How to measure Workplace Experience & harness its ROI

The debate around human capital management’s impact on financial returns causes organizations to continuously seek answers and solutions. Return on investment (ROI) is critical in any business and improving the ROI on human capital investments is an important strategic factor. This is especially true for organizations who offer professional services or consulting where revenue is earned from human-centric outputs rather than product sales.

A workplace that creates an environment of hospitality has become non-negotiable for successful organizations globally. While most leaders agree exceptional workplace experiences are beneficial to employees, how to measure the ROI associated with these programs is a question that remains difficult to answer. A question many organizational leaders continue to wrestle with is: Does the quality of employee experiences influence their ability to maintain the company’s quantified bottom line?

Research completed by Schroder’s in 2023 reveals how human capital management (HCM) leads to improved outcomes for organizations. According to those studies, companies can settle the debate by assigning mutually dependent value to both qualifiable and quantifiable employee experiences. The same way future-facing leaders already embrace a whole new world of workplace technology, we must also refine our understanding of human capital ROI into more than a gut feeling. According to Forbes magazine, the decreased turnover rate of happy employees alone is enough to increase an organization’s economic growth. The price of turnover is significant — costing anywhere from 30% of an entry level salary to 400% of an executive level salary to replace an employee.

It is no longer enough to provide a standard vacation day package and a birthday treat: we must go to new lengths to understand workplace experience and how it contributes both to the organization’s public image and to its economic growth. In 2024, it would be naive to believe that these forces do not work together to generate maximum productivity.

Work and the way employees view and respond to company culture will continue to shift with the fresh expectations of a new generation of talent. The Society of Human Resource Management (SHRM) discusses in a recent article that the successful leader of today must manage a complex diversity of perspectives and needs in order to provide a truly hospitable workplace experience. The same article points out that while Gen Z is shaking up the world of work, they are only one of the generational forces at play: talented employees from across age groups are more likely to leave a job if they feel undervalued or ignored.

CAN A MORE HOSPITABLE WORK CULTURE REALLY PAY THE BILLS?

The short answer is yes. The more complicated answer is that to ensure positive returns, leaders must be intentional about the implementation of programs that develop and maintain their workforce. Organizations young and old face the same struggle when it comes to determining economic returns on investments in human capital: how to quantify employee satisfaction and connect it to outcomes in dollars.

Plan ahead for data collection you can quantify

Have a data collection metric in place before you begin any new training programs or roll out any new platforms. Define exact skills that employees should acquire after a training is given or a new platform is introduced and specify the expected gains so you can measure both. Establish a system to track and file data that can easily be accessed by all stakeholders: 75% of organizational leaders from a range of industries indicate that they need better data systems to track the effectiveness of training and employee engagement strategies.

If you have historically struggled to monitor how happy your employees are and need a place to start, take a look at customer satisfaction rates. According to an article in Bloomberg that discusses the ROI potential of employee experience, happy employees instill confidence in customers. A company that is able to track and develop their employees’ customer service successes will be able to predict how many customers will return and can use those findings to measure the success of relevant training initiatives. A study completed by Bain & Company found that an increase in customer retention rates of as little as 5% can increase profit by 25-95%.

Design an inclusive data collection process

Employees at all levels of an organization should be involved in the design of the data collection process. For example, although employees may not have expertise in survey design or statistics, they do know what is important to them and can help leaders ask the right questions. Importantly, ensure that the HR department does play a role in the data collection design and analysis process. Considering multiple perspectives and types of data from within an organization can help leaders identify “ROI sweet spots” where employees are happy and returns are high. Where high rates of employee satisfaction and high returns overlap, organizational leaders can participate in an iterative process that identifies ways to improve the employee experience while monitoring returns in order to measure which changes have the strongest impact on overall productivity.

Study the big picture if details are not available

Even if an internal progress monitoring system is not yet established in a particular organization, there are ways to know whether or not a company’s HCM efforts provide the returns that organizational leaders expect. We have plenty of broad evidence that companies with the happiest employees are already more economically successful, for example:

The stock market: as an indicator of a company’s financial success, there is no mechanism more reliable than the global stock exchange. The Forbes List of Best 100 Companies to work for also consistently outperforms the market. According to the Great Place to Work blog, the Best 100 Companies list performs nearly four times higher than the average of all publicly traded companies.

Google: Google’s office culture made the news long before workplace experience became a buzzword in organizational leadership: it is arguably Google’s company culture that ignited change for all. You might be thinking about the in-office electric scooters, video game consoles, “hang-out” spaces and fitness centers open for use during work hours. While opportunity for play is a planned aspect of Google’s office culture design, Google’s positive ROI related to workplace experience is also due to its provision of upskilling opportunities. Google University offers employees a range of free courses and time to focus on professional skills development, which in turn creates opportunities for employee mobility within the company. This combination of investments in human capital with a focus on employee experience has allowed Google to remain a tech leader.

Accept that some data cannot be quantified

Qualitative data has historically been of little interest to CFOs; however, the call to reconsider its importance and contribution to a company’s overall results is loud and clear. A solid benefits package offered by an organization might not be quantifiable by a direct ROI indicator, but research does show that it is a top reason that employees accept new positions. With a constantly increasing percentage of the workforce engaged in gig work, a benefits package might be the difference that attracts top talent away from the pay-per-play economy. According to Forbes magazine, 90% of potential employees consider a healthcare package as extremely important, and 83% say flexible work and leave time are very important.

As we experience lightning-fast changes to office and workplace culture, any emergent approach to measure an organization’s success needs to be fresh and inventive. A brand new set of norms and standards altered office culture dramatically, and companies that fail to keep pace with the change will lose their best talent to those who can stay in stride. The best organizations will need to retain the best talent if they want to stay at the top. At the end of the day, a high salary on offer to attract the best talent will matter little if the talent walks away due to lack of quality support, insufficient benefits or the broken promise of a work-life balance. The debate is no longer about whether employee happiness or economic gains are more valuable to an organization: it’s how to successfully balance the need for both.

SIMPLIFYING THE WORKPLACE WITH SPS TECHNOLOGY

Imagine a day in the life of work that is exponentially improved by having technology at your fingertips allowing your employees to seamlessly access workplace support services.

Experience unparalleled service delivery enabled by SPS Nexus. Built as a service request platform to enhance SPS Enterprise Workplace Solutions, SPS Nexus is an all-in-one service management hub that supports requests and tracking of a wide array of workplace services to make your employee’s day better and more productive. The platform streamlines services such as mail tracking, shipping, document scanning, printing, visitor registration, and booking of conference rooms or desks, just to name a few.