Why boards of directors and C-suites care about employee experience

In a previous article, I addressed why boards and C-suites care about employee wellbeing, both to drive performance and reduce risk. Closely related is employee experience, which I’ll cover here.

Effective boards and senior management teams understand that a superior employee experience is associated with superior financial performance. They know that healthy, engaged, financially secure employees perform more effectively and efficiently, make better decisions and drive superior results.

What is employee experience?

Employee experience has gained significant attention in recent years, as organizations recognize its role in attracting, retaining and engaging top talent. At its essence, employee experience refers to employees’ overall journey during their time with a company. It encompasses every interaction, from the initial hiring and onboarding process to daily work experiences, career development opportunities and even moments outside of work (such as those that impact family members).

A positive employee experience is characterized by a work environment where employees feel valued, engaged and connected to the organization's purpose. It goes beyond competitive benefits and fair compensation. It includes a culture that fosters growth, collaboration and wellbeing through four dimensions of the employee experience: purpose, people, work and total rewards. 

What role do board members and senior leaders play in terms of employee experience?

With thanks to WTW’s Jill Havely, Angela Paul, Lindsay Stortz and Tiffany Shortridge, the following are actions that effective boards and senior leaders take to govern and maximize the benefits of the employee experience to the enterprise:

1. Understand and measure the connection between employee experience and performance

Recent WTW research shows that organizations with high-performing employee experiences achieved nearly three times the revenue growth, 11 times the profit margin and twice the return on equity compared to global averages. Eighty-six percent of employees at these organizations feel senior leadership has a clear vision for the future. Effective boards and senior leaders measure and review employee experience and performance data for their organizations.

2. Articulate the impact of employee experience, wellbeing and materiality

Effective boards and senior leaders report materiality of human capital and wellbeing in multiple dimensions of financial and operational impact, including those that relate to employee experience. While wellbeing did not appear a significant differentiator as recently as 2019, it is now understood to be an essential element of the employee experience. High-performance companies prioritize employee wellbeing by making it an integral part of their culture, outperforming the average organization by more than five points.

3. Practice governance around purpose, trust, values and innovation

Effective boards and senior management teams devote time to ensure essential topics relating to human capital and the employee experience are being covered and discussed. This includes three key areas:

• Clearly articulating and protecting company purpose: Boards and leaders of high-performance organizations understand the importance of articulating their vision and strategy, communicating the organization’s goals and inspiring employees to embrace the organization’s purpose.
• Sustaining trust by embracing values-driven behaviors: High-performance organizations excel when employees see the connection between leaders’ decisions, the institution’s core values and transparent decision making. Values-driven behaviors are essential to unwavering respect and integrity as well as enhanced two-way communication.
• Driving market competitiveness through innovation: Employees at high-performance organizations are regularly motivated by the success of their customers. High-performance organizations differentiate themselves by anticipating external changes rather than just responding to them, innovating to deliver new products that customers will value and swiftly reinvesting to enable a fast cycle of success to regularly outpace competitors.
4. Monitor progress in employee attitudes and perspectives, wellbeing, total rewards and readiness for change

Effective boards and senior management teams track representative measures from the following areas related to employee experience:

• Employee attitudes and perspectives: Employee burnout, retention, satisfaction, productivity, stress, work experience, employee preferences, likelihood to leave, trust in leadership, relationship with managers, relationship with coworkers.
• Employee wellbeing:
• Physical wellbeing – percentage of employees covered by healthcare, absenteeism, presenteeism, wellbeing program participation, total cost of ill-being, chronic care management, productivity, and employee health and safety
• Emotional wellbeing – percentage of employees covered by behavioral healthcare, employee assistance program usage, behavioral health service access, use of paid time off, psychological health standards, stress barometers, resilience training and emotional health indices
• Financial wellbeing – retirement readiness by age, ability to manage planned and unplanned financial events, financial literacy indices, retirement plan contribution levels, percentage of employees living below the poverty level
• Social wellbeing – ISO psychological safety standards, inclusion and diversity metrics, percentage of employees working remotely, employee engagement, leadership trust and workplace dignity
• Total rewards program and policies: Program alignment (pay, benefits, careers) with employee preferences, equitable and fair programs and practices, flexibility of programs and practices, alignment with employee needs, perceived value, impact of artificial intelligence and reskilling.
• Readiness for change: Organizational, managerial and employee readiness for change versus benchmarks.

Boards and senior management teams practice effective governance through developing a deeper understanding of the employee experience, measuring it and enhancing it for their organizations.

A version of this article originally appeared on Forbes on March 28, 2023.

Author

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John M. Bremen

Managing Director and Chief Innovation & Acceleration Officer

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