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Jenny Williams | 27 June 2023

The EX Effect

How Employee Experience Transforms Organisational Performance

At Humankind, we have a deep-rooted belief that focusing on Employee Experience (EX) is good for business. We have seen time and again the impact that deliberately designed EX has on an organisation’s people but recently, we have been exploring the impact EX has on organisational performance and asking ourselves, what is it about EX that is so good for business and just how good is it?

What is EX?

We define “employee experience” as the experiences employees have at work that impact their thoughts, feeling and interactions. When you pause and think about it, this is huge. It’s the overwhelming thoughts and feelings someone has as they start a new job, or leave one; it’s how teams come together to include, or exclude, others; and, most importantly, it’s how leaders lead. Everything at work impacts people’s thoughts and feelings, and this is why EX cannot be left to chance.

Great employers take the time to co-design their employee experiences. They identify the different experiences people have as they move through their organisation, and work with employees to identify the experience that will get the best out of their people. For example, changes to an onboarding process are more likely to hit the mark if the employer seeks input from people who have recently experienced being onboarded.

So when it’s done well, what impact can it have?

Focus on your people and the results will follow

In 2016 MIT researchers surveyed 281 senior executives and found that those organisations that focused on creating great experiences for their employees had 25 percent greater profitability compared to organisations that focused on performance alone. They also had twice the innovation and customer satisfaction.

McKinsey Global Institute’s recent Performance Through People Report (Feb 2023) found similar results after analysing the records of 1800 large companies. They found the companies that performed the best not only focused on performance but invested in their people’s development. These companies had 28 percent greater profitability and an increase in resilience and retention.

EX creates a strong culture that is human, inclusive and fosters belonging

One possible explanation for these results is that people who belong at work are more likely to thrive.

Employees are craving workplaces that are more “human”. This means workplaces with leaders, systems and processes that recognise people as people, with all their complexities, intricacies, faults and emotions that make them human. Gone are the times of thinking of people as “resources” or “assets”. People want to be recognised and celebrated for everything that they are. Great workplaces do just that. They focus on the experiences they create for their employees, recognising that one size doesn’t fit all. Through these experiences, they embrace and encourage people to be able to show all aspects of themselves, to be vulnerable, to be real. The result is people feel a deep sense of belonging.

In ‘Belonging: The Ancient Code of Togetherness’, Owen Eastwood says:

“To feel a sense of belonging is to feel accepted, to feel seen and to feel included by a group of people, believing that we fit in, trusting we will be protected by them. To not feel belonging is to experience the precarious and insecure sense of an outsider.”

BetterUp identify four components of belonging at work:

  1. social connection – the connection people have with the people they interact with at work, whether that be their colleagues, their leaders or people external to the organisation. It includes the rhythms and rituals teams have, the formal interactions that occur and, most importantly, the opportunity for informal and personal connections.
  2. inclusion and acceptance – the feeling people have that they are recognised as their whole self and accepted for who they are. This in turn enables them to participate more fully at work. They are more likely to be open and vulnerable and share more of themselves if they feel included and accepted.
  3. mattering – the feeling people have when their voice and their contribution is valued by others at work.
  4. organisational identification – the connection people have to the organisation they work for and its purpose.

BetterUp found that people with a strong sense of belonging increased their job performance by 56 percent and took 75 percent fewer sick days than their counterparts in other organisations. Organisations with high belonging experienced a 50% reduction in turnover and a whopping 167 percent increase to their employee net promotor score. Most significantly, BetterUp estimated these results would lead to more than $52m in annual savings for a 10,000-person company.

It's never too late to start

The research shows that focusing on what is right for your employees will propel organisations forward. People are the number one source of performance potential in an organisation.

The best place to start is by talking to your employees to gain an understanding of their lived experiences at work, what matters most to them and what would make the biggest difference to their EX. Find out the things that are impacting them and their sense of belonging at work. This will help you gain an understanding of how your EX is impacting on your organisation’s performance.

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