In case you missed the first post of this blog series, How to Connect Through Experience, this blog post is part of a three post series which serves as an overview/background for an upcoming National ABSDC Conference presentation delivered by Michael Myers (Consultant for UGA SBDC in Athens) and myself (J. Ashley Panter, Marketing Manager at the UGA SBDC). A question posted in the first blog post, “How can you as a business owner provide a seamless, quality experience to retain long-term, happy customers?” Essentially, the post concluded that in order for business owners to continue to be successful, they must evolve their ways of thinking about marketing and management and must REALLY learn how to connect with your customers. So… let’s finish the series with management:
When one thinks about user experience, often times, people assume the term only applies to the marketing world. However, user experience is everywhere. As we learned in the first part of this blog series (How to Connect Through Experience), great user experience, often times, isn’t even recognizable. If you think about it, can you remember a time when you had a GREAT user experience? It’s probably difficult. However, I bet you can quickly remember the last time you had a bad user experience. Am I right? Whether we’re talking about marketing or management, we have one core question that must be answered, “How can we ensure that our users have a positive experience with each and every touchpoint of our business?”
According to Gartner Inc., more than 90% of businesses compete primarily on the basis of user experience (UX), but as the competition for talent increases, businesses have started to realize that they must also take into consideration the experience of employees (EX), which is where User Experience Management comes into play. Without positive #UXM, you cannot attain customer loyalty. So, what exactly is EX? Well, let’s first talk about what EX is NOT…
What EX is Not
EX is NOT new and improved Human Resource (HR) methodologies/theories.
- While HR shapes some of the most critical interactions within EX (such as recruiting, on-boarding, performance reviews and planning), EX is SO much more. For instance, EX also includes things such as facilities, corporate communications, and even Information Technology services.
EX is NOT strictly perks and parties.
- “Feel good” tactics such as free gym memberships and foosball tables in the break room are great and all, but EX should go well beyond making employment fun and enjoyable. Instead, EX should be a strategic initiative that involves designing and delivering distinctive experiences for employees that are aligned with your desired culture.
EX is NOT employer/employment branding.
- Every company wants to hire the most talented employees they can. In order to compete in the war for talent, many companies actually try to develop an external reputation to help improve their recruiting efforts. However, if you want to win at EX, you should turn your focus more inward and focus on the day-to-day experiences your company provides to existing employees.
EX is NOT treating employees as customers.
- Although neither employees not customers should take importance over other, thinking about employees AS customers is incomplete. The relationship between the two provide a completely different value proposition.
EX is NOT employee engagement. Interesting huh?
- Too many companies only pay attention to the results from annual employee engagement surveys and don’t proactively design and manage EX that would produce even better engagement. By producing better engagement, you are increasing your employees’ commitment to both their company and job.
What is Employee Experience (EX)?
User Experience (sometimes referred to as Customer Experience in the business world) is “the sum of all interactions a customer has with a brand/business.” Many assume that the definition of EX is “the sum of all interactions an employee has with a brand/business.” However, according to author, Jacob Morgan, EX isn’t that simple. He states that we must look at EX in three ways:
- Through the eyes employee.
- Through the eyes of the organization.
- The overlap of the two.
Morgan defines EX as “the intersection of employee expectations, needs, and wants and the brand/business’ design of those expectations, needs, and wants”.
As a business owner, you have to realize by now that EVERYTHING ties into User Experience Management (#UXM). Whether the user is your customer or your employee, we should treat both just as important as the other.
Why is Employee Experience Important?
As mentioned in the first part of the blog series, “although most brands claim to be “customer centric,” there is a gap between what users expect from a business and what they are actually getting.” The same logic applies to the employee aspect of UX. Most brands claim to “love their employees,” but in reality, employee experience is just an afterthought.
A number of workforce factors have raised the importance of EX. For one, the war for talent has never been more fierce. Companies must create a superior EX to create a competitive advantage when recruiting. And like with UX in marketing, once an employee is hired, the name of the game is to #gainandretain.
