How Employee Experience Impacts Your Bottom Line

The popular adage goes: the customer is always right. But what if we applied a similar principle when dealing with our employees?

Renowned entrepreneur Richard Branson is one of the most influential people in business who feels strongly about this philosophy. In an interview with Inc., Branson says: “My philosophy has always been: if you can put staff first, your customer second, and shareholders third effectively, in the end, the shareholders do well, the customers do better, and you, yourself are happy.”

For business leaders like Branson, ensuring staff is treated well translates to better customer service. In turn, they deliver better returns for a business. However, for many employers, the importance of employees’ roles in creating a great customer experience and driving revenue can be unclear, because it’s difficult to quantify.

Finding ways to quantify EX

The challenge of  quantifying how much employee experience (EX) impacts revenue is something that researchers aim to address in a technical research paper called “The Value of Employee Experience, Quantified”.

The research, conducted by experts from Salesforce and Barnard College of Columbia University, studied financial and people data from a global retail brand with 1,000 stores across the US.

Researchers identified four metrics to quantify EX: 1) employee longevity, 2) full-time/part-time status, 3) prior internal rotations, and 4) skill level, and used this to create hypothetical financial estimates based on four levels of performance in EX.

Based on this research model;, they found:

  • Stores that ranked among the bottom 25% in terms of EX performance generated an hourly revenue of $57, whereas stores in the top 25% generated an hourly revenue of $87. If the bottom 25% make changes that shift their performance to match that of the top 25%, then this can lead to over 50% increase in revenue.
  • A store in the bottom 25% spends $16 per hour and generates $41 in profits. By investing an additional $12 per hour to improve EX performance enough to be included in the top 25%, the store will earn an extra $18 per hour of profit — a 150% return on investment (ROI).
  • Jumping from bottom to top in terms of performance may seem unrealistic, so the research paper provides a more feasible example: If the chief human resource officer of this global retail brand successfully gets every store to raise their EX performance by one level (e.g. bottom to second-to-bottom, or from second-to-bottom to third), it would lead to a 6% increase in total annual revenue across the entire company.
  • With other assumptions factored in, the research finds “that the 5-year ROI of this employee investment would be around 30%, and the 10-year ROI would be in excess of 80%.”

This detailed research shows that investing in people and better employee experience directly translates to better customer experience and revenue. “Put simply,” the researchers say: “Stores whose customer-facing employee base was more tenured, had more experience in prior rotations, was higher skilled, and was more skewed towards full time generated far more sales per hour.”

Better EX = better customer service and improved bottom line

Based on this ground-breaking research, an employee’s tenure, job experience, and skills can directly affect a company’s bottom line. This emphasizes the need for better employee experience to improve talent retention and skills development.

In our white paper, “The Business Case for Employee Retention”, we emphasize the high costs of employee turnover. For example: Employers spend an average of 33% of a worker’s annual salary to replace one person, considering the cost of recruiting, onboarding, and training replacement workers. This cost alone can have a significant impact on any company’s bottom line.

We’ve also seen proof of how better EX translates to better customer service and bottom line in work we’ve done with our own customer community at LiveTiles. Here are just a few examples.

For organizations offering healthcare services like Walsall Healthcare NHS Trust, the correlation between EX and bottom line was especially emphasized during the pandemic. The influx of patients severely tested the Trust’s resilience and their employees’ ability to deliver the services that were needed. Providing an easy way for everyone to get the latest information as well as connect with the organization and other staff members became a crucial need.

To ensure that the staff felt connected and supported as they carried out their duties, the Trust invested in a mobile-first employee experience platform using LiveTiles Reach. The app allows staff to stay updated with the latest news and information, as well as to connect with each other for both professional and social reasons.

For global institutions like Creditsafe to keep delivering great client services and remain competitive, they needed better ways to keep their dispersed and diverse workforce informed, educated, and connected. They accomplished this by using LiveTiles Intranet Enterprise, which integrated well with the company’s existing Microsoft Azure infrastructure.

Creditsafe’s Head of Marketing, David O’Reilly, and his team focused on creating various types of engaging and relevant content to keep employees engaged and connected wherever they happened to be located. Following the success, Creditsafe is in the process of trialing the next phase, which includes sales training to help improve service delivery.

For our fast food giant client with over 2000 stores in the US, getting new branches up and running on schedule is crucial to ensuring a good ROI. We revamped their intranet to make it more user-friendly, so the client and their contractors and franchisees can easily find the information they need in seconds, on a mobile device or desktop. By keeping everyone connected and informed, this one-stop comms platform and instruction manual for both internal staff and contractors helped ensure that new branches are opened on schedule.

Invest in EX to invest in business growth

With the technical research paper cited above, as well our own experiences and studies, it’s clear that an investment in employee experience is an investment in business growth. The analysis from the research paper “illustrates the value of connecting people data with financial data,” and emphasizes the role HR plays in driving customer experience and revenue.

And HR isn’t the only key player in providing great EX that leads to an improved bottom line. Employee experience is no longer a mere responsibility of the HR department; everyone in the organization has their roles to play — from HR to IT to leaders, and even the employees themselves.

New eBook

The Business Case for Employee Retention

High employee turnover means high costs: learn more about why employee retention matters for costs, collaboration, and culture.

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