HOW THE EMPLOYEE EXPERIENCE DRIVES PROFIT
In a climate of workplace upheaval, businesses who focus on their employee experience can strengthen employee purpose and engagement, and drive business-wide growth and profit.
JUN 23
WRITTEN BY JASMIN HARRISON
When it comes to driving profit, business leaders tend to overlook the pivotal role of the employee experience (EX). However, research continues to show us that your employee experience and your customer experience (CX) are inextricably linked - they are two of the core factors driving business growth and profit.
So, what does a positive employee experience look like, and how exactly does EX drive profit? In this post, we’ll explore the ways in which EX is crucial to businesses of every size and industry, and how prioritising EX powers revenue and sales.
WHY THE EMPLOYEE EXPERIENCE IS IMPORTANT
There’s a misconception that still exists in the world of business - that the employee experience is a “fluffy” concept, and not to be taken seriously.
We’re here to show you that the opposite is actually true and, why in 2023, you can’t afford NOT to prioritise EX in your business.
WHAT WE MEAN BY THE EMPLOYEE EXPERIENCE
The world of work has changed significantly since 2020. As a scale up and industry disruptor, you’ve been called upon to generate new and innovative ways to work, and to support your teams.
As McKinsey found in their recent survey of nearly 1000 people, the majority of people interviewed wanted more trust, social cohesion and purpose from their workplaces. Along with this, there was a strong desire to be recognised for their contributions, to have opportunities to learn and grow, access to flexibility, and to work within collaborative team environments.
All of these core employee desires can be described as making up the employee experience - which requires a shift from the traditional top-down model of Human Resources, to a more progressive approach - one that puts people first. EX is about leading with empathy, and creating a culture that values and celebrates people with unique skills, diverse backgrounds and innovative ideas.
WHY IS EX SO IMPORTANT?
In 2022, talent acquisition was the highest priority for businesses. Jump forward to 2023, and Lattice’s 2023 State of People Strategy Report shows us that the top people priorities for HR leaders across the globe are engagement and retention.
What does this mean? Where HR Consultants have traditionally focused on hiring and firing, and risk and compliance, modern HR is prioritising attracting high performing employees and retaining them over the long-term.
Not only does this equip businesses with a competitive edge (employees want to work for companies with excellent EX), it also saves businesses tens of thousands of dollars that are lost when an employee leaves.
In short, employee engagement and retention matter to businesses because losing an employee is expensive.
According to Josh Bersin of Deloitte, the cost of losing an employee can range from tens of thousands of dollars to twice their annual salary. Bersin also argues that employees are appreciating assets that produce more value to organisations over time - hence why losing them early is so costly.
Let’s take a closer look into five of the core reasons why the employee experience is so important for all businesses.
1. EMPLOYEE TURNOVER IS (REALLY) EXPENSIVE
Employee turnover has skyrocketed since the pandemic. Yet, dishing out 10-15% pay rises for everyone is rarely a sustainable solution.
Visionary leaders need a better strategy to mitigate turnover and address inflation. This is where strategic HR guidance on the employee experience becomes crucial.
We know that organisations that fail to invest in the employee experience see higher turnover - and that turnover is extremely costly for businesses. Think about what it costs your organisation to advertise, screen, hire, onboard, and train each new starter. What impact does this have on team morale in terms of productivity? Also, consider every time someone leaves, they also take a huge amount of business knowledge with them.
So, it’s really no surprise that, as Deloitte’s Josh Bersin said, the cost of losing an employee can range from tens of thousands of dollars up to twice their annual salary!
To us, every employee should be treated as an asset - your long-term investment in them will generate immense benefits to the business as a whole, compounding to produce greater growth and greater profits over time.
Far from being a fluffy concept, employee experience really poses the question: ‘Why invite the costs of turnover by putting employee engagement on the backburner?’.
2. ENGAGEMENT IMPROVES CUSTOMER SATISFACTION
Earlier on in this post, we referenced the link between your employee experience and your customer experience.
One Gallup study found that engaged companies had at least 10% higher customer satisfaction scores than their competitors. There’s also evidence that a positive employee experience correlates to long-term customer loyalty and even advocacy.
“This means ‘focusing on concrete performance management activities, such as clarifying work expectations, getting people what they need to do their work, providing development and promoting positive coworker relationships’.” (Gallup)
For most businesses, your employees interact closely with your customers. When employees are highly engaged, they will give the customer the best experience possible. And, the better the experience, the easier it is for the customer to emotionally connect with your brand.
This is crucial to long-term business success, as a highly engaged customer becomes an advocate for your brand - they help to market your brand via word of mouth.
Direct word of mouth referrals and recommendations build trust more quickly, save time and money, and, when backed by a consistently positive customer experience, continue to grow your base of loyal and engaged customers.
3. EX MAKES IT EASIER TO RECRUIT TOP TALENT
Investments in your employee experience, through things like 30-60-90 Day Onboarding Plans, Learning & Development Programs, and Well-being Programs make a powerful Employee Value Proposition, which go a long way in helping a prospective candidate choose your organisation over your competition.
While both hiring the wrong person, and losing an effective contributor, are incredibly costly for companies, it is the second piece that has skyrocketed in importance since the pandemic.
Employee expectations have shifted, and people are choosing workplaces who put their people first. Businesses are needing to innovate and adapt their HR strategy to match these shifting expectations.
HR departments drive profits in two ways:
Recruiting new talent
Retaining high performers.
4. YOUR TEAM WILL BE MORE PRODUCTIVE
Developing an engaged and productive workforce is crucial to the success of any business. Collaboration, alignment, meaningful and purposeful work, and addressing employee burnout are all essential factors to consider.
According to McKinsey, at least 49% of employees feel at least somewhat burnt out. We know that employee burnout is ubiquitous, alarming, and still underreported, making it imperative for businesses to prioritise fostering employee connection and engagement.
The most successful businesses plan to spend considerable time and resources on making sure their employees feel connected (mitigating burnout). To achieve this, businesses need to reimagine the role of HR as a key driver in keeping employees engaged and productive.
Engagement data from Gallup supports this, indicating that highly engaged teams are 21% more profitable and 17% more productive. They are also 41% less likely to experience issues with absenteeism.
By prioritising employee engagement, businesses can improve their profitability and create a more positive and productive working environment.
5. ENGAGEMENT POWERS REVENUE AND SALES
Engaged employees deliver more value. Specifically, the data tells us that businesses with engaged employees are typically:
● 21% more profitable
● 17% more productive, and experience
● 20% higher sales.
Together, these outcomes power increased revenue and sales for businesses.
By prioritising your employee experience, you improve your customer experience, because employees are more attuned to the needs of your customers. Engaged teams are also more present and productive, and more observant of processes, standards and systems. When taken together, the behaviours of a highly engaged business unit result in a 23% difference in profitability!
As you can see, the employee experience goes so far beyond being best practice. It is an essential step for businesses who want to drive profit and achieve long-term success, by attracting high performing employees and retaining them over the long-term.
EMPLOYEEXP
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We help companies gain a competitive advantage through an enhanced employee experience.
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Favourite sources: Gallup, McKinsey & Co & Deloitte
