Is it possible to show the Business Value of Employee Experience?
I had the opportunity to meet ING’s CHRO Hein Knaapen, EMEA’s CHRO of the year for ‘Sustainable Workforce’, to discuss Employee Experience (EX) and how best to manage it.
Hein was interested to understand how employee experience relates to engagement and to McKinsey’s Organizational Health Index, a KPI they used at ING to manage its performance. I explained that we’d spent the last two and a half years working on how to manage EX in large scale companies. Having visibility to common EX pain points we were able to co-create solutions to these, with 30 other companies. Among them were 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 walked him through the detailed methodology that resulted in: CxHR - the Customer Experience of HR, with its four key components ‘Design / Share / Measure / Act’ underpinned by an online platform to support CxHR in large organisations. Hein seemed impressed – he’s a kind man. He shared with me, and the members of our Digital HR Program peer meeting that “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, what is the business value of EX? So, let me take you through it in a little bit more detail, here goes.
On the left-hand side, the model shows generic business value levers in a simplified way: Business value is 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, for example, 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 of the touch-points of HR customers in HR journeys, the manager time, employee time and HR staff time spent on HR activities will decline. Thus improving 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 are involved in compensating for a lack of effortlessness. Finally, effortless experiences at touch-points 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 summary, 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!
Digital is a word on everyone’s lips at the moment. What does it really mean for HR? The main questions that we will answer in this course are as follows:
How can HR as a function become more digital?
How can HR drive business outcomes in a digital age?
We will share our learnings from over 2,000 global companies and what has worked for them when building their digital HR strategies
ABOUT THE AUTHOR
Volker Jacobs is the CEO and founder of TI People and an Executive Director and co-founder of Insight222 Limited. Volker holds degrees in economics and information sciences, has worked for U.S. and European consulting companies and started his own HR management consulting business that he sold to CEB. At CEB, Volker held a senior management position with a global responsibility for HR consulting and HR technology before co-founding TI People.