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How to build an EX-Centric Organization

Our survey of 250+ companies and research on EX Pioneers, reveal a clear business case to transforming your business, designed around your customers and workforce (see links to more info at end of article)

The Customer and Employee Experience

by Elliott Nelson and Hannah Olvera Doman - Kennedy Fitch

We have seen breakthrough performance in companies in recent years that have re-built on the concept of Customer Experience (CX). Analytics and mobile technology have provided organizations with deeper insights into what drives behavior – what attracts customers, what makes them return, buy higher margin products, and most importantly, what makes them want to promote their company’s products.

Multiple studies show that CX-Centric companies see significant growth vs. the competition, including research that shows organizations with high NPS ratings grow at twice the rate of their peers.

If this CX data is true, does the same apply to Employee Experience (EX)? Business leaders should be asking themselves 3 questions:

·     What is the correlation between business results and Employee Experience (EX)?

·     How is EX different from Engagement (which is steadily declining)?

·     What does it take to weave EX into the fabric of an organization? Is there a common ‘EX Playbook’ that can be successfully applied in a variety of business situations?

To answer these questions, KennedyFitch launched a global study to understand how companies are approaching EX. Over 250 companies worldwide responded to our recent online survey. 4 out of 5 said EX is very important and 9 out of 10 said it would become more important in the next 1-2 years. Only 1 in 10, however, felt their company had made significant progress developing EX. And many reported that lack of internal EX expertise is a big problem.

We interviewed another select group of companies who were further along in the journey, including GE and Airbnb, who are considered ‘EX Pioneers’. We also looked at current publications – books and internet articles – to see what existing research could tell us. 

To start, we found the following answers to the three questions mentioned above:

1.    There is a clear business case and a correlation between EX and business results.

2.    Engagement and EX come from two different worlds - they measure quite different things, come from different sources and have widely different applications.

3.    Building an EX-Centric organization requires a complete Transformation in the way of thinking and operating. Most companies are in the early stages of learning what EX is and few understand what is required for implementation.

What we found in our research make us believe that the movement to design CX and EX as part of a Disruptive Business Transformation is one of the most revolutionary and impactful actions a company can take. Let’s dive a bit deeper into each of the three questions.

What is the EX Business Case?

Research[1] done recently by Jacob Morgan found the following comparisons of EX vs. non EX companies:

·     EX companies are 4.5x more frequently listed on Most Innovative Companies lists by Fast Company, Boston Consulting and Forbes, than non EX companies

·     6x more frequently listed on GlassDoor’s Best Places to Work, Fortune’s 100 Best Companies for Millennials and LinkedIn’s Most In Demand Employers

·     3x more frequently listed on Brand Z and Forbes’ ‘Top Brand Value’ companies

·     40x more frequently in the list of Exponential Organizations (companies whose impact is disproportionately large – 10x larger - vs. other organizations)

·     4.4x Average Profit vs. non EX companies

·     2.9x Average Revenue per employee vs. non EX companies

The shift to EX is rooted in a silent revolution taking place in organizations across the world as companies transition from treating humans as assets or “capital” (Engagement) to treating them as human beings (Employee Experience); from forcing them to submit to and work within certain processes and norms (managing assets) to understanding them and how they work best and designing solutions around their needs (individualization).

Tom Friedman, in a recent article succinctly describes how technology is making a huge impact as work is being disconnected from jobs, and jobs and work are being disconnected from companies, which are increasingly becoming platforms (moving from “owning” employees to “having access” to capabilities). This major shift from the traditional idea of ‘We own talent’, as reflected in the concepts of “Human Capital”’ and “Talent Management” to: “We create an attractive platform for you to learn and do your best work.”

EX and CX companies create platforms for Employees and Customers to individuallyexperience their organization. The organizations that successfully do this will be the winners as the disruptive force of technology shifts the balance of power from companies to both consumers and employees.

What is the difference between Engagement and EX?

Engagement and EX come from 2 different universes. Engagement sprang out of the era of top-down, command and control thinking when management wanted to know if employees were content with current decisions and practices. Engagement surveys essentially ask: “Here’s what we’ve decided to do, how happy are you with these decisions?”

Engagement surveys have often been long lists of things management decided to ask, with a quantitative rating. In the end, companies were ‘guessing’ if they were asking the right questions (why else ask 80-90 questions?). Moreover, Leadership Teams would only run the surveys every 1 or 2 years at most, and if it was a ‘Bad Year’ they would cancel the survey because ‘We already know people are upset.’ Imagine asking your customers for input once every year or two, and only when you know they’re happy.

Multiple studies from leading engagement research companies (Gallup, AonHewitt, Hay, Mercer, WillisTowersWatson, Bersin) all confirm falling engagement scores over several decades. So it seems that focusing on engagement does not deliver promised business value.

EX and Engagement are built differently. EX is built on Design Thinking – where organizations watch and observe and continually ask employees open-ended qualitative questions e.g. “What matters most to you?” rather than guessing “Does X matter more or does Y?”, when it might actually be “none of the above”. EX Pioneers build and test prototypes of Employee Journeys. And similar to CX, also EX puts the Net Promoter Score in the mix.

