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The Business Value of EX: No Employee Experience impact without the business

The Business Value of EX: No Employee Experience impact without the business

Words by Volker Jacobs: Founder & CEO

Last November, I met with ING’s CHRO Hein Knaapen, EMEAs CHRO of the year for ‘Sustain­able Workforce’, to discuss ‘employee experience’ and how to best manage it. Hein asked me how employee experience relates to engagement and to McKinsey’s Organizational Health Index, a KPI ING uses to manage its performance. I told him that we had worked for the last 2 ½ years on how to manage employee experience (EX) at scale in large companies. We co-created solutions to common EX pain points together with 30 compa­nies, among them AXA, BASF, Bertelsmann, BMW, Bosch, Capgemini, Cisco, Dolby, E.ON, GE, Grundfos, Haufe, HERE Technologies, ING, Merck, Otto Group, Schenker, S&P Global, and USAA. I explained to him the comprehensive methodology that resulted: CxHR – the Customer Experience of HR, with its four key components ‘Design / Share / Measure / Act’, coming along with an online platform to support CxHR in large organizations. Hein seemed impressed – he is a kind man. Then he told me, and repeated it in front of our Digital HR Program peer meeting: “If there is one thing I learned as a CHRO, it is that everything HR does has to have a clear line of sight to business results.” In other words, Hein rightfully wanted us to explain the business value of EX. So, here we go. 

On the left-hand side, the model shows generic business value levers in a simplified way: Business value defined as return on invested capital – with the ‘invested capital’ lever greyed out – equals increasing net profit by increasing revenue and decreasing cost.

The right-hand-side the model shows the ‘What’ of EX: CxHR, our Design / Share / Measure / Act methodology, co-created, tested, continuously refined and kept up to date by the members of our ‘Journey Networks’. The most important part of the model is where CxHR connects to the generic business value tree through EX-specific business value levers in the ‘Why’ part of the model. Reading from right to left, CxHR creates two experiences:

1. An engaging experience at ‘moments of truth’

2. An effortless experience of HR

Moments of truth are ‘emotionally loaded moments with disproportionate impact on employee engagement’. With engagement defined as ‘discretionary effort and a higher intent to stay with the company’ it increases work productivity (discretionary effort) and retention (intent to stay; in recruiting the same logic applies for attraction). Ultimately, work productivity and retention impact the revenue lever of our generic BV tree.

An effortless experience is something consumers happily get used to: Netflix makes it effortless to find the next movie to watch, with Amazon it’s effortless to buy things. Compared to these effortless experiences in their private lives, consumers’ experiences with HR services in their professional life are, alas, very different. Employees, managers, and HR professionals spend too much time with non-value adding activities. This threatens the engagement of employees, but more importantly, the business value of effortless experiences takes an undesired path.

If HR can create effortless experiences at all touchpoints of HR customers in HR journeys, the manager time, employee time and HR staff time spent on HR activities will go down. That improves work productivity of managers and employees by up to 3%, which in return frees up time to generate revenue. One of the companies we are working with put their EX initiative under the motto: ‘Giving 1 Million hours back to employees and managers each year!’

Moreover, effortless experiences decrease HR function costs, as less HR staff is involved in compensating for a lack of effortlessness. Finally, effortless experiences at touchpoints that are supported by new, cloud-based HRIT systems will improve the end-user adoption of these systems. A massive impact: 26% of the total investment in new cloud HRIS is at risk due to lower than expected end-user adoption – mainly because the experience with the new system is not as effortless as it could be.

In total: EX does have a clear line of sight to business outcomes! Hence, it is important not to miss this opportunity for HR to provide value to the business. We better get it right (this time). That’s why we will share more details in a small series of articles on CxHR, our methodology of EX Design / Share / Measure / Act. Stay tuned!

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