Using Analytics To Measure Employee Experience Impact On Profit

This week our blog is brought to you by Pat Acheampong, the founder of Ahumka Digital. He is a self-proclaimed Tech Junkie, a Would be Philanthropist, an Entrepreneur, Bon Vivant, and Aspiring World Changer. With over 15 years of experience working in global businesses in the UK, North America, Australia, and Asia, he is currently head of Employee Experience and Service Delivery at Zurich Insurance in Hong Kong. Enjoy!

Employee Experience (EX), it’s one of the latest buzzwords in the employee culture, engagement, and wellbeing space. EX has been credited with everything from improving shareholder value to increasing business revenue, while reducing employee turnover, and customer churn. But how does this value get quantified for business executives using metrics they appreciate, rather than another warm and fuzzy HR initiative involving gyms, nap rooms, and free beer that ends up costing money? Here’s what the EX – Profit loop looks like:

Done right, the Chief Employee Experience officer replaces the Chief HR officer in a role that also encompasses elements of work facilities, and employee facing technology, similar to the role at Airbnb. Done not so well, it’s merely a re-badged employee engagement or even worse community officer role reporting up to the Chief HR officer through several levels. The difference is important, because so many firms look at EX as just another way of saying Employee Engagement. They are not the same, and here’s why.

The difference between employee experience and employee engagement lies in the difference between experience and engagement. Put simply, employee experience is holistic and encapsulates everything an employee thinks, feels and sees. In contrast, employee engagement refers to how positively an employee is occupied with or committed to the job. Employee engagement is one result of the overall experience and tends to be much more specifically associated with productivity.

Employee engagement tends to be associated with a narrow focus on technology tools, measurement or perks such as free food. These types of factors can be a part of an employee experience strategy, but they do not supplant a holistic and long-term approach to creating happy, loyal, and productive employees.

The Employee Experience is the sum of perceptions employees have about their interactions with the organization in which they work.  Or to put it another way: EX = (Experiences + Expectations + Perceptions)/(Unmet Expectations + Unmet Experiences)

The business impact of employee experience

There is extensive research now available that shows the business impact of having a great EX in your company. Here are a couple of good reasons why a company should want to create a great EX for their employees:

Time and again, good employees are claimed to be the greatest investment by many firms, and with the ongoing war for talent, they’re hard to find. It stands to reason then that if you’ve fought so hard to attract and hire quality people, you don’t want to lose them.

Employee churn eats into the HR team’s time and also the business’s bottom line. Investing in a positive EX is crucial to creating an engaged workforce and is a very effective way of reducing staff turnover.

Research also shows that companies that invest in the EX are:

• 11.5x as often listed in Glassdoor’s Best Places to Work
• 4.4x as often in LinkedIn’s list of North America’s Most In-Demand Employers
• 2.1x as often on the Forbes list of the World’s Most Innovative Companies
• 2x as often in the American Customer Satisfaction Index
• 4x more profitable than those that are not measuring the employee experience

I would love to just throw down a series of metrics and tell you that these are the only ones you need to measure to evaluate a company’s EX. The reality is that with so many different ways of trying to improve the EX, the best way to do it is to implement, measure the impact on engagement, revenue, and costs, then learn from that for your next cycle. This build, measure, learn cycle is similar to the lean startup method.  That said, there are a few metrics to look at that may indicate your EX and subsequent employee engagement are not as robust as they could be.

• Employee Experience
  • Diversity index – Across a range of factors, not just gender. More diverse companies tend to perform better
  • Inclusivity score
  • Candidate NPS
  • Exit interview analysis
  • Alumni referrals
  • Employee referrals (people/products)
  • Recruiting channel effectiveness – which channels are providing the best recruits
  • Time to competence – How quickly are new hires becoming productive
  • Pulse surveys with text sentiment analysis
• Employee satisfaction/engagement
  • ENPS
  • External review sites (e.g. Glassdoor)
  • Bradford Factor – This measures employee absence. The theory is that short, frequent, and unplanned absences are more disruptive, and indicative of employee issues than longer ones
  • Wellbeing measures
  • CSR
• Employee retention
  • Regretted turnover
  • Rebound hires
  • Manager capability
• Employee productivity
  • Employee productivity rate – As EX starts to go down, so does productivity
  • Learning outcomes – measure the usefulness of the training over time
  • Employee recognition – how effective are your programs
  • Meeting outcomes – to meet or not to meet. Too many meetings with little business value
• Business outcomes
  • Profit per employee
  • Revenue per employee
  • Rate of innovation
  • Customer churn rate – Customers are more likely to stick with a company with a slightly inferior product than they are with poor customer service. Employees with low engagement don’t tend to deliver great customer service!

I hope these metrics have given you an idea of some of the ways you can measure whether your employee experience is producing business results for you. The full treatment of the subject could easily fill a book, and in fact already has filled several! This primer will hopefully give you a start in your EX journey.

Thank you again from the Salary.com Team to Pat Acheampong founder of Ahumka Digital for being on the HR Data Labs podcast and for writing this guest blog post! We appreciate you sharing your knowledge and experience with us and our audience! To connect with Pat visit his LinkedIn and visit Ahumka Digital’s website to learn more.