Published: 16 November 2023
Contributors: Keith O'Brien, Amanda Downie
Employee experience is a holistic talent management approach that organizations take to help ensure that their employees have the support they need to succeed and thrive at work.
Employee experience covers everything from how employees are trained and cared for to their physical workspaces and the technology and services they use to accomplish their responsibilities at work.
It has become an increasingly important component during every stage of the employee lifecycle, from the time of recruitment to when an employee leaves the organization.
This was especially seen during the COVID-19 pandemic, when employees moved to remote work. The pandemic created more stress and loneliness for employees, and more people left the workforce or quietly quit.1 This had a profound impact on employee engagement.
Gallup reported that 32% of active employees are engaged at work, a figure that has continued to decrease since the pandemic.2 As outlined in that survey, nearly 75% of employees at best-in-class organizations are currently labeled as engaged. Based on this, business leaders are recognizing that organizations prioritizing employee experience yield a higher return on investment from their employees.
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As with many similar topics, some organizations use employee experience and employee engagement interchangeably. But there is a slight difference.
Employee experience covers the holistic relationship employers and employees have across the entire employee lifecycle. Employee engagement is more narrowly focused on connecting with employees, helping to ensure that they are happy at work and committed to their jobs. As such, employee engagement is often considered a component of employee experience.
Historically, organizations have addressed employee experience by focusing on perks like, salary raises and bonuses, free food and coffee, and outings to show their appreciation to their employees. But more employees now struggle with work-life balance and concerns about having the right skillsets to remain competitive in a technology-driven world.
While organizations have downplayed perks recently as they look to cut costs, they have also needed to look at different ways to produce strong employee engagement that better aligns to rising employee needs.3 Modern organizations are increasingly focusing on providing positive experiences to employees, such as giving them mental health days, unlimited paid time off, wellness programs and childcare services.
Organizations with a strong company culture and a deep interest in worker well-being are likely to focus on creating a positive employee experience in the workplace. By creating a great employee experience, organizations and their human resources (HR) department should expect improved employee engagement.
There is a direct link between heightened employee experience and business performance. McKinsey research found workers that reported a positive employee experience had 16x the engagement level and nearly 8x the likelihood of staying at the organization than those with a negative experience.4
HR teams and HR leaders have long prioritized employee experience strategy, but they have the backing of their executives more than ever. Smart business leaders understand that employees are the foundation of their company and often the source of their competitive advantage.
The advent of authentic leadership means that organizations are more focused than ever on serving their employees, instead of asking their employees to serve the organization. Inverting this traditional approach makes the employees feel more a part of the organization’s strategy and success. And those executives know that employees can have a significant impact on business outcomes.
Employees are increasingly open to leaving organizations that do not provide what they need. Catering to employee needs, a core component of a positive employee experience, is a great way to help ensure that employees are happy and remain at the organization.
Organizations cannot afford to lose employees, especially top talent, because they did not listen to them or provide the right tools. While estimates vary, Gallup has put the cost of replacing an employee from 50% to 200% of the employee's annual salary.5
At work, employees experience burnout, microaggressions and other stressors, as well as uncertainty about their standing or growth opportunities. Only half of employees surveyed by Gallup feel they know what’s expected from them at work.
Today, employees are more vocal about what they expect and need from their employers. Leading organizations have taken that feedback seriously and put more focus into solving some of those issues.
An employee experience strategy should account for every step of the employee journey, from the time they join the organization until the moment they leave it. Here are some of the most important employee experience initiatives as they are likely to occur during an employee’s journey:
Leading organizations tout their employee experience initiatives, especially when meeting with potential candidates.
By demonstrating warmth and inquiring about a candidate’s passions and interests, an organization’s HR personnel signal to the prospective employee, and the employee’s social network, that they take the employee experience seriously.
A key area for employee experience is how you bring new hires into your organization. Starting a positive employee experience during the hiring process allows new employees to feel immediately welcomed and confident they know how to excel.
