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You’ve likely heard the term “employee experience,” but there’s still much confusion around this new and growing concept. Employee engagement and employee experience are not the same thing even though some use the terms interchangeably. Employee engagement has been around for a few decades and started off with good intentions, yet today it has fallen short of its goal. How else can you explain the fact that we’ve never spent more money, time and resources on employee engagement, yet our scores have never been lower? You would think the opposite would be true.
Today, inside most organizations around the world, employee engagement has become a short-term adrenaline shot attempting to fix a long-term problem. Nobody ever starts off working at your company Day 1 thinking “this place is terrible!” That just doesn’t happen. On Day 1, employees are genuinely excited to be there, to meet their team, and find out where they’re going to sit and when they’re going to start their first project. Over time, their engagement levels go down and then the company does their wonderful engagement survey. When scores trend downward, HR is immediately turned to and told, “fix this.” So, HR comes up with this brilliant idea of introducing a short-term perk or benefit to spike happiness. This might be free food, hot yoga or some other ridiculous “employee appreciation” perk. Satisfaction goes up temporarily before tapering off again and then going back down. Another perk is introduced and the cycle repeats itself. This wasn’t the intended impact of employee engagement, but that’s what it has become, unfortunately. Not only is this a dumb approach, it’s dangerous.
Perks Are a Tactic, Not a Strategy
In psychology, there is a concept known as the hedonic treadmill, which basically states that we have a relatively stable level of happiness and if something good or bad happens to us, we will eventually return to that baseline level. In other words, we get used to something and then it loses its novel appeal. When your company introduced free food or a “bring your dog to work” policy, it might have been pretty cool for a few months, but then it becomes standard and expected. To compensate, you have to introduce yet another perk to keep employees just as excited. If you take a step back, you realize that by focusing on this kind of approach, you are conditioning your employees to be there because of things — gifts and perks. It’s not because of the company, the work, the people, the values or anything that goes beyond the superficial.
Imagine someone is in a relationship with you simply because you provide him or her with gifts. What happens when the gifts stop? That person is going to leave — and so are those employees. This doesn’t mean that perks and benefits are bad, but they should always be considered as a tactic, not a strategy.
This brings us to the concept of employee experience. If employee engagement has become synonymous with forcing employees to work in outdated workplace practices while giving them perks to distract them from the sad realities of their jobs, then employee experience is the idea of redesigning your workplace practices around your people. The good news is that every single employee experience for every employee at every company around the world is a combination of three environments: culture, technology and physical space. Under each environment there are attributes: four for the physical space, three for technology and 10 for culture.
This constitutes 30% of the employee experience. The physical space includes everything from the workspace design to the art that hangs on the walls and the food that your company might offer. The physical space is the one that you can see, touch, taste and breathe. Consider that we spend almost as much time at work as we do at home and it becomes clear why our workspaces are so crucial for employee experience. In fact, it’s because of this blurring of work and life that we are seeing so many companies around the world design their spaces to feel a little bit more like home! The physical space acts as a symbol of your organization and represents what it stands for.
This too constitutes 30% of the overall employee experience. This environment refers to the tools, software and hardware that employees use to get their jobs done. Technology is the central nervous system of the organization and it’s also important to point out that many concepts around the future of work, such as flexible work, communication and collaboration, and real-time feedback, are impossible without technology. When the technology inside of a company breaks down, so do the human aspects around the technology.
This constitutes 40% of the overall employee experience and unlike the other two environments, this is the one that you feel. I like to think of culture as the side effects of working for your organization. These side effects can be good or they can be bad.
Combined, these three environments make up what I like to call the employee experience equation. Anytime you introduce a new policy, practice, workspace design or the like, you need to think of how these three environments are going to be affected. Ask yourself how this changes the way employees feel about working there, the tools they access to get their jobs done and the spaces in which they work. The key is doing an amazing job at all three if you want to see the benefits.
Jacob Morgan has extended an invitation to all WorldatWork members to join "The Future If", his private Facebook group. You'll be able to mingle with a community of business leaders, authors and futurists who are exploring what our future can look like if certain technologies, ideas, approaches and trends actually happen.
How does this fit in with employee engagement? Employee engagement is the effect and employee experience is the cause, and the business impact is the result. Results include things like profitability, productivity and overall improved performance.
I studied 252 organizations around the world (thanks to generous funding from Cisco and Lever) to figure out if there’s truly an ROI for investing in employee experience. I also interviewed hundreds of business leaders and combed through just as many case studies, articles and research reports. Of the 252 companies I studied, only 6% of them — that’s 15 companies — were doing an amazing job of investing in employee experience. This list includes Microsoft, Airbnb, Adobe, Facebook and Riot Games. The ROI was significant. When compared to “non-experiential” companies, they saw on average 2.1 times average revenue, 4.1 times average profit, and were 24% smaller, meaning they are doing more with less. These companies also saw far superior stock performance over a period spanning almost five years. By all accounts, companies that invest in employee experience crush those that don’t.
The responsibility for creating experiences for employees falls on everyone at the organization. The executive team and the CEO specifically need to act as the champion of employee experience. HR is considered the traditional owner of employee experience, meaning it likely comes up with the strategies to be implemented across the company. All managers are responsible for making sure their employees have great experiences and the overall strategy is implemented. Then we have the rest of the employees at the company who are all responsible for speaking up, sharing their ideas and making sure their voices are heard.
I absolutely believe that the next big competitive area for organizations around the world is going to be in the employee experience arena.
Jacob Morgan is a three-time bestselling author, keynote speaker and futurist who explores the future of work, employee experience and leadership. Follow him on Twitter or connect with him on LinkedIn.