3 Reasons Why The C-Suite Will Want To Learn About Employee Experience - Equiniti
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3 Reasons Why The C-Suite Will Want To Learn About Employee Experience

01 March 2018

Andrew Woolnough, Director of HR Solutions at EQ Paymaster talks about how employee experience has a significant impact on a company’s bottom line.

Forward-thinking HR leaders have for some time held the view that Employee Experience is the key to a more profitable and well-regarded business. The main challenge they face, however, is in translating this in a tangible way to senior management.

This is about to change thanks to a convergence of elements – namely corporate governance reform plus growing pressure on government by the CIPD as part of its Manifesto For Work 2017 to introduce voluntary human capital reporting standards.

What all these elements have in common is the understanding that it’s people that determine a company’s success or failure. And it’s for this reason that Employee Experience is expected to become a regular fixture on Board agendas across all industries.

What is Employee Experience? Put simply, it’s the integration of all the workplace, HR and management practices that impact people in their job, from initial brand perception, through to attraction and recruitment, everyday life and retirement.

There are tools now available to help employers pull together, measure and assess all these elements on an ongoing basis, with a view to ensuring tangible value to a company’s productivity and profitability.

A focus on people equals profits

Despite mounting evidence in favour of Employee Experience, less than one third of employers use people analytics to calculate the cost, impact and return on investment (ROI) of reward and benefits in their organisation, according to research carried out by Employee Benefits on behalf of Equiniti.

Additionally, three in five (59%) cite an inability to justify additional spending as a reason why they are unable to enhance their reward and benefits programmes.

Companies are missing out through a lack of Employee Experience. Here’s why:

1. Impact of people on business outcomes: the evidence

A recent Gallup poll covering businesses across 73 countries found that firms in the top quartile based on their employee engagement scores outperformed the bottom quartile having 21% more profitability and 20% more productivity.

A number of FTSE 100 companies now focus on employee engagement in their annual reports and accounts. This comes following the CIPD’s recommendation to government last year to encourage more publicly listed companies to provide better information on how they invest in, lead and manage their workforce for the long term.

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According to an article in The Telegraph, London startup Soma Analytics found that FTSE 100 businesses that used the words ‘mental health’ or ‘wellbeing’ more than twice in their annual reports enjoyed a mean profit of £1.4tn, three times that (at £563bn for the year) of those that didn’t use such phrases.

The study pushes forward the argument that the more a company holds itself publicly accountable for the wellbeing of its employees, the more they will invest in it. This, in turn, is in investors’ interests, with sick days and lost productivity costing billions of pounds each year.

 The CIPD as part of its Valuing Your Talent framework has also published numerous case studies on how businesses are using people measures to improve their organisations.

Meanwhile, according to management consultancy Deloitte in a report published last year, businesses are currently at a tipping point with regards to employee wellbeing and engagement, in a trend – the report claims – is similar to that of Corporate Responsibility (CR) in the 1990s. It took some time but CR is now seen as a strategic and integral part of a company brand, featuring prominently in annual reports and accounts.

2. Employee empowerment through corporate governance

If the productivity and profit drivers are not enough to convince the C-Suite to place Employee Experience at the top of the agenda, corporate governance reform will cement the need.

Whilst the finer details are yet to be ironed out, we know that the reform will undoubtedly necessitate much more effective engagement between directors and employees in future. It will also ensure that good practice is adopted more widely and more consistently. This was made clear in the government’s response to the consultation, published in August 2017.

The importance of having an effective worker voice was also emphasised in last year’s Taylor Review of Modern Working Practices.

As part of the next steps in the governance reform process, the Financial Reporting Council (FRC) is now consulting on the development of a new Code principle establishing the importance of strengthening the voice of employees and other non-shareholder interests at Board level as an important component of running a sustainable business.

3. Integrated thinking across business departments, suppliers and consultants

Employee Experience requires joined up thinking.

This is easier said than done considering the traditional lack of integrated working across all the key players in the Employee Experience chain: for example HR, Risk, Occupational Health, Payroll, Company Secretaries. The same applies to suppliers and consultants, the majority of which offer discrete and specialist services so sharing of information to allow for integrated solutions does not tend to happen. For example, work-related stress represents a Duty of Care issue for HR and a potential Employers’ Liability problem for Risk, but because employee benefits and general insurance are very separate areas of expertise, there doesn’t tend to be any sharing of management information and insurance-based interventions – the kind of things needed to help mitigate work-related stress.

The upshot? Solutions are looked at in a siloed way, making it difficult to calculate the impact on overall business outcomes.

Take one particular high-profile Employee Experience issue as an example: mental health. Charities, industry and public bodies have produced an array of benchmarks, indices and audits to help companies support employees and reduce stigma. For example, Mind designed its Workplace Wellbeing Index, a benchmark of best policy and practice aimed at addressing employee mental wellbeing. Similarly, Business In The Community (BITC) and Public Health England designed and launched a Mental Health Toolkit for employers.

More recently, following the CIPD’s call on the government to establish human capital reporting standards, as mentioned earlier, the Stevenson Farmer review Thriving at Work was commissioned in early 2017 by the Prime Minister. This introduced six mental health core standards to help employers build mental health into the fabric of their organisation. It also called on employers to shift from one-off wellbeing initiatives to a proactive employee wellbeing programme.

Whilst these are all great initiatives, they only take into account a certain element – a single dimension of Employee Experience.

What next?

A bigger picture view is needed, one that takes into account all aspects of an employee’s working life. What’s more there must be a straightforward way of calculating the impact on company productivity and profitability.

Equiniti has designed the ways and means to do just that. Our broad experience across pensions, payroll, rewards and benefits, and payments makes us perfectly placed to help companies take an integrated approach.

Following the recent publication of our Employee Experience White Paper, we aim to drive the debate forward over the coming weeks and months with thought leadership, best practice and, moreover, discussion with you – our key stakeholders - with one goal in mind: to help HR make the C-Suite sit up and take notice. Engaged employees matter to results and reputation. It’s that simple.

Find out more

For more information or for a copy of our Employee Experience White Paper, contact andrew.woolnough@equiniti.com