Let’s get started with some quick definitions
Before we begin making the case for why EX is just as important as CX, let’s take a look at brief descriptions of the two concepts.
Customer Experience (CX)
Customer Experience is the sum of all the interactions a customer has with a particular business. It describes their complete experience – from the first moment the customer becomes aware of the business to the moment they cease interacting with them for good. It takes into consideration all touchpoints and tries to paint a holistic picture of the relationship between an individual customer and a specific business.
Employee Experience (EX)
If CX describes the relationship between a customer and a business, EX describes the relationship between an employee and their employer. Like CX, it is the sum of all interactions between an employee and their employer. This is important, as it distinguishes EX from employee engagement, which tends to focus on short-term ‘moments’ of engagement. Instead, EX covers a considerable timespan and all aspects of the long-term relationship.
1. EX is not gimmicks – Employee experience is not about providing your employees with comfy, kooky chairs, ping pong tables or free chai lattes. These are gimmicks that may provide a pleasing (but momentary) boost to employee morale, but they don’t have any place in long-term examinations of EX.
2. EX is not a branding exercise – While you may want to make your business attractive to new hires, EX cannot be considered a simple branding exercise. It’s more about the day-to-day experience of employees – something you can’t improve with a quick facelift.
3. EX is not “HR for the digital age” – HR still has a key role to play in daily business operations but EX should not be reduced to the status of a ‘modern HR.’ EX encompasses much more than just HR, including work typically tackled by IT, Finance and Corporate Communications departments.
So, having defined CX and EX and looked at what Employee Experience is not, it’s time to take a look at the main reasons why we believe EX is just as important as the Customer Experience.
In most sectors of the economy, there is a considerable skills shortage, with a large number of employers competing for a relatively small number of appropriately skilled and qualified employees. This skills shortage means that businesses are in a battle with competitors for the employees that are going to lead their organisation forward and secure success in the future.
EX has emerged as a key determiner of a business’ ability to attract and retain skilled employees, making it arguably as important as CX when it comes to guaranteeing an organisation’s future success.
Employers are also having to cope with increased transparency in the jobs market due to the popularity of websites like LinkedIn and Glassdoor. These sites allow users to review and comment on what it’s like to work for a specific business and what employees can expect from the workplace culture.
While this may be a good thing for employees looking for a job that suits their personality, interests and professional ambitions, it’s caused considerable change in the employment market.
Whereas in the past businesses could hide behind a veil of secrecy, attracting talent with a big-name reputation and by stretching the truth about how the company operates, this is no longer possible. Instead, organisations have to deliver when it comes to EX. If they don’t, the whole world’s going to know about it.
Also important is the fact that movement between companies is much more common in the modern business environment.
The economic system’s drive towards precarious employment is reflected in a cultural change in which well-paid and talented employees are willing to move from company to company in search of their next promotion or a perfect job, rather than settling on a traditional ‘career for life.’ This phenomenon is only set to become more common as the younger generation comes to dominate the labour market. By 2025, millennials (a generation that has only ever known a fluid employment system) will constitute 75% of the global workforce, according to research by McKinsey
Employees’ willingness to move quickly and constantly between jobs means employers have to work twice as hard to retain top talent. The only way of doing this? A concerted effort to improve Employee Experience.
Employees can account for up to 70% of a business’ expenditure. While employee benefits make up a considerable part of this, an equally large portion is dedicated to acquiring, training and integrating new members of staff. In the US, it’s believed employee turnover results in around $11 billion in losses every year.
EX is particularly important to businesses looking to cut costs in order to invest in customer-facing technology, such as self-serve IVR and Chatbot tools, because a focus on EX means a business is more likely to retain its employees (and quickly and easily attract new ones). In turn, this results in a significant reduction in spending on new employees.
On the most basic level, EX is just as important as CX because the latter is largely dependent on the former. Put simply, happy, loyal and engaged employees offer better customer service and an improved Customer Experience (CX).
When you consider the fact that a recent study by Gartner suggests that 89% of companies surveyed expect to compete solely on the basis of CX, it becomes clear that EX is likely to be the differentiator, determining which businesses rise to the top and which sink.
If the Customer Experience is directly affected by employee performance, businesses need to look at ways in which they can improve their own workforce’s output. EX can play a leading role in achieving this, as there are an endless number of studies demonstrating how an employee’s mental and emotional state affects their performance.
For instance, economists at the University of Warwick released a study that showed a 12% spike in productivity amongst happy workers. At the same time, unhappy workers were 10% less productive.
It’s not just productivity, though. EX also has an impact on absenteeism, with unhappy employees taking 15 more sick days every year than the average employee. In the long run, this can cost an organisation a great deal and not only damage their profit margin but also have a wider impact on team morale and cohesion.
One possible alternative to the development of an Employee Experience strategy is to ignore EX and simply offer financial incentives for improved performance. In the past, this has been the traditional response of businesses who want to get more out of their employees. However, with shifts in employee attitudes and increased demand for talent, these financial incentives may not be as attractive as they once were.
Google, which has the ability to offer both financial incentives and an improved Employee Experience, reported that employee satisfaction rose 37% on the back of their implementation of employee support initiatives, as reported by Fast Company. This suggests that EX has a significant effect on how employees respond to the workplace environment and culture.
There is an established statistical link between employee engagement and EX and the value of your business. Research by Gallup shows that companies with a highly engaged workforce outperform competitors with lower levels of engagement by 147% in earnings per share. That means that those organisations that emphasise engagement and place EX at the heart of their operations are taking measures that are proven to improve financial performance.
Those organisations that focus on improving Employee Experience demonstrate a convincing improvement in their scores across a diverse array of important business metrics.
The Gallup research mentioned above suggests that those work units that scored in the top 25% for employee engagement outperformed those in the bottom 25% by 10% on customer ratings and 22% on profitability. That’s an enormous gap between those companies that prioritise EX and engagement and those that are late to the party.
The lesson? Ignore EX and your profit margin and customer satisfaction scores suffer!
Technological improvements have facilitated the creation of tools that can handle many of the basic tasks in the modern workplace quicker and more efficiently than humans.
Though this is nothing new (just think about the robotic nature of the factory assembly line), digital technology has increased the pace of change dramatically. This can be attributed to the rapid growth of AI. In modern workplaces, AI is automating a remarkable number of jobs, radically altering the role humans are expected to fulfil.
When justifying why EX is just as important as CX, our arguments can be broken down into three main points.
- Attracting and retaining talent
Whether it’s because of the skills shortage or a shift in expectations amongst an increasingly dominant workplace demographic (millennials), the battle for top talent has intensified. Developing an intelligent EX strategy is one of the best ways you can give yourself the upper hand in this fight.
- The dependence of CX on EX
A good Customer Experience is dependent on your employees delivering excellent customer service. Statistically, they’re much more likely to do so if they’re engaged with their work, successfully integrated into the workplace and willing to embrace the company culture. This means your approach to EX will likely determine the success of your CX strategy.
- Financial and performance-related benefits of a focus on EX
Finally, studies have shown that the performance of both employees and businesses is linked to engagement and EX. Whatever metric you use – be it productivity, profitability, absenteeism or customer satisfaction – those teams that are more engaged and content with the relationship with their employer perform better than those that are less so.
As you can see, EX is now justifiably considered as important as CX. Over the coming months and years, we’ll see a growing number of organisations accept this fact by placing EX at the heart of their business strategy. However, it’s likely to be the early adopters that benefit most from an EX-focused approach, giving them a distinct advantage over the competition. Make sure you don’t miss out.