How employee experience contributes to positive business outcomes

12.31.2020 | By Mark Speyers

Roy Atkinson

Writer | Industry Analyst | Speaker

Over the past two years, the level of discussion of employee experience and its role in business success has increased quite dramatically. After deep and considered investment of time, effort, and money in the quest for better customer experience (CX), the new frontier is employee experience (EX).

It is important to bear in mind that everything in 2020 is different from previous years. Employers have limited control of and visibility into EX, while high percentages of employees are working from home. Rather than modifying physical offices, employers have had to concentrate on improving experiences with online meetings and the types of tools employees work with every day.

It is essential to define our two key terms: EX and positive business outcomes

Employee Experience (EX): It consists of all the experiences an employee has with the organization, including, but not limited to:

  • Recruiting
  • Job application and Interviewing
  • Hiring process
  • Onboarding
  • Training
  • Work environment
  • Tools and resources provided
  • Knowledge sharing
  • Relationship with managers
  • Relationships with team members
  • Learning and development opportunities
  • Sense of belonging and purpose
  • Recognition and reward
  • Opportunity for advancement

Positive business outcomes include:

  • Increased revenue
  • Increased market share
  • Higher productivity
  • Higher quality products and services
  • Better Customer Experience (CX)
  • Better employee retention
  • Higher profit margins

Other positive outcomes are considerations such as project success, employee adherence to schedule, reduced absenteeism, and some we might not expect, such as reduced safety incidents.

Obviously, outcomes appear far easier to quantify and measure than experiences, and so some organizations have trouble seeing the connection between the two. The danger here is falling into the fallacy that correlation implies causation, and we should avoid it.

There are many ways of gauging EX; some involve standard business metrics, and some require new ways of approaching the topic. Among the clearest indicators of whether employees’ experiences are positive or negative are standard measures of absenteeism, adherence to schedule, and employee retention. Humans tend to avoid unpleasant situations, and so these measures are general indicators of EX.

Employee Engagement

Some industry pundits have stated that employee engagement is about perks, such as better food or half-day Fridays. Perhaps some organizations have taken the easy route and substituted these perks for substantive improvement to EX. Still, a pizza party does not produce the kinds of results we see in serious studies. Engagement is one component of EX, but a very important one.

Measures of employee engagement go directly to several of the elements of EX mentioned above. These include a sense of belonging and purpose, relationships with managers and teammates, the work environment (space for employees to do what they do best and the right materials and equipment to do it right), and opportunities to learn and grow.

In October 2020, Gallup released its broad and deep study, The Relationship Between Engagement at Work and Organizational Outcomes, including responses from over 2.7 million employees and 112,312 business units across 96 countries. The results are fascinating, with well above 50% median differences between top and bottom quartile business units in absenteeism, safety incidents, and “thriving employees” (wellbeing).

But more directly, Gallup reported a 41% median difference between top and bottom quartile business units in quality (defects), 23% in profitability, 18% in sales productivity, and a 10% difference in customer loyalty and engagement. The report also details far better employee retention in businesses that have both high and low employee attrition.

Better employee engagement very highly correlates with better results in every one of the positive business outcome areas mentioned earlier in this post. In the study’s words, “the relationship between engagement and performance at the business/work unit level is substantial and highly generalizable across organizations.”

These findings confirm and expand upon an earlier multi-year report by IBM, The Financial Impact of a Positive Employee Experience. It found that organizations in the top EX quartile report nearly three times the return on assets than organizations in the bottom quartile and double the return on sales.

Measuring EX

Effectively measuring EX must go far beyond a simple “How satisfied are you?” survey, although surveying is an important component. A large part of what we are really trying to measure is culture: relationships and a sense of belonging and purpose. We should never lose sight of the fact that we are measuring perceptions. Feelings are not facts but have the weight of truth.

Most organizations opt for pulse surveys. These pulse results can be tracked over time and compared with the usual, larger annual employee survey. The pulse surveys are taken at specific intervals such as quarterly or semi-annually, and ask a range of questions about employee feelings and perceptions:

  • Do employees trust their leadership?
  • Do they feel that their input is heard?
  • Is their good work recognized?
  • Do they have the opportunity to do their best?
  • Do they have what they need to do their jobs?

Just as customer journey mapping has become one of the standard ways to consider customer experience, employee journey mapping is becoming more common, capturing touchpoints in the employee journey from recruitment to exit.

Important Considerations

No matter how organizations measure EX, we must keep several things in mind:

  • Methods have to be trustworthy, using proper survey design and collection methods.
  • Measures need to be consistent across the organization and over time.
  • Employees must be able to be candid and open without fear of reprisal or punishment.
  • Most importantly, leaders must be willing to take action on the results. Without this willingness, measuring EX is an empty exercise.

Yes, positive EX produces better business results, but if—and only if—an organization decides measure properly and improve based on the measurements.

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