The Impact of Employee Experience on Employee Engagement
by Nicole Lindenbaum September 12 2016
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Employee experience and employee engagement are two common HR terms that are inextricably linked. Jacob Morgan at the Future of Work explains employee experience as the combination of cultural environment, the physical environment, and the technological environment of the workplace. Employee engagement is a characteristic of the relationship between an organization and its employees. An engaged employee, who may have a positive employee experience, is “fully absorbed by and enthusiastic about their work and so takes positive action to further the organization's reputation and interests.”
It’s as important to understand the differences between the terms as it is to understand how they are related. Employee experience influences employee engagement. If I am having a great experience at work because of the culture or the technology or the physical space, I am much more likely to be engaged. But if I have a bad experience – even if I would otherwise like the actual work I do – it becomes much harder to stay motivated and work hard. I’m much less likely to be engaged in my work, and my company will suffer as a result. Of course, some individuals are less engaged than others by nature, or by external factors the company can’t control, but focusing on employee experience can help to mitigate the impact.
If any of the three pillars of employee experience is weak, it can drastically affect how employees are engaged at work. For example, if provided with outdated technology, it can be very frustrating for the employee. They may feel like their time is wasted waiting for software to load. It might be difficult to collaborate with others. It could be impossible to get the information needed to move forward. All of these experiences with technology cause frustration and make employees less effective at their jobs. If this happens frequently, employees will disengage. It’s hard to care about doing a good job for a company who won’t supply you with the tools you need to be effective. And that directly affects the organization’s bottom line.
At first glance, it can seem difficult to tie an “experience” to ROI. But the effects of engagement on the business are much more concrete. As Aon Hewitt found:
Organizations in the top quartile for engagement (where more than 7 in 10 employees are engaged) saw a 4% increase in sales growth compared to an average company. By contrast, bottom quartile engagement companies were down 1%.
Operating margin was also affected; top quartile companies saw 2% increase, versus a 3% decrease for bottom quartile companies.
As for total shareholder return, top quartile companies saw a 4% increase, while bottom quartiles were down 8% compared to average companies.
Once you consider the impact of employee experience – culture, physical space, and technology – on employee engagement, it becomes much simpler to understand how a positive employee experience has a direct effect on business outcomes.
There are a number of reasons to invest in employee experience. For example, workplaces are becoming more experiential overall – consider recent news stories like the CHRO of AirBnB becoming the Chief Employee Experience Officer – and it’s important to keep up with organizational trends. Further, employees are more likely to change jobs frequently today than ever before, and a positive employee experience may encourage workers to stay longer at one organization. In addition to these big picture perspectives, it can be enlightening to examine how experience and engagement work together.
Nicole Lindenbaum is the Director of Product Marketing at PeopleDoc by Ultimate Software. Nicole leads the global messaging strategy for PeopleDoc by translating technology into business benefits HR can actually understand. With significant experience in HR technology, Nicole writes and speaks about HR service delivery, employee experience, digital transformation, and the future of work. Nicole holds a BFA from Syracuse University and an MBA from Washington University in St. Louis. She lives in Brooklyn, NY.