You’ve no doubt heard it before, but the most important asset for any business is people. In a business context, “people” can take on a number of different meanings. Your customers are people—as are your suppliers, vendors, and myriad other stakeholders.
But while your relationship with each of those constituencies is extremely important, the people that matter most are the ones whose job it is to deal with them. In other words, your company will rise or fall on the strength of your employees—so hadn’t you better take care of them?
Indeed, the companies that regularly top the “best companies to work for” lists typically boast higher revenues than those that don’t, and Gallup reports that disengaged employees cost companies $450-to-$550 billion in lost productivity each year. The overall employee experience (EX) touches literally every aspect of a business. We’re going to focus on three areas where it has the most noticeable and tangible impact: recruitment, retention, and returns.
How do you recruit the best employees? Show that you put them first.
Whether you’re in a good or bad job market, one thing that never changes is the need to bring in the best talent possible for the openings you do have. This means employers need to offer more to get the employees they need. But more doesn’t always refer to compensation or perks. In fact, employees are becoming less driven by money and are more interested in the spectrum of experiences they’ll have throughout their time with a company. They’re interested in flexibility, creativity, meaning, and impact. When presented with the choice, they’ll go with the companies that can sell them a meaningful and satisfying professional experience—and now more than ever, they’re able to do their homework.
The proliferation of sites such as Glassdoor, Indeed, and LinkedIn has allowed potential employees to research companies before they even apply for an opening. According to a 2019 report, 66% of candidates conducted their own research” into a company when looking for a job. And more than a quarter of respondents specifically referenced the aforementioned sites, all of which focus heavily on, you guessed it, employee experience.
Want to save money? Focus on employee retention.
As candidates become more discerning and companies increasingly compete to recruit new employees, the workers they already have may be looking elsewhere. According to Gallup’s 2017 State of the American Workplace report, 51% of adults employed in the U.S. reported that they were searching for a new job or at least keeping an eye out for new job opportunities despite being employed.
The takeaway here is that EX is just as important for employee retention as it is for recruitment. According to Jacob Morgan’s book, The Employee Experience Advantage, companies with outstanding EX see 40% lower employee turnover. And this has a significant financial impact, with each turnover costing employers as much as 33% of that employee’s annual salary.
There are always going to be plenty of non-EX-related reasons for an employee to leave a company, but in recent years, several factors have begun to converge that have made the employee experience a catalyst in deciding whether or not to stay or leave.
The first factor is the rapidly changing demographics of the U.S. labor pool. Millennials, or those born between 1981 to 1996, now make up around 44% of all employed people in the U.S. Among other things, this generation is known for focusing on experience rather than objects, a trend that spills over into their work life. Good EX can help better engage and retain Millennial employees in a number of ways. The first is through the creation of a company culture that fulfills Millennials’ desire for personal accomplishment and a sense of purpose in the workplace.
Another factor has been the move toward greater employee empowerment. According to the London School of Economics Business Review, employees who feel empowered to take ownership of their own day-to-day tasks or work processes are far less likely to quit. Employees want to feel empowered to not only make their own decisions, but they want to feel that you’re interested in equipping them with the skills, tools, and knowledge necessary to feel confident in their roles. Listening to the wants and needs of your existing workers can go a long way toward keeping them on your team.
Can great EX boost revenues? You bet it can
Improving your company’s employee experience won’t only keep your team members happy, it can also have a meaningful impact on your bottom line. According to best-selling author and noted futurist Jacob Morgan, organizations with outstanding EX “have 4.2x the average amount of profit, 4x the amount of profit per employee, and 2.8x the revenue per employee” when compared to companies that lack great EX.”
And when your employees are happy, they tend to be more willing to sing your praises, use your products, and engage in the type of brand evangelism that can be both free advertising and informal recruitment for the top talent that might be in their personal networks. Happy employees are the perfect brand ambassadors in more formalized settings, as well. Members of your team who feel empowered and engaged will be far more effective at a trade show or more willing to lend their voices to your promotional materials than those who don’t.
Things have certainly changed from the 1950s-era thinking about employees, in which companies were structured in a way that saw a select few people making the decisions for the entire organization. For years, there was no such thing as empowerment—companies wanted to improve productivity with little concern for how it might affect their workers. And for their part, employees were mostly happy to have a job to dutifully complete, day after day, without complaining.Companies today need to realize that their employees are their lifeblood. Without them, there’s no product to sell, no service to provide, and no customer to please. Those that understand the importance of creating a great EX will enjoy the benefits of a team that is both better equipped and more able (and willing) to deliver the best customer experience possible.