The survey of 207 large and midsized companies across the world found organisations that use EVP most effectively are five times more likely to report high employee engagement.
They are also twice as likely to achieve better financial performance than companies that use EVP less effectively.
However, only 43% of organisations have a long-term plan in place to support EVP deployment.
“The employee value proposition is one of the best tools available for companies to engage employees, as well as attract and retain top talent,” said Richard Veal, head of Towers Watson’s reward, talent and communication consulting practice
The study found that EVPs at the best companies are:
Comprehensive and balanced: 49% of companies with highly effective EVPs combine extrinsic factors such as pay, bonuses and benefits with intrinsic factors such as work environment and teamwork. Only 24% of companies with low-effectiveness EVPs do this.
Differentiated: 47% of the highly-effective companies have EVPs that are significantly different, stand out from their competitors and are appealing to talent, compared with just 18% of low-effectiveness companies.
Business-oriented: 59% of the highly effective companies are using their EVP to drive the employee behaviour to deliver on strategy and be financially successful.
Employee-focused: 57% low-effectiveness companies focus on communicating the features and financial value of the deal, while 44% of highly effective companies are helping employees understand how their individual needs are met.
Towers Watson said employers looking to improve EVP effectiveness should develop an implementation road map; involve senior leaders early in EVP development; train, reward and hold managers accountable; and measure the effectiveness of EVP on different employee groups.