Back to Basics: What Is Employee Experience?

August 4, 2022 Aaron Kinne

man and woman in a meetingEmployee engagement and employee experience: The words sound similar, and the concepts overlap,” notes healthcare editor, writer, and journalist John Rossheim. But despite their similar-sounding names, there’s an important and critical distinction between the two. 

John cites the work of Brad Denny, a principal at Deloitte Consulting and co-author of “From Employee Experience to Human Experience.” According to Brad, “Employee engagement was very top-down, the organization deciding what employees needed. Employee experience, by contrast, brings employees into the conversation to look at the work itself, finding out what employees need to do their work, to make them successful.”

That’s not to say employee engagement isn’t a good thing. It’s long been shown to have a direct and measurable impact on an organization’s business performance. And engaged employees are less likely to leave a company. It’s just that employee engagement alone doesn’t go far enough. As John points out, “Many organizations and their HR leaders have concluded they need to do more to meet the needs of their workers.”

That’s where the concept of employee experience comes in. 

Defining employee experience

In a seminal global research study, The Employee Experience Index, IBM Smarter Workforce Institute and Workhuman® defines the employee experience as: “A set of perceptions that employees have about their experiences at work in response to their interactions with the organization.”

It goes on to note that employee experience is “a positive and powerful – and ultimately human – experience, in which employees are able to invest more of their whole selves into the workplace.”

More encompassing and holistic than engagement, strong employee experience looks at and leverages the components that foster positive company culture and long-term success. It helps define the role every business leader and manager plays in creating a positive experience for employees. And it reveals how leaders can make their organization more relational – rather than simply transactional. 

Perhaps most important, the report examines how employee recognition and continuous performance feedback have a significant and measurable impact on the employee experience. 

What are the benefits of an exceptional employee experience? 

The study identifies five dimensions of the Index. When employees have a positive experience in the workplace, they demonstrate a greater sense of: 

  1. Belonging – feeling part of a team, group, or organization  
  2. Purpose – understanding why one’s work matters 
  3. Achievement – a sense of accomplishment in the work that is done 
  4. Happiness – the pleasant feeling arising in and around work 
  5. Vigor – the presence of energy, enthusiasm, and excitement at work 

When these dimensions are thriving within an organization, the benefits are dramatic: better work performance (96% vs. 73%), significantly higher levels of discretionary effort (95% vs. 55%), and far greater levels of employee retention (21% vs. 44%). 

And that’s not all. As John points out, the benefits of a positive employee experience reveal themselves in a variety of ways. For instance, in organizations where at least 80% of employees are made to feel their job is important, there was – according to data from Gallup – a 64% drop in safety incidents. 

How can organizations create a strong employee experience?

Creating a better employee experience comes down to two key factors: leadership and workplace practices. Together, they can provide an organization with tools and insights to deliver a more positive experience for workers.

Leaders and managers play a central role in the overall tone and direction of an organization, and that – in turn – is the fuel that infuses more positivity into the workplace. It begins by providing clarity about where the organization is going and how each and every employee can participate in moving the company toward success. Managers can have a direct impact on employee experience by delivering personal support and commitment to their teams.

Today, employees expect a higher level of workplace practices that acknowledge “the uniquely human qualities of the workplace,” notes the study. Such practices can be viewed across three levels: environmentwork, and person.

  • Environment refers to the expectation that organizations will “be responsible and act with integrity in dealing with all manner of stakeholders, including employees themselves.” It also includes supportive co-worker relationships. When these conditions are met, employees report a much more positive employee experience.
  • Work – or more specifically, meaningful work – is all about ensuring that employees’ skills and talents are used to their fullest, with close alignment to shared core values. This, by the way, has a profound impact on what workers experience in the workplace: the presence of these features is related to a 50 percentage-point increase in employee experience.

As noted above, employee recognition and performance management – especially when the latter is based on peer-to-peer feedback – are also key factors in how employees view both the work they do and their workplace experience. The figures here are again quite powerful: 83% of employees who received recognition report a more positive experience – versus 38% for those who did not. The figures on feedback are equally compelling: 80 versus 41%.

  • Person refers to empowerment and opportunities for voices to be heard, according to the study. It places an emphasis on giving employees the time and opportunity to recharge while pursuing non-work activities, and providing the freedom to decide the best way for work to get done. Once again, when this approach is embraced, workers are more likely to report a positive experience: 83% vs. 34% for those who felt their suggestions matter, and 79% vs. 42% for those who have the freedom to decide how to do their work. 

How does a positive employee experience impact the bottom line?

“Employee experience is not just about feeling good at work,” according to The Financial Impact of a Positive Employee Experience, a follow-up report from The Employee Experience Index.

The study found when organizations increase employee satisfaction through human workplace practices like recognition, employee feedback, and empowerment, they see a significant impact on business outcomes such as return on assets (ROA) and return on sales (ROS).

Among the study’s highlights:

  • Organizations that score in the top 25% on employee experience report nearly 3x the return on assets (ROA) compared to organizations in the bottom quartile.
  • Organizations that score in the top 25% on employee experience report 2x the return on sales (ROS) compared to organizations in the bottom quartile.
  • Even a small increase in an organization’s employee experience index (EXI) score can make a huge impact on operating income. Results reveal that increasing EXI by a margin of 0.25 corresponds to a 0.86 percentage-point improvement in ROA and a 1.81 percentage-point improvement in ROS. As an example, for a company with sales revenue of $600 million and return on sales of 15%, increasing its EXI score by just 0.25 would lead to an increase in operating income of $11 million.

Your employee experience action plan

Delivering a more positive experience for employees begins with diagnosis – listening to the real-time insights of your employees frequently and consistently through the power of tools such as pulse surveys. Innovative companies identify the culturally relevant workplace practices that you can build on and improve.

Once that’s done, it’s time to take action: 

  • Enable managers to design experiences consistent with your organization’s core values
  • Ensure that your organization’s actions advance your values and nurture an environment that reinforces productive, supportive co-worker relationships
  • Help employees understand the meaning of their work and how it contributes to the wider organizational goals
  • Treat performance management as a continuous conversation, fueled by social recognition, peer-to-peer feedback, and growth
  • Make it possible for employees to participate in decision-making and trust them to travel the path to success

“Organizations are now re-examining their employees’ experience at work as a path to improved job performance and sustained competitive advantage,” notes the report. Understanding your workers through the lens of employee experience is a way for “leaders to inspire and energize their workforces toward greater well-being and performance.”


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About the Author

Aaron Kinne

Aaron Kinne is a senior writer at Workhuman.