Given the continuing turmoil in the labor markets, with (according to SHRM) the number of job openings reaching their highest levels in 21 years last year.  Even with projected job growth slowing, the competition for talent is not easing - it projects that there is more than enough new job creation to cover any layoffs. How can companies continue to compete? What can and should they attend to? The answers lie in developing and managing a compelling and high-value employee experience (EX). 

EX refers to the cumulative interactions, perceptions, and feelings that employees encounter throughout their employment lifecycle journey with an organization. It includes all the aspects of employees’ interactions with their work environment, including the physical workspace, company culture, relationships with colleagues and managers, opportunities for growth and development, and the overall support provided by the organization. 

Employee Experience focuses on understanding and improving the employee's overall well-being, engagement, and satisfaction at work. It recognizes that employees are not just resources but individuals with unique needs, aspirations, and motivations. By creating a positive employee experience for each employee, organizations aim to foster a work environment that promotes productivity, engagement, and a sense of purpose. Much of that is determined using a set of disciplined and deliberate employee listening techniques, such as those leveraged in design thinking.

Design thinking collects insights and analyzes data from employees on not just their experiences interacting with the employment processes, people, and ecosystems, but on those places in the “journey” (e.g., from new hire to alumni or retiree) that have the most impact on their satisfaction, motivation and engagement as a part of the employee population. Those “moments that matter” become targets for experiential improvement through redesign, in ways that enhance the efficiency, effectiveness, or impact of the process, program, or interaction.  Potential targets for the journey that contribute to a positive employee experience include:

• Physical Environment: The workplace location, design, amenities, and comfort level of the physical space where employees perform their tasks.
  
  
• Company Culture: The values, norms, and behaviors that shape the organization's work environment, including the level of trust, inclusivity, and recognition of employee contributions.
  
  
• Leadership and Management: The quality of leadership, management practices, and the effectiveness of communication and decision-making processes within the organization.
  
  
• Career Development and Growth: Opportunities for professional development, learning, skill enhancement, and advancement within the organization.
  
  
• Work-Life Balance: The ability to achieve a healthy balance between work responsibilities and personal life, including flexibility in working hours, location, and support for personal well-being.
  
  
• Employee Recognition and Rewards: Acknowledgment and appreciation of employee contributions through recognition programs, rewards, and a fair compensation structure.
  
  
• Collaboration and Teamwork: The extent to which employees are encouraged to collaborate, share knowledge, and work together effectively to achieve common goals.
  
  
• Employee Support and Wellness: The provision of resources, support programs, and initiatives that promote employee well-being, both physical and mental.
  
  
• Technology and Tools: The availability and usability of technology and tools that enable employees to perform their tasks and access needed resources efficiently and effectively.
  
  

By focusing on enhancing the employee experience, organizations aim to create a positive and engaging work environment that attracts and retains talent, drives productivity, and ultimately contributes to the success and growth of the business.

What is the observed or projected value of focusing on employee experience?

At a theoretical level, focusing on employee experience (EX) can bring benefits and create significant value for organizations. Here are some key aspects of value to both business and talent outcomes of prioritizing employee experience:

1. Enhanced Productivity.

When employees have a positive experience at work, they tend to be more engaged, motivated, and satisfied. This, in turn, should boost their productivity and efficiency, leading to improved business outcomes. Engaged employees are more likely to go the extra mile, collaborate effectively, and take ownership of their work, resulting in higher levels of productivity and better overall performance.

2. Talent Attraction and Retention.

A strong focus on employee experience can make the organization an attractive place to work, helping in the attraction and retention of top talent. In today's competitive job market, talented professionals are increasingly seeking organizations that provide a positive work environment, growth opportunities, and a healthy work-life balance. By investing in employee experience, a company can differentiate itself from its competitors, leading to increased retention rates and a higher caliber of candidates applying for (and accepting) positions.

3. Reduced Turnover Costs.

High employee turnover can be costly for businesses owing to recruitment, onboarding, and training expenses, loss of productivity, as well as the loss of institutional knowledge. By prioritizing employee experience, organizations can create a supportive and fulfilling workplace, reducing turnover rates. When employees feel valued and supported, they are more likely to stay with the company for the long term, leading to cost savings and improved continuity.

4. Innovation and Creativity.

Positive employee experiences tend to foster a culture of innovation and creativity within organizations. When employees feel empowered, trusted, and encouraged to share their ideas, they become more willing to contribute innovative solutions and take calculated risks. By promoting an environment that values and rewards creative thinking, companies can tap into their employees' full potential, leading to improved problem-solving, innovation, and competitive advantage.

5. Customer Satisfaction.

Employee experience and customer experience (CX) are interconnected. Satisfied and engaged employees are believed to be more likely to deliver exceptional customer service, resulting in higher levels of customer satisfaction. Employees who feel supported and empowered are similarly motivated to provide better service, understand customer needs, and go above and beyond to meet expectations. This positive correlation between employee experience and customer satisfaction can lead to increased customer loyalty, positive word-of-mouth referrals, and improved business performance.

6. Employer Brand and Reputation.

A focus on employee experience contributes to building a strong employer brand and positive reputation in the market. Satisfied employees often become brand advocates, sharing their positive experiences with others, including potential customers and job seekers. A positive reputation as an employer of choice not only attracts top talent but also enhances the overall brand perception, which can have a positive impact on customer acquisition and business growth.

