The Ultimate Guide to Employee Experience
Just like strategy, consulting, and culture, the term employee experience is often perceived as vague at best, and frivolous at worst.
You may be asking: What exactly is it, and why do I need one?
Korn Ferry reports that organizations double profitability when they improve their employee experience. Gallup calls “untapped human capital” the next great global resource. That’s why employee experience has been called the next competitive frontier in business.
In this piece, we take a comprehensive look at what employee experience (or EX) really is, why it matters, and how it impacts your bottom line — whether you have 10 employees, or 10k.
First, let’s talk about what EX is not.
What Employee Experience Is Not
It’s not HR.
The idea of EX was born under the HR umbrella; but it’s emerging as its very own business function. Where HR is tactical, EX is strategic.
HR is the critical, foundational piece of people operations that every business needs (i.e. payroll, benefits, compliance). EX, on the other hand, is a “want-to-have,” not a “need-to-have.” EX is a competitive advantage.
It’s not employee engagement.
Creating an exceptional employee experience is a business objective; employee engagement is one of the intended outcomes of that initiative.
Engaged employees demonstrate concrete, measurable behaviors that are different from disengaged employees. They meet deadlines, reach sales goals, and provide better customer service than disengaged employees. That’s why increasing employee engagement is a mission critical component to any employee experience strategy.
It’s not unquantifiable.
Quantifying EX isn’t hard when you understand what to measure, how to measure it, and how to use those metrics in decision-making. Just like any other part of your business, it takes breaking it all down into a few key results to track. We’ll dig into this more below.
What Employee Experience Is
If EX is not HR, employee engagement, or a set of unquantifiable ideas, then what is it?
Employee experience is the pattern of encounters, whether positive or negative, that an employee shares with their employer.
These encounters are made up of many touchpoints during an employee’s tenure with a company, from their first perception of the brand, to the onboarding process, to relationships with managers, to their physical (or virtual) work environment, to the way they say farewell.
Author and speaker Jacob Morgan defines a great employee experience as an employer’s ability to “creat[e] an organization where employees want, not need to show up to work.”
Ultimately, a positive employee experience is a balanced working relationship where the employee experiences as much value as the employer does.
The Evolution of EX
So how did we get here? The concept of employee experience has been misused and misunderstood for at least a decade now. In 1990, the idea broke into the mainstream business world when the Institute for Employment Studies published ‘From People to Profits, the HR link to the service-profit chain.’
The article was groundbreaking, making a case for the way in which employee attitudes drive overall business performance. The evidence this paper provided in support of a clear link between employee experience and profits was critical in the shift we’ve seen in the HR field in recent years.
Formerly relegated to their corner to assist with hiring, payroll and benefits, strategic-thinking HR professionals are now earning seats at the leadership table to influence business strategy as a whole.
Furthermore, as access to data became easier to acquire, and more critical to success, HR leaders developed the ability to measure the impact that efforts such as recruiting, training, and development have on the bottom line.
Essentially, businesses gained the ability to quantify the value of Human Resources. And the results were astounding.
The ROI of EX
Just like bodily symptoms are used as data to reveal underlying health issues, the employee experience can be quantified, tracked, and used to diagnose — and fix — business problems.
Here are three examples of measurable results that serve as indicators of a strong or weak EX:
Customer happiness
Because it leads to customer retention, and therefore, higher revenues, customer happiness is the lifeblood of business. It can be measured in customer satisfaction surveys, reviews, and ultimately, sales.
There is a mountain of evidence supporting the idea that customer happiness starts with employee happiness. In fact, companies with a positive EX achieve 10% higher customer ratings, and 20% more sales.
Employee retention
Employee turnover eats away at profitability, first in employee replacement costs, then again in reduced revenue when positions are left unfilled.
In high-turnover organizations, such as restaurants or call centers, a great EX can reduce turnover by 24%. And in a lower-turnover organization, like banks and insurance agencies, reduced turnover more than doubles at 59%!
Employee absenteeism
Unplanned days of missed work cost big bucks in paid time off and lost productivity. But companies that invest in EX experience 41% less absenteeism.
These are just a few examples of metrics you can use to keep your finger on the pulse of your employee experience. For more on metrics and how to apply them, check out 18 HR Metrics Affecting Your Organizational Health.
“Employee experience is the pattern of encounters, whether positive or negative, that an employee shares with their employer.
How to Create a World-Class EX
Now, onto the fun part. You’ve defined your EX, set some goals, and started to measure it. What’s next? Many companies mistakenly throw money at recruiting and retention problems by raising wages, which is an expensive response that usually doesn’t even work.
The truth is, we need to think about the employee experience the way we think about the customer experience; meaning, if we want to get it right, it starts with an intention to make work a meaningful part of life. Work-life balance is out; work-life integration is in.
Here’s how to get started:
Empower an EX owner.
If everyone is responsible, no one is responsible, right? If EX really matters to your business, one person has to “own” it. It can, and should be, an initiative the whole team is focused on; but ultimately, you won’t get far without a designated individual leading the charge.
If you’re a founder of a young company, or if you have less than 10 employees, that person is probably you. If your business is more established, it might be an operations or HR leader. All that matters is the owner of the EX understands its meaning and impact, and is committed to making improvements.
Map it out.
What are some moments that really matter within your organization? For most, those touch points include the hiring process, onboarding and training of new employees, feedback on performance, and opportunities to develop new skills. Companies with an exceptional employee experience are focused on continually improving each one of these encounters, which brings us to the next point…
Listen. Act. Repeat.
Just like customer feedback helps to measure and improve customer experience, employee feedback helps measure and improve employee experience. Surveys reveal how happy employees are with specific drivers of a great EX, like physical environment, performance reviews, and career development.
“Open door” policies are good; but in practice, most employees choose to look for a new job before giving their boss unsolicited feedback. Even employees who are generally happy may not be able to pinpoint what it is that would boost their performance. The simple act of proactively seeking employee feedback quarterly, or even monthly, sets you apart from companies who don’t.
How’s that for value? Remember, leveling up your employee experience not only improves quality of life for everyone involved; it also has the power to 2X your profitability over the lifetime of your business.
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