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Press Release

Better employee experience proven to drive financial success

Compensation Strategy & Design|Executive Compensation|Future of Work|Inclusion and Diversity|Talent

November 4, 2019

Companies with more effective employee experience outperformed their peers for top-line growth, bottom-line profitability and return to shareholders, finds study.

LONDON, 4th November 2019 — A new study by Willis Towers Watson, supported by advanced analytics, reveals for the first time a compelling and predictive link between employee experience (EX) and employer’s superior financial performance.

The study found that companies demonstrating a strong EX consistently beat their sector on average by a clear margin of two to four percentage points (pp) across key performance metrics, including return on assets and equity, one-year change in profitability and three-year changes in revenue and profitability. In contrast, companies delivering less effective employee experience consistently underperformed their peers by 1 to 10pp.

The analysis is underpinned by a rigorous data source of employee feedback, including a survey of over 500 companies, close to 50 years of research and a total database approaching 250 million employees. Stephen Young, Global Practice Leader, Willis Towers Watson Employee Insights, said: “Our breakthrough research shows that companies with a strong overall EX outperform their sector peers on top-line growth, profitability growth and returns on assets and equity, not only in the short term, but over the long term too. Meanwhile, companies with poor overall EX will likely underperform their sector. This confirmation that EX sits at the heart of delivering exceptional customer experience and superior financial performance has profound implications for human capital strategy.”

The study measured several performance metrics for companies, including return on equity, one-year change in gross profit and three-year revenue growth, as demonstrated in the chart below. It found that for each financial measure, companies with low employee experience scores also had the poorest financial performance and companies with high employee experience scores were also the best financial performers, for example:

  • Return on equity: low EX companies were -6pp below the index, whereas strong EX companies performed +3pp above the benchmark
  • One-year change in gross profit margin: low EX companies -10pp below the index, strong EX companies +3pp above the index
  • Three-year revenue growth: low EX companies -1pp below the index, strong EX companies +4pp above the index
EX predicts better financials
Analysis of EX vs. financial performance across organizations - Comparison vs. sector average

Source: Willis Towers Watson Normative Database. © Willis Towers Watson

The world’s leading organisations are increasingly focusing on employee experience.”

Patrick Kulesa

Senior Research Director, Willis Towers Watson Research

Patrick Kulesa, Senior Research Director, Willis Towers Watson Research & Innovation Center, said: “The world’s leading organisations are increasingly focusing on employee experience. We have found that the highest performing companies have a very strong focus on how their employees feel about the organisation, from feeling inspired by its purpose and a trust in leadership, to feeling confident in achieving their career aspirations. These factors set organisations apart.”

Willis Towers Watson’s employee surveys tap into all aspects of employee experience – from local conditions such as training opportunities, immediate supervision and teamwork, to aspects of organisational functioning such as senior leadership effectiveness, customer focus and company competitiveness.

Evidence for the model was developed by examining an elite group of strong employee experience clients that are market-leading in financial results. This “high-performance” group represents about 30 companies annually.

What makes employee experience unique in the high-performance group are key aspects that reflect the mindset of employees in the best companies, including:

  • Feeling inspired by the company’s mission and purpose
  • Being able to achieve one’s potential and career aspirations
  • Having a deep sense of trust in senior leadership
  • Having a sense of drive through strong customer focus and innovation and agility in meeting marketplace demands

Regarding these attributes, Young said: “The most significant change comes through a transformation of leadership mindset — inspiring your organisation around your purpose, driving agility and innovation to be ahead of the market, helping your people achieve their potential and building a culture of leadership trust. The fact that so few organisations do this well suggests it is hard. But it is the ultimate magic key to unlocking high performance.”

Other elements of employee experience show little differentiation between the high-performance group and other companies, including:

  • Basic understanding of work goals and objectives
  • Support for employee effort from local managers
  • Organising work through scheduling and internal structures, efficient processes, and workplace flexibility

Many of these workplace essentials occupy immense time and resources in organisations today”

Patrick Kulesa

Senior Research Director, Willis Towers Watson Research

Kulesa added: “Many of these workplace essentials occupy immense time and resources in organisations today. What our model is saying is that these table-stakes are not unimportant but can distract employers from the true hallmarks of excellence. Our model thus directs employers to the specific factors of employee experience which are most important for predicting sustained financial performance.”

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimise benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas – the dynamic formula that drives business performance. Together, we unlock potential. Learn more at Willis towers Watson’s Employee Insights Practice, provides trusted advice, cutting edge software and superior benchmark data to over 500 employee survey clients each year.

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