Once a company has invested time and money into the employee’s training, it’s crucial to retain them. Studies on the cost of employee turnover are all over the board. Some studies (such as SHRM) predict that every time a business replaces a salaried employee, it costs on average, anywhere from 6 to 9 month’s salary. For a manager making $40,000 a year, that’s $20,000 to $30,000 in recruiting and training expenses.
So, how do you retain these employees? One way is to motivate maximum elective effort, which most/all service positions involve significant elective effort. Maximum elective effort is the maximum amount of energy an individual employee can bring to the service role and the minimum effort required to avoid being penalized by their employer. The difference between the maximum and minimum energy investment is elective to the individual employee.
According to Leonard L. Berry, “personal entrepreneurship,” like maximum elective effort, is an elective act. That means the individual employee decides whether or not to try something new, whether or not to risk helping a customer with an unusual or difficult request, or whether or not to assume a position of leadership in solving the problem. If you treat your employees right, and they love their job, you greatly increase the chance of motivating the maximum elective effort and inspiring personal entrepreneurship in your employees.
How much would you empower your employees to serve your customers? A great example of motivating the maximum elective effort and inspiring personal entrepreneurship in employees is The Ritz-Carlton. In fact, they’ve even put a number on it.
The Ritz-Carlton gives their employees $2,000 to use at their discretion to make/keep customers happy. That is why they’re known for their gold standard of customer service. They’re also known for their customer loyalty, which in post two of this series, we learned will take a company a long way. In fact, loyal Ritz-Carlton customers will spend $250,000 with the Ritz over their lifetime. Here is just of the many reasons why:
With that being said, the businesses who see the value of personal entrepreneurship and “court” maximum elective effort are the businesses who easily gain and retain employees… good, talented employees. These are the companies that value UXM (User Experience Management) as they’ve discovered the power of EX and the positive impact it has on business performance in many areas.
What Results Does EX Produce?
According to research by Jacob Morgan, author of The Employee Experience Advantage, shows that companies who invested more heavily in Employee Experience were:
- Included 11.5x as often in Glassdoor’s Best Places to Work.
- Listed 4.4x as often in LinkedIn’s list of North America’s Most In-Demand Employers.
- 28x more often to be listed among Fast Company’s Most Innovative Companies.
- Listed 2.1x as often on the Forbes list of the World’s Most Innovative Companies.
- Twice as often found in the American Customer Satisfaction Index.
Most importantly, Morgan found that experiential companies had more than 4x the average profit and more than 2x the average revenue. They were also almost 25% smaller, which suggests higher levels of productivity and innovation.
- Treat employees and customers as equals. Whether the user is your customer or your employee, we should treat both just as important as the other.
- Create superior EX if you want to compete. The war for talent has never been more fierce. Companies must create a superior EX to create a competitive advantage when recruiting.
- Motivate maximum elective effort. The companies that we consider to be exceptional service companies tend to have employees that give the maximum elective effort.
- Successful UXM increase both profit and productivity. Experiential companies had more than 4x the average profit and more than 2x the average revenue. They were also almost 25% smaller, which suggests higher levels of productivity and innovation.
In order for business owners to continue to be successful, they must evolve their ways of thinking about marketing and management and must REALLY learn how to connect with their employees.
Forward-thinking business owners who learn how to connect with their users (both customers and employees), invest in UXM, change their viewpoints and begin looking through the eyes of both the employee and the business. They must realize the two overlap. Once this realization is formed, a business increases its competitive advantage in the future.
Whether it be improving human resources, employee experiences that are aligned with company culture, or maximum elective effort, by focusing on providing employees with more value and more meaningful connections with your business, it will set your business apart from others.
The management world is beginning to look drastically different for businesses. Small businesses can compete with big box stores more easily by focusing on UXM more closely before the big companies get too far ahead in the EX game.
(Source: J. Ashley Panter, Marketing Manager, UGA SBDC | Michael Myers, Consultant, UGA SBDC in Athens | Jacob Morgan, The Employee Experience Index | Leonard L. Berry, Discovering the Soul of Service: The Nine Drivers of Sustainable Business Success | Denise Lee Yohn, Forbes, 2018 will be the Year of Employee Experience | The Ritz-Carlton’s Famous $2,000 Rule, Adam Toporek, Customers That Stick)