Want bottom-line impact? Invest in EX

April 30 · 9 min read

Mental health in workplace

“Employee experience? Isn’t that just about the ‘warm and fuzzy’ parts of working at a company?”

While customer experience and user experience have gotten a lot of attention over the past few years, many organizations are realizing that there is a third dimension of experience that perhaps has been overlooked.

The employee experience.

To me, employee experience (EX) is all about the emotional awareness and perceptions of an employee while doing their job. EX is not just comprised of a single factor, but many. EX is about how an employee feels overall during and after every interaction associated with doing their job. How does an employee feel about the company? How does an employee feel interacting with their teammates? How does an employee feel about their value and contributions to their employer? Does the employee feel their work is meaningful? These are just some of the various factors that make up EX.

Why is EX so important?

There are several reasons why EX has become so important to organizations.

Having a strong EX attracts top talent and motivates people to come and work for an organization. Similarly, a positive EX helps organizations retain that talent. It costs less for an organization to retain an employee than to hire a new one.

Creating a positive EX results in employees who become actively engaged in their organization. This engagement leads to a good work culture.

Happy employees provide great customer experiences, leading to better customer satisfaction and loyalty.

Although these outcomes are important, there is perhaps an even greater reason why organizations have taken a deeper interest in EX. The reason?

A positive EX has a positive impact on the corporate bottom line.

What makes for good EX?

Organizations are realizing that how people feel about their jobs and their work is just as impactful as any other factor for organizational success. EX can be influenced by many factors,# including opportunities for growth and development, communication, camaraderie and collaboration, trust and respect, and empowerment.

Jacob Morgan, a futurist who explores the future of work, EX, and leadership, states# that business impact is a result from EX. Morgan notes that every employee experience is a combination of three environments: culture, physical space, and technology.

Providing opportunities for growth, engaging in transparent communications, and being trusting and respectful form the cultural aspects of EX. Providing workspaces that are modern and conducive to contribution and collaboration will address the physical space attributes of EX.

How does EX impact the bottom line?

A recent study illustrates the bottom-line impact of EX.

The Workhuman Analytics and Research Institute and the IBM Smarter Workforce Institute conducted a study# in 2019. This study produced two key findings:

  • Organizations that scored in the top 25 percent on EX report nearly three times greater return on assets (ROA) compared to organizations in the bottom quartile. ROA is the ratio of net income to assets, which is used to evaluate profitability relative to total assets. The higher the ROA the better, because that means the company is earning more money on less investment.
  • Organizations that scored in the top 25 percent on EX report two times greater return on sales (ROS) compared to organizations in the bottom quartile. ROS, also known as operating profit margin, is a calculation of efficiency in generating profits. A higher ROS shows higher levels of efficiency.

So, if EX is about how employees feel, how can the financial impact of EX be measured? Clearly, good EX has a positive bottom-line impact on organizations. But how can this bottom-line impact of EX be measured at your organization? How can service management and technology influence EX?

Measuring the service management and technology influence on EX

The most significant influence on EX is culture. While it may be true that we can recognize a poor organizational culture when we see it, measuring that in financial terms is something completely different.

The best way to determine the ROI on EX is to use metrics that are easily measured.# Tangible measures, such as increased employee retention, greater productivity, and more customer satisfaction, point toward a positive EX. Less tangible measures, such as greater innovation and easier recruiting, also point to a positive EX.

The influence of service management and technology on EX can be measured, which can subsequently be translated into financial impact. But how?

First, measuring the financial impact of EX starts at the organizational level. What goals and objectives has the company established for EX? For example, the organization may have EX goals regarding improved productivity, employee retention, and empowerment.

Now, identify how service management and technology impact those objectives—and measure that.

Here are some examples.

Without defined processes, employees must figure out (or make up) how to do the work that needs to be done. While this may seem rewarding from a perspective of creativity and innovation, it often means inconsistency and additional work-related stress and frustration. With poorly defined processes, it means rework, ineffectiveness, and waste of time and resources.

