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Article | EX Insights

How these 4 types of employee experience will drive business value in 2023

By Stephen Young and Angela Paul | January 19, 2023

Employee experience shapes business value and is a predictor of business performance. What’s your current business state?
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The global dynamics of business have changed in the past three years and powerful forces have reshaped the way we work and live. Employees’ expectations have changed, and this year employers will be challenged like never before to create value out of redefined and redesigned employee experiences.

To thrive (rather than merely survive), employers must think differently. Under the shadow of ongoing global disruption thriving will require a more compelling and purposeful employee experience that reconnects, re-energizes and retains employees while supporting their healthy productivity.

The concept of quiet quitting received much fanfare in late 2022, reflecting employees’ low levels of discretionary effort coupled with a lack of desire to leave their employer. However, evidence suggests this is nothing new. In fact, engagement levels have remained reasonably stable recently, suggesting no increase in quiet quitting.

What has changed is the broader context. With inflation and an increased cost of living, real wages are down. And with the Great Resignation and decreased staffing, real workload is up. This has led to an imbalance between work and life combined with a decline in perceived leadership support. Together, this creates a potent mix of raw emotion, real hardship and a sense among employees that they are being taken advantage of.

The relationship between employee experience and business value

To understand the current state of employee experience and the factors employers need to pay attention to in 2023, we tracked the financial performance of 355 global organizations of different sizes and a range of industries. Simultaneously, we tracked their employee experience through employee survey data, resulting in feedback from nearly 4 million employees. This analysis uncovered four distinct business states and revealed that an organization’s business state has a significant impact on business value and financial results.

We segmented the 355 organizations according to the current level of employee engagement and intent to stay, comparing each to their respective industry average. The four segments, their defining experiences, and how they generate business value, are described in Figure 1.

Employee experience impacts business value in one of four ways - description below
Chart showing four quadrants. Vertical axis depicting Engagement versus sector on a scale from low to high. Horizontal axis showing retention versus sector on a scale from low to high. The top left quadrant represents the value risk state at 18% of businesses. Employers in the value risk state have fully connected contributors looking to leave, draining energy, expertise and value from the business. In the bottom left quadrant, we have value drag representing 30% of businesses in this state. Value drag organizations have disconnected employees who plan to leave creating a drag on coworkers and business performance. In the top right quadrant, we have the value drive quadrant representing 37% of businesses. These organizations have fully connected and committed employees driving outsized value for the business. And finally in the bottom right quadrant we have value potential representing 15% of businesses. The employers have less optimally engaged employees who want to stay with the organization creating unrealized potential.
Figure 1. Employee experience impacts business value in one of four ways

Source: WTW employee experience normative database

The four types of employee experience in 2023

  1. 01

    Value drive

    37% of organizations are in this state and their employee experience drives positive business value. Compared to their peers, employees are:

    • More engaged
    • More likely to stay
    • More likely to believe their voice matters
    • Feel capable to deliver their work
    • Feel more recognized for their contribution to the business realizing its strategy.

    These organizations are better at inspiring employees and building trust and confidence in leadership, therefore are well-placed to grow in their market and, in turn, provide opportunities for employees to grow.

  2. 02

    Value risk

    18% of businesses are in this state. In these organizations, significant business value is at risk due to the number of high-performing employees thinking of leaving. Employees are well-connected and contribute to business success.

    Compared to peers, these organizations deliver high levels of inspiration, drive their market and leadership is trusted. Yet more of their employees have plans to leave. Compared to the value drive state, in value risk organizations, employees:

    • Are less likely to believe their voice matters
    • Perceive less equity when it comes to advancement opportunities
    • Perceive their organization as less effective at matching rewards to performance
    • Are less willing to expend effort.

    The combination of these factors contributes to retention risks.

  3. 03

    Value potential

    15% of organizations are in this state. The employee experience in these organizations reveals disengaged employees who contribute less value but don’t leave the company – generally, these are the quit quitters. As will be seen below, there is significant financial value to be gained by re-engaging these employees and enhancing their contributions to the business.

