imme-
diate need for addressing its retention issue, a decision
was made to design the survey in-house. Developing the
survey in-house allowed my team to leverage its internal
survey experience and knowledge of the business, and
enabled us to act quickly and decisively on survey imple-
mentation. Although my team designed the survey and
overall approach, we did engage a third-party survey
vendor for this assignment. The vendor is a Ph.D indus-
trial psychologist with extensive experience in supporting
AT&T surveys and has expert knowledge in employee
surveys and statistical analysis. One benefit of having the
vendor host the survey on his company’s website is that
employees generally feel more comfortable in providing
candid feedback to an external third-party vendor rather
than a person or group within AT&T. Embedded in
AT&T’s employee survey process is a robust communica-
tion platform that ensures all participating employees
that no AT&T employee or group will have access to any
individual survey responses. Respondents of our surveys
frequently acknowledge through their written comments
that they take great comfort in knowing that their indi-
vidual survey responses are protected and secured by
the survey vendor.
Another benefit of using a third-party survey vendor is
the vendor’s ability to conduct several statistical tests and
produce various statistical reports. Since my team has
responsibility for other areas outside of employee sur-
veys, I have found that it is a better use of my team’s
time to have the vendor generate and organize raw sur-
vey reports. This approach allows my team to attend to
many other organizational issues during this stage of the
survey process. Once the raw survey data reports were
generated for this project, the vendor then provided my
team with this information so that we could begin to an-
alyze the data and translate the results into a powerful
presentation for the business unit leadership team. The
presentation that I delivered to the leadership team pro-
vided them with the “so what’ of the survey results and
was communicated in a “language” and format that they
easily understood. The final part of the presentation
drew the connection between the survey data and a
P132 | VOLUME 25 • NUMBER 2 • SUMMER 2007
preliminary action plan for the leadership team to con-
sider and discuss. My team is currently working with the
leadership team on helping them to refine the action
plan and establish accountability for its implementation.
One of the challenges of implementing this survey was
the collection and organization of business outcome
data, such as productivity and revenue. Since the busi-
ness metrics used for this study were collected and re-
ported at different levels within the organization, it was
necessary for my immediate team to enlist the support of
a business metric team who helped us to collect and un-
derstand the business metric data. These team members
were employed in the business unit where the study was
implemented and have strong knowledge of the business
metrics and the environment in which the business unit
operates. Without the involvement of the business metric
team, it would have been very difficult for my team to
understand the various metrics used by the business unit.
For those O.D. practitioners seeking to link employee
survey results to business outcomes, I believe that the
involvement of a business metric team from the onset
of the project is a requirement, not an option, for con-
ducting such an initiative.
This new approach to employee surveys is a signifi-
cant improvement over traditional employee satis-
faction surveys --- where employee satisfaction was
often viewed in isolation from performance and real
business results. By effectively correlating employee
engagement with results, my leadership team is bet-
ter equipped to devise and implement action plans
that are far more likely to improve overall business
performance and enhance the employee experience.
AT&T VP – Business Leader
This new employee survey has shown my leadership
team how to leverage employee survey results to
achieve business results. By placing the employee
survey in the context of business outcomes, our lead-
ership team has found a rigorous way to identify
and improve those vital few workforce practices that
have greatest impact on the bottom-line.
AT&T VP – Business Leader
Brian Heger has been employed with AT&T over the past
7.5 years, where he has held positions as an HR General-
ist, HR Program Manager, and Talent Management Con-
sultant. In his most recent position as Talent Management
Consultant, Brian is responsible for corporate-wide suc-
cession planning, organizational surveys, and various as-
pects of talent management. Brian holds an M.A in Indus-
trial/Organizational Psychology and a B.A in Psychology
from Fairleigh Dickinson University in Madison, New
Jersey. Brian can be contacted at brian_heger@yahoo.com.