The ROI of employee experience

Matt Johns Employee experience 3 Comments

All too often we hear business and public-sector leaders talk about how important their people are to their respective organisations. In fact, I suspect most who read this article would have heard phrases like “our greatest asset is our people”.

Then why is it that so few choose to invest in creating truly great employee experiences? The answer, more often than not, is that this kind of investment is never seen as urgent, and more importantly, the ROI of employee experience is challenging to calculate.

The reality is investing in your employee experience is likely to be one of the most rewarding investments you could make. The impact on both the top and bottom lines are enormous and we shouldn’t ignore them.

Measuring the ROI of EX

Here are five key reasons why you should invest in developing market leading employee experiences.

1. Radically increased earnings

According to Gallup research, companies with highly engaged workforces outperform their peers by 147% in earnings per share. That is simply staggering.

My guess is that if commercially driven Boards were in possession of that information, one of their first questions would relate specifically to the effort executives are putting to developing strong employee experiences.

2. Substantial increases in profitability

To back up the research conducted by Gallup, a study by Towers Perrin found that there is a dramatic gap between the earnings of those businesses with highly engaged employees at a 19% increase in earnings per share, and those with the least engaged employees at a 33% decrease in earnings per share. With a gap of 51%, we simply can’t ignore the impact on profit.

3. Greater productivity

Gallup found engaged and motivated employees are 21% more productive than disengaged employees. Further research from McLean & Company found that a disengaged employee can cost a business up to $3,400 for every $10,000 in annual salary!

4. The cost of turnover

The costs of recruiting, hiring, training of a new staff member are relatively common knowledge. But the loss in productivity from departing employees (which continues until their replacements are up to speed) is a hidden cost; you’ll never see it in the P&L of any business, only the cost to hire. As a result, it is largely ignored.

If every organisation was to allocate a dollar cost related to each voluntary staff member leaving, the decision to invest in developing better, more rewarding experiences for employees would be a no-brainer.

5. Better customer experiences

By now most organisations have realised the financial value that a comprehensive customer experience strategy can have. They invest in new technology, new store layouts, and extensive customers surveys (too many in my opinion!!). However, employee investment remains largely static, which does not make sense. Employees not only create the most lasting memories of a brand (good and bad), but they are also best placed to identify problems and develop meaningful solutions if only they are given the tools, training, environment, and autonomy to do so.

The evidence is clear, investing in employee experience is great for business. Great employee experiences do not happen by chance – they are deliberated designed and executed, and the ROI is clear.

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