The Three Pillars of Employee Experience ROI
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The Three Pillars of Employee Experience ROI

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Wondering what the true return on investment (ROI) is of employee experience (EX) software?

According to new research conducted in partnership with Lighthouse Research & Advisory, 90% of companies agree that even amidst economic uncertainty, it’s more important than ever to invest in employee experience programs. In fact, investments in employee experience are proven to not just enhance workplace culture, but are also directly tied to tangible business outcomes. 

For HR leaders seeking budget or broader buy-in from top executives, measuring the return on investment (ROI) of Employee Recognition and Employee Survey software has never been more critical.  This article explores the three key types of employee experience ROI, and also covers best practices on how to calculate each metric.

Best Practice Tip #1

Setting clear, actionable goals from the start provides a roadmap for success. It also creates a benchmark to measure progress and effectiveness against. Identify the 1-2  measures of success from the following three pillars that will be most impactful to your organization before you implement your EX program. This ensures that all stakeholders are aligned on what success looks like in case the question of program renewal or cancellation rears its head later.

1. People ROI

One of the most widely understood goals of employee experience investments is to positively benefit employees within the organization. Key metrics that help depict if your organization has made a positive impact on employees with an EX investment (or not) include employee engagement (eNPS) and employee retention.

Organizations that invest in creating a continuous culture of recognition and appreciation for employees typically  see reductions in voluntary turnover. As an example, Arrowhead reduced their turnover by 49% through strategic company-wide recognition programs. Recruiting and training costs for backfills can be extremely expensive – so improving employee retention rates through employee recognition programs is one way to deliver tangible ROI and cost savings from such programs.

Best Practice Tip #2

Annual measurements often fail to capture the fluid dynamics of employee sentiment. Measure the impact of your program more frequently— such as quarterly rather than yearly—to allow your organization time to course correct along the way if needed. Rapidly addressing declining employee engagement scores or a surge in employee resignations will typically head off larger issues down the road.

2. Human Resources (HR) ROI

When evaluating the impact of Employee Engagement software, don’t forget to include key metrics such as cost savings compared to previous approaches / vendors, and improvements in HR team efficiency.

For instance, adopting self-serve employee survey technologies that enable unlimited survey fielding and continuous employee feedback is often more cost efficient than utilizing a consulting or services company to run annual company-wide engagement surveys.

HR teams that choose to consolidate existing department-specific recognition programs, Years of Service awards, and engagement survey expenses into one unified software platform typically see a sizable (and immediate) increase in both HR administrative efficiency and cost efficiency.

E-learning platform Schoox represents a real-life example of HR efficiency gains. Schoox was able to reduce HR program administration time from several hours per week down to under one hour per week by adopting a recognition software platform.

3. Company Performance ROI

The final category of typical employee experience software ROI includes metrics associated with overall company performance. These can include customer satisfaction (CSAT) scores, or productivity measures for specific branches or factory locations.

Our study data illustrated that investments in employee experience software often lead to improved customer service and higher customer satisfaction scores. Furthermore, there is a direct correlation between highly engaged employees and enhanced company performance. In fact, our research report found that 65% of organizations that invest in employee experience software saw an improvement in their employees’ productivity.

Best Practice Tip #3

Measuring employee experience ROI can feel overwhelming at first. However, it’s perfectly acceptable—and often advisable—to start small. Start by picking 1-2 metrics that align closely with your organization’s immediate goals. From there, you can always expand what you choose to track, to incorporate additional KPIs  as your program develops and matures.

One final statistic to reiterate the importance of setting program KPIs: businesses that use data to measure the ROI of their employee experience investments are ~5x more likely to say they achieved positive ROI from those investments.