How to plan for business success in 2021
It feels like just yesterday we released our predictions for HR trends in 2020…. And then we very quickly learned that the unpredictable does indeed happen!
But that’s not all we learned. When looking for our next predictions, we decided to focus more on the past. What has proven itself to be a sustained competitive advantage, come hell or high water, not just this year but every year? What can we invest in that is guaranteed to drive business growth?
The answer is your employees.
Organisations that have implemented an employee experience (EX) strategy have incredible advantages when compared to organisations with poor EX. And it’s not just wishy-washy things like “employees feel more productive”, it’s actually backed up by measured bottom line numbers.
For this reason, we’re confident in saying that success in 2021 will be predicted by EX.
What employees say about employee experience
Employees who self report high EX scores are more motivated, have higher levels of persistence, and are more mentally resilient. They also say they perform better, regularly go above and beyond in and outside of their official roles, have less intention to leave their organisation, and are generally more satisfied with their jobs.
The true value in these metrics is the ‘above and beyond’ mentality, also referred to as discretionary effort. Staying back to help a teammate, taking on additional responsibilities, and doing so in a focused manner leads their organisation to higher levels of success.
The organisations that have these employees report similar effects across all of the business. Think reaching profitability faster, higher value added per employee, reduced customer complaints, and better relationships with their suppliers.
There’s nothing better than a well oiled machine that runs itself, and that is what EX does to a business!
The financial benefits of employee experience
We promised hard numbers, and here they are.
Organisations that ran an employee experience survey (with results on a five-point scale, 1 being the lowest and 5 the highest) and scored within the top 25% had incredible financial benefits.
When compared to organisations that scored in the lowest 25%, the top organisations had three times the Return on Assets, and almost double the Return on Sales.
A few quick definitions;
- Return on Assets is the net income of an organisation divided by their investment in all assets. For a construction company, this helps them calculate how much income each piece of machinery or equipment is bringing in.
- Return on Sales is the operating profit of an organisation divided by their net sales. It helps organisations calculate how much of their sales is profit versus covering expenses.
What this looks like in real life
A study found that for every 0.25 improvement in an organisation's EX score (i.e. going from a 3.5 to 3.75), that organisation gained 1.81 percentage points in their Return on Sales (i.e. going from 15% to 16.81%).
Let’s put those stats into something easier to digest.
Company A scores 3.75 in their employee experience survey, beating Company Z who scored 3.5.
Company Z has an annual operating income of $500 million dollars and a Return on Sales of 15%. Company A also has an annual operating income of $500 million dollars, but because they had a higher EX score, their Return on Sales is 16.81%.
When we run the maths, that means that Company Z’s Return on Sales translates to $75 million dollars a year. On the flip side, Company A’s Return on Sales translates to $84 million dollars a year — that’s an additional $9 million just because their employees are willing to push through challenges and go above and beyond in their work.
The opportunity cost of doing nothing
If you invest in your EX, you get all the goodies mentioned above (and more!), but what are you getting by doing nothing? Unfortunately, doing nothing to address your employee experience negatively impacts your business.
This includes your employees’ having significantly lower mental and physical health, resulting in them taking more sick days. Their organisational and personal performance deteriorates over time, so doing nothing actively destroys your business.
Rushing to a ‘quick fix’ like offering bonus incentives often doesn’t fix the problem at all. Only 13% of surveyed employees listed financial incentives as their top motivator.
A long term plan for employee experience
The presence of shared core values between an employee and their employer, and a sense of doing meaningful work drivers employee experience scores by up to 50%.
You can use (or revitalise) your company values and mission statement to capture this sentiment and give meaning and purpose to your employees’ day-to-day responsibilities.
Build your reward and recognition program off your values, and actively promote this program. It could be something like ‘employee of the month’ is chosen based on who contributed to your company mission the most, or saying “you’re being recognised because your achievement demonstrates one of our core values”.
Setting that expectation for what is worthy of recognition, and furthermore what is worthy of a reward, sets a powerful precedent for your employees’ behaviours.
Research also shows that the effects of receiving recognition lasts for about seven days, so you really need to be consistent in recognising your team members at least once a week.
When’s a good time to launch an employee experience initiative?
The answer really is “the only time better than yesterday is today”. Knowing that doing nothing leads to declining performance, you really should be aiming to launch something ASAP.
However, we get that you might want to start with a bang and in conjunction with something else, so here’s a list of organisational events that you can pair with launching an initiative;
- Strategy and target announcements
- Large growth, or shrinkage
- An all-hands or town hall meeting
- Start or end of a quarter
- Company birthday or anniversary
Perkbox is able to help across the board, with a values driven approach to reward and recognition, employee experience surveys and feedback, and perks to keep your team in tip top physical and mental shape.
Reach out to a member of our team now to start strategising your employee experience.