Employee Experience Management: What, Why, How?

McKinsey shared that Employee Experience is one of the key trends for 2023. Let's discover what is it, why is it important, and how?
Daan van Rossum
Daan van Rossum
Founder & CEO, FlexOS
I founded FlexOS because I believe in a happier future of work. I write and host "Future Work," I'm a 2024 LinkedIn Top Voice, and was featured in the NYT, HBR, Economist, CNBC, Insider, and FastCo.
September 6, 2023
min read

In a recent end-of-year report, Sandra Durth and the team at McKinsey & Company identified Excellence in the EX Journey as one of the eight most impactful innovation shifts as HR is moving away from the "classic Dave Ulrich model."

They based this on interviews with more than 100 chief human resources officers and people leaders to "reveal how the HR operating model is changing to drive value in a volatile business environment." 

Hybrid work is mentioned as one of the critical imperatives for HR to embrace new operating models alongside "new challenges in monitoring employee conduct and performance," as discussed in the employee productivity deep-dive I wrote before.

I picked Excellence in the EX Journey out of the eight innovation shifts for two reasons:

  1. HR leaders themselves identify Excellence in the EX Journey as the one to have the most significant impact
  2. It's a tangible framework that every company can make improvements in right away

What is Employee Experience, and why is it a journey?

In short, Employee Experience is every interaction employees have with your company. 

In today's working world, as the Great Resignation is still fresh on C-suites minds, employees can afford to be choosy despite the tight labor market, as they want meaningful work. They can pick workplaces that support their career and lifestyle goals. 

The number is higher than ever, with almost half (48%) of current employees actively looking for new jobs and openings, as reported by Gallup.

A great employee experience is more than just a few great moments: it is frequent and meaningful interactions throughout employment. Gallup traditionally encapsulates the following seven major stages:

Attract: Recruit Top Talent

High-talent individuals are particularly interested in working for organizations with a strong purpose and well-defined values -- and living them out authentically.

Hire: Pick the Stars

An exceptional hiring process is clearly aligned with the organization's aspired purpose, brand, and culture. Organizations should use objective, scientifically rigorous talent assessments that predict performance to create a fair hiring process. Companies realize greater overall performance, including 10% higher productivity, reduced turnover, and higher profitability.

Onboard: Affirm the Decision

Only 12% of employees strongly agree that their organization does a great job onboarding. Effective onboarding goes beyond learning the ropes of the job. Employers should help employees quickly socialize on their team, connect with the organization's purpose and values, and understand how to apply their strengths to achieve excellence.

Engage: Build Strengths and Purpose

Employee engagement is far more than an enjoyable work environment. Employees today are looking for a manager who cares about them, keeps them accountable, and focuses on future excellence and career growth opportunities.

Perform: Drive Expectations

Employees want regular informal feedback and recognition for excellent work. They need to feel that their performance -- reflecting their achievement, team collaboration, and customer value -- is reviewed fairly and comprehensively.

Develop: Coach Career Growth

Employees expect to see a path forward in your organization -- opportunities to gain new skills, work with new people or enjoy greater autonomy. These professional development opportunities best arise through ongoing coaching conversations. When employees lack development, they will look elsewhere: The No. 1 reason people change jobs today is for "career growth opportunities."

Depart: Positive Exit Experience

Leaving the organization can be the most emotional and uncertain phase of an employee's journey. Employees with a positive exit experience are more likely to become proud brand ambassadors who strengthen your brand's reputation.

No alt text provided for this image

How Does Employee Experience Management Work?

Effective employee experience management goes beyond conventional human resource management and focuses on empowering employees' experiences with greater professional and personal development.

Employee experience management also engages employees' loyalty to the organizational brand through both cognitive and emotional immersion, captivating and motivating them.

Employee experience management recognizes the critical importance of a company's employees when conveying brand value promises to external customers.

The Business Impact of Employee Experience

Employee experience has proven to have a significant impact on businesses.

High-quality employees are a valuable asset, and losing them can be detrimental. To avoid losing your best people, investing in positive employee experience is crucial. It not only creates an engaged workforce but also reduces staff turnover.

According to Jacob Morgan, companies that invest in employee experience are four times more profitable than those that do not, and organizations that invest most heavily in EX are 11.5 times more likely to appear in Glassdoor’s Best Places to Work, 4.4 times more often in LinkedIn’s list of North America’s Most In-Demand Employers, 2.1 times more often on the Forbes list of the World’s Most Innovative Companies, and twice as often in the American Customer Satisfaction Index.

An Employee Experience-driven Operating Model

The EX-driven operating model McKinsey highlights will help companies become more competitive in attracting, engaging, and retaining employees. 

As the authors share, putting EX first means "allocating disproportionate resources towards moments that matter." For example, by bringing HR, IT, and Operations together to plan, develop, and roll out the highly critical onboarding process

Compared to other models the article outlines, the EX model lets HR truly take charge. HR specialists are "the driving force in bridging cross-functional silos and overcoming the patchwork of fragmented data and processes." 

Similar to designing a Customer Experience journey, HR designs the entire experience of an employee from (pre) start to finish and measures and learns along the way.

Data and Personalization

The second-largest shift McKinsey highlights is the one from process to AI, big data, and machine learning.

Still, according to Applaud research, only 10% of companies highly personalize the Employee Experience. Even amongst tech companies, only 30% say they successfully create a personalized experience for their employees. 

Explore the best all-in-one HRIS software that will help companies keep all employee data in one place, enhance employee experience, improve efficiency and compliance.

This stands out, as personalization has proven its value in every other part of our lives. Why is the workplace lagging?

The benefits of a personalized EX are two-fold.

1: It is better for business.

KPMG reported that companies investing in EX enjoy four times more profitability than those who don't, and companies with highly engaged employees outperform their competitors by a whopping 147%. How's that for productivity?

2: It increases employee engagement and retention.

Employee retention is higher when employees are more engaged, improving by as much as 36%. Engaged employees take more interest, put in more effort, and hold themselves to higher standards of quality in their work because they are more invested in the company's growth.

Switching to an EX Model

If you're ready to take the leap towards an EX-centric model, start by embracing the four key shifts this model requires:

  1. Excellence in the EX journey,
  2. Individualized HR "cafeteria approach" for personalization,
  3. "Productive" HR services with the needs of the business in mind,
  4. Integration of design and delivery with end-to-end accountability.

Reflect on strategic HR priorities and the changes needed to establish this operating model. Think comprehensively about the transition journey with your leadership, working towards core milestones for each innovation shift while ensuring a systemic, integrated transformation perspective.

Embrace data from internal employee surveys to external social listening data. This data can help you and the leadership to align your unique purpose, brand, and culture with EX. 

When EX reflects the organization's values, you can tell every employee interaction is authentic, inspiring commitment and supporting performance. Data should be the primary driver in the first three stages of the employment life cycle: Attract, Hire, and Onboard.

Engage managers because they make or break EX. So, it is imperative that you hire, train, and develop great managers. They're the ones who will engage employees, coach for high performance, and promote long-term and individualized development. 

Prepare and inspire managers to have effective conversations and help employees realize their current and future values. Having great managers is especially crucial in the other four stages of the employment life cycle: Build strengths and purpose; Perform; Develop; and Depart.

You Might Also Like …

All articles about

Human Resources

Human Resources have changed forever. With Remote Work and AI storming to the scene, this is what HR looks like in 2024.