    Compared to peers, employees in these organizations generally feel less connected and contribute less value yet are more likely to stay with their employer. Compared to the value drive state, organizations in the value potential state are significantly less effective at inspiring their employees around their vision. There is also lower employee confidence in leadership’s ability to manage change and grow the market. This leaves employees questioning their opportunity to develop and grow, leading to a weaker connection between their contributions and their rewards.

  4. 04

    Value drag

    30% of organizations are in this state, with employees being largely disengaged and looking to leave, thus creating a drag on business value. This state is most like the value potential state except employees are more likely to make an exit plan. Employees believe there is less clarity over career paths and have lower confidence in pay for performance. They also have lower levels of trust in leadership, particularly related to a lacking sense of leadership openness and honesty. Despite these conditions, the potential upside is that these employees haven’t yet resigned, so there is an opportunity to make improvements and realize the benefit of increased value drivers.

The financial impact of employee experience

To illustrate the impact of employee experience on business performance, we looked at the average financial performance of each state. A clear pattern emerged that matches the predicted business value of each state.

The impact that Employee Experience has on business performance.
Figure 2: Employee experience determines financial outcomes

Source: WTW employee experience normative database

Organizations in a value drive state outperform all others, delivering the greatest profits and being the only segment with growing revenues and margins. Simply put, the only way to grow business value in 2023 is to attract and retain employees who are more engaged and have above-average intentions to stay.

Those in a value risk state enjoy the next best level of margin. However, revenues and margins decline as highly contributing employees leave and take business value with them.

Organizations in the value potential state place third in terms of margins delivered, with declining revenues and profit.

Organizations in the value drag state deliver the lowest margins and post declining revenues. These organizations also deliver virtually zero returns. See Figure 2.

Employee Experience has an impact on financial returns.
Figure 3: Employee experience state determines financial returns

Source: WTW employee experience normative database

Next steps: Determine your business state and tailor a value driving employee experience

The implications of this research are profound. Employee experience shapes business value and is a predictor of business performance. Only organizations that are in a value drive state will grow. Organizations in a value drag state will decline and deliver low to no returns.

By understanding your organization’s current state, you can design a thoughtful and tailored employee experience that maximizes connection, contribution and commitment, all while delivering positive impact.

Leading organizations are deploying several solutions to improve employee experience this year:

  • Employee experience design – Treat your EX as you would any other significant business imperative. Every company has a culture and EX, either by default or design. Ensure your EX is designed – and executed with purpose – to deliver on your business expectations.
  • Wellbeing – Go beyond wellness programs by preparing managers to recognize signs of wellbeing distress and guide employees towards resources and solutions to support and improve total wellbeing.
  • Pay clarity and transparency – Help employees understand how pay is determined. Employee experience communication platforms are a great way to provide clear insight on pay policy, processes and changes as well as demonstrate the full value of total rewards through total rewards communications.
  • Career growth opportunities – Help employees get more from their employment deal than just pay and benefits by articulating career pathways, coaching and development opportunities. Consider reworking your employee value proposition to provide a more engaging and inspiring vision of the future and a clear step-by-step plan of how it will be achieved, with the support and contribution of employees to more meaningful work.
  • Voice and involvement – Provide real opportunities for employees to challenge the status quo and contribute in meaningful ways that support their interests and ambitions. Foster a culture of psychological safety and inclusion so employees recognize that their input matters. Offer ongoing opportunities throughout the year for employees to speak up, share perspectives and ideas.
  • Inspiring and inclusive leadership – Companies with a high-performing employee experience clearly articulate the company vision, how they will get there and how each person contributes to the company value. Open, honest, timely and relevant communication from leadership is critical to (re)building trust and confidence.

WTW helps organizations around the world understand and improve their employee experience and enhance business value. Get quick insights on your current business state and most pressing employee challenges, then plot detailed action plans. Contact an WTW employee experience expert today to discuss your employee experience value driver analysis.

Authors

Managing Director, Employee Experience
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Global Employee Research Director

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