In summary, prioritizing employee experience is posited to lead to enhanced productivity, improved talent attraction and retention, reduced turnover costs, a culture of innovation, increased customer satisfaction, and a strong employer brand. These benefits contribute to a more successful and sustainable business in the long run. The question is, are the pundits who promote this supported by real experience and data? 

What the data tells us about the ROI of great EX

Measuring the return on investment (ROI) of employee experience (EX) can be challenging due to its intangible nature. However, organizations can still assess the value of EX initiatives by examining various metrics and indicators. Leveraging research and robust measurement offers insights into the true and more objective impacts of a great employee experience.  To that end, data suggests that it can have significant impacts on:

1. Profitability and revenue enhancement. 

A recent study in Harvard Business Review reported that a large global retailer whose stores moved from the bottom quartile to the top quartile in each of the employee experience metrics studied would increase their revenue by more than 50%, and profits by nearly as much. It found that if an average store could move from the bottom quartile of performance to the top quartile in each of the four EX dimensions it would go from generating $57 per person-hour worked to $87 per person-hour. Willis Towers Watson found that those companies with a robust EX strategy and program achieved a 7% difference in three-year change in gross profit margin. And MIT research has found that companies in the top quartile on employee experience generate 25% higher profitability than their competitors.

2. Employee Engagement.

Data suggests that the stronger the EX, the higher the employee engagement and satisfaction levels are with their employer. The aforementioned study by Willis Towers Watson found that employers consider EX as a key driver of employee engagement (81%), well-being (80%), productivity (79%) as well as overall business performance (78%). Another related study of employee perceptions found that during the pandemic employee perceptions of management’s level of care for their well-being dropped from 72% to 57%. As a result, it reported that 43% of companies said that actions taken by employers during the pandemic had a negative impact on the employee experience. However, those employers who employed a formal EX strategy experienced higher/improved organizational culture (+44%), employee experience (+40%), employee engagement (+35%) and employee wellbeing (+28%) Furthering that point, a 2021 LinkedIn/Glint study found that employees who were satisfied with just a single element of EX (flexibility in hours or location) were 3.4 times more likely to successfully balance work and personal obligations, 2.6 times more likely to be happy working for their employer, and 2.1 times more likely to recommend working for their employer. 

3. Turnover Rates.

Much has been said, researched, and written about why employees leave their jobs, and their experiences with management, the workplace, work policies, job design, and development and growth opportunities are all major experiences that tend to matter most. The Willis Towers Watson study found that the top 9% of companies (those with a formal and successful EX strategy) were 90% more likely to report lower annual turnover than their industry peers. And the American Psychological Association reports that “very few employees would leave an organization” when they perceive that leadership was fully invested in their experience, and 89% would recommend their workplace to others. Similarly, an IBM study reported by Forbes found that while only 21% of employees would leave a company with great EX, nearly 50% reported their intention to leave those companies with low EX.

4. Productivity and Performance.

Proposed or theorized impacts of positive EX on individual and team performance metrics tend to be born out in the research. Willis Towers Watson found that those companies with robust employee experience strategies realized a 2.7x higher productivity than their industry peers. Forbes’ report on the IBM study found that employees in high EX companies expended 95% of their discretionary effort for their company’s benefit, whereas low EX company employees used it only at a 55% level.

5. Customer Satisfaction.

Higher employee satisfaction and engagement often lead to improved customer service and experiences, which can result in increased customer loyalty, repeat business, and positive word-of-mouth referrals. In fact, the MIT research mentioned above found that those companies in the top quartile of employee experience enjoy over twice (2X) the customer satisfaction levels of their industry counterparts, as measured by net promoter scores (NPS).

6. Innovation.

Given that employees in their definition of high EX enjoyed greater access to collaborative and needed technologies plus having ready access to other’s expertise and ideas, MIT’s research reported that companies with the highest EX experienced more than twice (2X) the rate of innovation in the prior two years compared to those at lower levels. Their percentage of revenues that came from new products and services introduced was 51% versus 24% for lower EX companies.

7. Recruitment and Talent Acquisition.

Looking at the experience of job seekers (candidate experience) is the initial phase of EX and can have a direct impact on the quality of candidates attracted to the organization and subsequent new hires. Even if the organization has a positively viewed employee value proposition (EVP), the initial step of being recruited can impact the perception of employee experience. SoftwareAdvice surveyed active job seekers and found that 83% who had a negative application experience would never reapply and that 59% would tell others not to apply.  They also found that not only would 88% of those with a positive experience tell others to apply, but 71% would purchase the company’s products even if they did not receive a job offer. Recruiter.com reported that a positive and efficient application process can increase application conversion rates by up to 365 percent. Additionally, shorter cycle times for the recruitment process and job offers yielded 40% more offer acceptances.  Finally, it suggests that regular and strengthened communications with candidates yield improvements in the quality of hires.

It's important to note that while it may be challenging to assign a precise monetary value to employee experience, a comprehensive evaluation of these metrics can provide insights into the overall impact and ROI of EX initiatives. Additionally, conducting regular surveys, collecting both quantitative and qualitative process and feedback data, and engaging in conversations with employees can provide valuable information on their perceptions and experiences, allowing organizations to continuously improve their EX strategies.

Nonetheless, research provides ample support to the notion and power of providing an exceptional employee experience – one that stretches from employment “cradle to grave” – to attract and retain highly engaged and productive talent. The use of employee listening and engagement systems - surveys, design thinking processes, process and outcome analytics, etc. can bring both objective and useful insights that create an environment where the employee employment journey can be extended and optimized.

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