The Incredible ROI of Investing in a Better Employee Experience

RIGHTPOINT is a Business Reporter client.

Prior to the pandemic, business leaders assumed that corporate culture was created and existed only within the physical office space. They invested in amenities that made going to work a fun and attractive experience. To be sure, ping pong tables and kegs of beer foster friendships, but they comprise a small fraction of what constitutes a work culture. Culture is everything that employees experience, from when they first read about a job opening to when they retire or leave for another company. 

Trends continue to show that investing in the overall employee experience is a top-line initiative for company leadership—but understanding how those investments will return value is often fuzzy. This is the challenge for many chief human resource officers: quantifying and justifying the return on investment in employee experience so that the funds are allocated on an ongoing basis. Let’s talk about how to build that case.

What employees want

Obviously, employees want good salaries with benefits, but a great employee experience delivers well-being, empowerment, connection, focus and a sense of purpose. People who have opportunities for growth are more engaged in their jobs, and more committed to the overall success of the company; 37% of employees feel job recognition boosts their productivity. 

Now is the right time to invest in the things that make an employee’s life better: mentorship, tools, training, company social networks and travel to critical conferences, for example. 

The first place to invest is the employee journey, from creating more thoughtful onboarding experiences to improving exit interviews. New hires are at risk of leaving, but companies can mitigate that risk by investing in social networks that introduce them to colleagues who share their interests or can mentor them.  

Replacing antiquated corporate intranets with a modern workplace employee experience platform can help employees discover the information and people they need quickly and easily. This is vital given that almost a third of workers (32%) say they have left an employer during the pandemic whose tech was a barrier to their ability to do good work, and nearly half (49%) say they’re likely to leave if they’re unhappy or frustrated with the technology they use at work. And given that many workers leave their jobs to seek better professional development, upskilling is one of the best investments any company can make. 

Investments deliver real ROI

It may seem counterintuitive to invest into headwinds, but investment in employee experience (EX) creates ROI whether business conditions are trending up or down. In fact, investment in EX is one of the critical paths toward realizing greater productivity, higher retention and, ultimately, greater profitability. The ROI from employee-experience investments varies from company to company, but it can be calculated. It can be helpful to look at EX investments in terms of the broader employee journey, and how those investments impact the overall employee lifetime value (ELTV). 

A better approach to establishing the ROI of change management includes employee lifetime value and the investment in change. 

Profits

Happy and engaged employees instill confidence in customers. They’re better informed and more connected to the organization, which means they’re better able to help customers, who, in turn, are less likely to take their business elsewhere. 

• According to the Harvard Business Review, “A happier workforce is clearly associated with companies’ ability to deliver better customer satisfaction.”
• A multi-year study shows that the companies deemed the best places to work outperform the stock market.

Costs of increased attrition

Much attention in the past year or so has been placed on the impact of the Great Resignation, but looking deeper at the data suggests that we’ve been on this journey of higher attrition for many years; the pandemic merely served as a catalyst that made the trend more impactful and visible. Higher attrition obviously increases costs for a business, making investments in EX the most powerful defensive tool to realize cost savings. Looked at through the lens of ELTV, there is no higher cost to a company than investing in identifying, hiring, onboarding and training a new employee, only to see them leave soon afterward. 

Lower recruitment costs

Recruitment costs have always been steep, but they’re accelerating in response to the Great Resignation. One prediction is that in 2022, recruiters will need to spend an additional $50 billion to fill open positions. Here’s where investments in onboarding and networking pay off, as employees who have positive journeys are more likely to recruit industry colleagues. What’s more, they’ll become advocates for your company, and can improve your industry’s reputation. Investing in company social networks can go a long way toward stemming attrition, as 30% of new hires leave a position within the first 90 days, indicating a misalignment between the candidate and the employee brand.

Lower technology costs

While some technology costs can be attributed to employee productivity and support, others can have a strong impact on direct bottom-line costs. Digital workplace enhancements drive employee engagement, but can also shed technical debt. We recently helped one of our clients reduce elements of their software portfolio that had been determined redundant or unnecessary, resulting in significant ongoing savings.  

A continuous process

ROI from employee experience investments is not realized simply with the purchase of a new technology or the completion of a project. These investments are measured by the impact on employee day-to-day activities and in transforming employee workflows. Establishing measurement and analytics frameworks that address the broad employee journey and account for ongoing change and adoption programs will ensure that the promise of value is realized.  

To position your company for long-term success, the entire enterprise needs to champion employee experience. The efforts to drive that success are myriad: changes to the company operating model; leadership buy-in and engagement; digital transformation; people analytics; and more. Empower your employees and leverage outside expertise as needed to drive transformative change that yields measurable outcomes.

Download Rightpoint’s POV on Employee Experience here.

— Tim Stahl, Vice President, Employee Experience

This article originally appeared in Business Reporter.

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