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Definitive Proof That Employee Experience ROI Is Getting Closer

April 08, 2022 Employee Experience
Lance Haun
By Lance Haun

Why do organizations care so much about the employee experience, especially with very little research done on the impact of that investment?

Make no mistake, there has been some research done on the employee experience. While there is often a strong correlation between investment and business performance, it’s been hard to create a causal relationship in those results.

Are good business results the result of creating a good work experience for employees or are the results coming from some other action that organizations are taking that might also improve the employee experience? The results are suggestive, but they aren’t enough to prove that investing resources in employees will eventually hit the bottom line.

Most of the companies that have invested heavily in employee experience have done so with a very slight leap of faith. For plenty of folks, myself included, putting resources into your workforce makes enough sense that it’s just a matter of exerting the right amount of political capital to get your way.

On more than one occasion, I may have dropped a version of the Virgin Group founder Richard Branson’s famous quote, “Train people well enough so they can leave, treat them well enough so they don't want to.”

Catching Up With Customer Experience Research

While improving the customer experience has been closely tied to revenue growth for nearly a decade, employee experience hasn’t had that level of study until recently. 

Earlier this year, researchers from Columbia University, in partnership with Salesforce and HR analytics platform Talenteck, released some of the most compelling causal data that employee experience drives real business results. The level of rigor and factors they controlled for in their study is beyond what they mention in their Harvard Business Review article but the results are plain as day in this retail example:

“Put simply, stores whose customer-facing employee base was more tenured, had more experience in prior rotations, was higher skilled, and was more skewed towards full time generated far more sales per hour. In fact, if an average store could move from the bottom quartile of performance to the top quartile in each of the four dimensions it would go from generating $57 per person-hour worked to $87 per person-hour. That’s more than a 50% increase in revenue.”

This research is desperately needed in an age where, for example, Applebee’s executives are pushing to exploit workers suffering from increased transportation and gas costs on one hand while also encouraging their stores to be “employers of choice" on the other.

It shows that paying more for experienced, full-time workers with better skills and retaining them isn’t just the right thing to do — it also makes good business sense. 

Related Article: Employee Experiences That Employees Actually Want

Charting a Path to Employee Experience ROI

Frontline employees in particular got the short end of the employee experience stick for a long time. For years, their impact has been severely underestimated. Frontline positions are more likely to get outsourced when hiring gets tough or employees demand too much from their employers. Their jobs are also often the first to be automated. Think of the last time you’ve hit the dead end of an automated phone tree trying to contact a company about an issue. 

Instead of thinking about these employees as cost centers to optimize, it’s time to think of them as growth engines for your organization.

The four elements of employee experience the researchers studied aren’t radical. We aren’t talking about moving to four-day weeks or creating a flexible, hybrid workforce. Instead, they're simply measuring retention, rotation through different positions in the organization, skill level and full-time employment. 

The most ambitious organizational transitions aren’t necessarily going to be singularly digital. Instead, they are going to recognize the true growth potential of employees and what that means to your ambitions as an organization.

This research is a great first step in quantifying what many people already believed and took as an operating assumption. Now, there’s no reason to hold back on investment in employee experience. The future holds a data-driven way to maximize investment in the work experience.

About the Author

Lance Haun lives life at the intersection of people, work and technology. He's currently a practice director of strategy and insights for The Starr Conspiracy and a contributor for Reworked and ERE.net.

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