Organizations are responsible for ensuring their employees have the right skills to fulfill their job responsibilities. A key component of this is professional development.
Provide training, upskilling, coaching, self-directed learning and other talent development initiatives that help employees grow their skillsets.
It is important to know how employees feel about their work and the organization. These surveys, also called employee experience surveys, can take place over extended periods of time to track how employee experience has changed.
Tracking things like employee satisfaction over time is important, as there could be larger issues that go underreported without data. Pulse surveys, a quick templatized survey of a few questions that remain the same, can help track engagement, sentiment and perspectives over time.
This is where organizations help employees by telling them areas in which they are excelling and those in which they might improve.
Performance management is as much for the employees as it is for the organization. Employees crave understanding where they are currently excelling and knowing how they can improve.
Top organizations don’t wait until official review periods or quarterly surveys to focus on employee experience. Every touchpoint with an employee offers a real-time opportunity to build upon the employee experience.
Also, managers should try to be aware of any issues from outside the workplace that might impact performance and address them with employees to see how the organization can help.
Even departing employees can help an organization strengthen its employee experience. An honest debrief with an outgoing employee can help identify problem areas that negatively impacted their experience at the organization.
Focusing on stellar employee experience can help organizations tackle some of their most important goals.
Happy employees are more likely to stay with the organization that already employs them. Minimizing employee turnover is a key priority for any organization looking to avoid unnecessary costs.
Employees who are confident, fulfilled in their work and feel supported by their leaders are more likely to bring new and creative ideas to the business.
Many employees are on the frontlines of customer engagement. Engaged employees are more likely to improve customer satisfaction because they feel better about the organization and the executives for whom they work.
Employees at organizations committed to a positive employee experience are likely to work harder for their organizations. In turn, improved employee productivity often leads to better business outcomes including increased profitability.
Creating a comprehensive employee experience strategy does have some challenges that organizations must address to achieve success.
Asking employees to self-report their perspectives to their bosses, even if anonymously, can sometimes color the data. Employees might be wary that the organization will be able to track their responses to them, leading them to be less honest.
It can be challenging to identify whether an organization is providing a good employee experience, especially when it’s difficult to know whether an employee is truly happy at their job. It is important to ask employees the right questions and track key metrics.
Employers need to balance asking their employees how they’re doing with respecting their privacy. An employee affected by something outside of work can be a challenge for any manager.
It is important to balance respectful privacy with getting enough information so the employer can best offer support.
Employee experience is not a one-time initiative. It requires constant investment, reappraisal and updates. Organizations should continually monitor their employee experience initiatives.
A design-led, data-driven approach to experience transformation.
Companies that foster a positive employee experience can obtain a clear competitive advantage over those that don’t.
While workplaces have been in flux since the pandemic, change is growing even more intense as generative AI redefines every job and every task, from entry level to the executive suite.
To compete and win, companies need to make customer experience (CX) and employee experience (EX) strategic priorities and unite the organization to fully execute.
Learn how to prepare your people, systems and business for the future of work using AI responsibly.
In this environment, every experience should incorporate AI and every application of AI should be an experience.
For organizations to thrive, collaboration must be enabled seamlessly across the enterprise. Enter enterprise work management.
Equip your workforce with the skills of the future. Transform your talent acquisition and skills strategies and processes with the right balance of people, AI and data. Whether you are looking to address high turnover, enhance the recruiting technology stack, improve workforce productivity, address skills shortages or create an effective learning experience for a diverse workforce, IBM can provide customized strategies and tools across consulting, technology and managed services.
1 Quiet quitting and performance management, McKinsey, 26 October 2022
2 Employee engagement, Gallup
3 The perk-cession is under way at some companies, WSJ, 8 March 2023
4 This time it’s personal: Shaping the ‘new possible’ through employee experience, McKinsey, 30 September 2021
5 This fixable problem costs U.S. businesses USD 1 trillion, Gallup, 13 March 2019