In other words, this impacts the productivity of employees. Service management measures that point to productivity include metrics such as:

  • Mean time to fulfill service requests: When it comes to fulfilling an end-user service request, time is money. There is a productivity impact and cost while an employee waits to have a service request fulfilled. Look for a downward trend in this metric. Introducing technology, such as a self-service portal, may drive further reductions in this metric.
  • Cost to resolve an incident: What does it cost to resolve an incident? There’s an IT cost of course, but what of the cost to the employee? When an employee is working with IT to resolve an incident, that is time that the employee is not doing their job, impacting their productivity.

Employee empowerment is another area where the influence of service management and technology on EX could be measured. Today’s employee wants to be as self-sufficient as possible. How service management and technology contribute to employee empowerment could be captured with the following measures:

  • Number and percentage of queries resolved by a knowledge article
  • Mean time to fulfill a service request / Mean time to resolve an incident

To positively influence EX, the goal is to increase the number and percentage of queries resolved by a knowledge article, along with a corresponding decrease in the mean time to fulfill/resolve metrics. Developing relevant and consumable knowledge articles and introducing technologies such as a knowledge management system or a self-service portal will help. What about employee retention? How can service management and technology contribute to higher retention rates?

Good service management means having products and services defined in terms of business value and outcomes. This helps give employees a sense of contribution, as they can trace how their work efforts become business outcomes and value. In other words, the employee feels good about the work that they do, and they can see that the work that they do makes a difference.

Here are some suggested measures:

  • Value realization: As services and products are defined, identify how value is co-created and agree with the business on how that will be measured.
  • Measuring end-user satisfaction is a way to capture how service management and technology influence employee retention. Correlate improvements in employee retention with end-user satisfaction scores.

Other ways service management and technology influence EX

Having effective service management practices in place, in turn, enables a positive use of technology. Positive interactions with technology lead to a better EX. For example, automation can relieve employees from doing mundane, repetitive, and tedious tasks. This frees up employees’ time to do more meaningful work—a satisfier when it comes to EX.

The use of artificial intelligence and machine learning can help employees make better decisions by processing and analyzing very large data sets. This can provide employees with a sense of empowerment and confidence in doing their jobs.

Technology can also provide employees with autonomy and flexibility in getting their work done using mobility-enabling technologies.

Increasing your ROI on EX

How can investment in process and technology subsequently deliver the ROI from EX? Here’s how IT organizations can lead their organizations in improving their ROI from EX.

  • Define EX goals: Establish a set of shared goals for EX. These goals could include to improve organizational profits, reduce employee turnover, or provide greater customer service.
  • Map the employee journey: Just like a customer journey map depicts the touchpoints and interactions between a customer and an organization, an employee journey map depicts the touchpoints and interactions between the employee and the organization. How do employees contribute to EX goals? How do employees feel during their journeys? Are any of these interactions falling short?

If your employee journey maps are indicating technology or process issues, here are some things to do now to improve EX—and the bottom line.

  • Audit processes and workflows to ensure that they are as efficient and effective as possible. Better workflows and processes make for happier employees; happier employees mean better EX.
  • Automate those processes that are well-defined. This further removes unnecessary toil from the employee, freeing up their time to do more meaningful work.
  • Establish self-service capabilities—but only if your service offerings are well-defined and corresponding fulfillment workflows are effective.
  • Establish effective knowledge management. A well-designed approach to knowledge management can empower employees to resolve technology issues quickly and effectively.

EX is more than just the “warm and fuzzy” aspects of working in an organization. The right combination of people enabled with the right technology can provide organizations with an enviable and differentiating EX—and that shows up on the bottom line.

- Doug Tedder Principal, Tedder Consulting LLC.

About the author

Doug Tedder, Principal, Tedder Consulting LLC.

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