The Concept And Impact Of “Employee Experience” – Fluffy Buzzword Or Performance Catalyst?
Photo: Noah Silliman
EX. Employee experience. The new kid on the block in every HR tool box, and certainly a topic for any organization struggling with talent attraction, retention rates and low performance. Yet, it still produces eye-rolls in board rooms, being perceived as becoming “soft” and moving away from focus, productivity and financial success.
I am starting to believe that there is a false definition of this term out there. Firstly, a positive employee experience increases, not decreases, focus and productivity. And secondly, studies show that employee experience and engagement may prove to be much more important for the bottom line than managing expenses.
Not only does it hold significant cost savings in salaries, absenteeism, recruiting and health costs, it also raises the return on invest through increased engagement and productivity. McKinsey studies show that productivity improves by 20-25% in organizations with connected employees, which is backed up by a Gallup study, stating that teams with high employee engagement rates are 21% more productive than those with low engagement. Even if you only thought in financial figures: If someone told you they had the key for raising your productivity by 20% while saving cost, would you listen to them?
And here’s where the hard ties into the soft in a way that must melt both the CHRO’s and the CFO’s heart: According to a study by Randstad, 36% of employees would instantly give up $5,000 in salary, just to be happier at work. Now take that number, multiply that by 36% of your overall headcount, and you have what it might currently cost you to keep some of your people in their jobs, despite being unhappy.
So, let’s take a deeper look at the impact of employee experience and define what it means. In their book The Employee Experience, Tracy Maylett and Matthew Wride make a strong case for the direct impact of the level of employee contentment on the quality of your service and product, and ultimately the customer experience. No matter how far removed your service or product, humans, meaning customers and employees alike, will always respond to human interactions more than to marketing or purely financial incentives. In the end, it’s what Maylett and Wride call the “law of congruent experience”: Employees will deliver a customer experience that matches their own experience within the organization.
This theory is backed by Richard Branson, serial entrepreneur and founder of the many businesses of the Virgin empire. Branson was able to build these companies through an unparalleled focus on customer service and dedication to excellent performance, but he famously stated that his attention in order to achieve that lies not on the customer, but on his employees. For him, the formula is clear: Happy employees equal happy customers. “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients. By putting the employee first, the client effectively comes first by default, and in the end, the shareholder comes first by default as well.”
So, what comprises the employee experience?
Let’s start here: It’s not (all) about perks! What many companies fail to realize is that asking employees what they want and then giving it to them might actually hurt the employee experience more than help it. A company revolves around productivity and impact, and employees at their core want nothing more than to be a valued part of that. Moving away from that accountability and failing to give employees guidance might deepen the perceived rift between company and employees and stall engagement.
It’s also not necessarily about “happiness”! Happiness doesn’t equal engagement, and although Branson’s quote contains this word, I’m not sure that it was essentially what he was trying to say. We sometimes don’t even know how to define happiness. Is it contentment? Joy? Bliss? Peace? I believe we need to take that work out of the equation and look at it from a different angle. Following Maylett and Wride’s logic, here goes the concept of expectation alignment.
It turns out that the quality of an experience largely depends on whether the parties expectations, both explicit and implicit, are met or violated. A vital key to managing the employee experience is therefore not in creating a Disneyland environment with rainbows and unicorns, but to manage expectations in a way that makes it most likely for the employee to experience what they were expecting, and to mind the so-called expectation gap – a situation of “overpromise, underdeliver”. In short, to achieve expectation alignment. Needless to say that this is highly dependent on the level, consistency and authenticity of leadership communication that should follow principles like fairness, clarity, empathy, predictability, transparency and accountability.
Another simple yet important concept is that expectation alignment happens in three major areas of the relationship and interaction between company and employee, in all of which the parties, no matter if they are aware of it or not, make a contract. Maylett and Wride describe these as follows.
Brand Contract – your “public face”, the implied promises that your brand, including your public reviews, makes about the employee value proposition. It embodies the values and mission that have deep meaning for the organization, and the way that you care about and approach people, both customers and employees. As Malcolm Gladwell famously said, “hard work is a prison cell only if the work has no meaning.” Managing this contract requires a clear mission, leadership identity and a strong collaboration with marketing and communications.
Transactional Contract – the explicit agreement that is usually stated in the employment contract and the initial offer letter, the guidelines in employee handbooks, the policies and procedures, the things that are said and taught during on-boarding. While many companies shy away from being too precise or rigid in these areas, employees are usually looking for specific guidance to understand the rules of the game and the means by which the company operates. Here’s a great chance for HR to set clear expectations in a very explicit and stated way.
Psychological Contract – largely unstated and implicit set of expectations and obligations, defining the interactions between company and employee, usually personified by the direct manager. This area touches feelings, perceptions, cultures and many other cognitive dynamics that are hard to manage or control and need skillful leaders who are emotionally aware. Leadership development plays a huge role in this area, but internal communication, collaboration, culture and organizational structure are highly impactful as well.
All these contracts are always in place, no matter if we like this or not, and failing to recognize their importance sets us up to lose our grip on the culture and the employee experience. What does this mean for leaders as the critical factor in delivering the employee experience? In a nutshell, it condenses our most important roles to three major things:
Get the right talent excited to join the mission of the company,
make sure they experience authenticity and reliable delivery of what they were expecting, and
motivate them to engage as part of the company, as a so-called intrapreneur.
There are many ways to design this experience in a way that is consistent with the company’s identity and purpose and helps attract, retain and engage the talent needed in this economy. From my point of view, this transcends different departments within the organization, from senior leadership to all areas of HR, marketing, communication technology and leadership development. It requires an organized approach that includes strategy alignment with the company’s true purpose and mission, process and communication design throughout all stages of the employee life cycle, and an active nurturing of company culture and leadership identity.
In the end, all these concepts come down to one thing only: Trust. Trust in the fact that the company holds up its side of the contracts even if (and especially when) times get rough. Trust in consistency and validity of the values and the mission of the company. Trust in being treated as a human being, including being held accountable to one’s actions, to the benefit and the greater mission of the company which, in the end, comprises of a sum of people, no matter their position, collaborating to build processes, deliver services and create products that have a hopefully positive impact on our world and society.