Design thinking places the issues of the employee at the center of the problem-solving process, and analyzes issues and solutions from her point of view, not the organization’s. EX Pioneers then build and test prototypes of Employee Journeys to remove pain points and elevate the experience. To measure their success, EX Pioneers uses business-centric metrics to measure their success, such as Net Promoter Score, EBIT, Profitability, Growth, and others. They avoid creating metrics that are not tied to business outcomes.

EX has a different goal. EX is really about building insights and an understanding of your employees and giving them a say in shaping the organization they are working for. Just as CX is about designing the organization around customers.

EX gets input on what matters to employees from a variety of sources outside of surveys including face-to-face interviews, focus groups, hackathons, instant feedback apps, and analytics. Together these paint a picture of what employees feel most strongly about, with emotion being a powerful window into behavior.

Figure 1 - Engagement v. Employee Experience

Paul Davies, Head of EX at GE defines EX as “enabling our people to do the best work of their lives through moments that matter”. Cisco, Deloitte and LinkedIn have similar definitions. GE leverages concepts such as personas, design thinking, and storyboards as it curates EX. Paul says, “We don't go an hour without using one of these. We ask our employees, our people leaders and our candidates what matters most to them, we listen to their stories, listening especially for emotions.”

Mark Levy, Head of EX at Airbnb since 2013, says they borrowed the idea from Disney that ‘every frame matters’ in telling employee stories. Cisco holds regular hackathons where employees give input on People processes.

Using all these ongoing insights, EX involves employees in the design and shape of the company, helps identify organizational strengths, and discovers the situations in which people learn and perform best. These insights are being used to restructure (remove silo’s, layers and titles), trim processes, turn rules into employee judgment. All of which helps companies unlock new paths to faster growth, profitability and innovation. 

How to build an EX-Centric Organization?

Our study of existing books and publications did not yield a standard definition of Employee Experience. Nor did it reveal an outline of the steps for designing the Employee Experience – a Playbook. Most importantly, we didn’t find research that matched the depth of the Transformation that EX pioneers say is required to become an ‘EX-Centric Organization.’

Our primary research therefore became a quest to 1) find a common definition, 2) discover an EX Playbook, and 3) understand the kind of Transformation required.

Through interviews with more experienced EX Pioneers, we found that while there are some common elements in designing EX, the particular ingredients are refreshingly unique to their companies, because every culture and business context is unique. In Designing EX, it is not the “What” that matters (e.g. ticking the boxes of 17 or 21 precise EX elements), it is rather the “How”. You need to learn to cook, but the best chefs go by taste, rather than by recipe.EX design is unique to each organization.

This is quite a radical departure from the past when large consultancies scanned hundreds of companies to distill the exact ingredients of ‘good Talent Management’ or ‘Leadership’, and sold assessments and maturity models. Unique EX design means also that the definition of EX varies from company to company. Most organizations look holistically at ‘Workforce’ (FTE’s as well as contract, temporary or ‘Agile’ workers). They look at everyone who interacts with the company from recruits to alumni. Most definitions talk about ‘Holistic end-to-end journeys’ and ‘Designing the best possible experiences for employees’. The main point is that organizations are designing experiences around the employee rather than making employees fit to the organization.

We asked companies about the motives and challenges they have in building EX. Our 250+ Survey Respondents listed their top three most important reasons for building EX:

  1. Business growth
  2. Engagement
  3. Creating competitive advantage

They listed their top four challenges as:

  1. Transforming the Culture – Given the radical shift to an outside-in, bottom-up culture required for successful EX, companies recognize the need for an equally radical transformation.
  2. Leadership mindset – EX pioneers emphasized that the CEO and leaders at all level must be on board for EX to succeed
  3. Complex Organization – Simplification is one of the keys to making EX work
  4. Lack of internal expertise in building the Employee Experience – Given that most companies have never built EX, this is not a surprise. EX Pioneers report using Marketing, Design, Facilities experts.

EX Pioneers cite the top four keys to success:

1.    Top leadership and CEO support – EX touches so many parts of the organization, it needs sponsorship and complete support at the top

2.    The goal is to become a Disruptor – EX Pioneers are convinced EX is a way to become disruptive and gain competitive advantage

3.    EX is the centerpiece of Cultural Transformation – EX requires a complete transformation in the way of thinking and working

4.    Involve many functions outside HR – EX is best when it is not an HR-only effort. EX Pioneers typically combine HR with all the functions that touch Culture and employees e.g. Marketing, Communications, IT, Facilities, etc.

Here are a few other highlights of what we learned:

  • EX Pioneers often start with CX. Customers are a good place to engage the CEO and senior leadership, who then pivot more naturally to seeing employees as customers (a big mindset change!), understanding what is meant by ‘experience’, and looking holistically at ‘Workforce’
  • EX Pioneers make CX and EX the centerpiece of their Transformation as they design everything around customer and employee drivers. An oft-cited goal of Transformation is to become Disrupters.
  • CEO’s of the more progressive and successful EX Pioneers e.g. Adobe and Airbnb promote EX and CX at the top of their agendas because there is such potential for strong business outcomes. Monir Azzouzi, Head of EX Pioneer Maxis, emphasizes that it is a non-starter if the CEO isn’t in the lead and driving key changes. Companies we interviewed who struggled to implement EX and CX did so because they lacked CEO support and sponsorship.
  • Successful EX companies design around customer and workforce, and transform to out-side in, bottom-up thinking. They become more agile and innovative. They adapt and simplify processes and decision-making in response to new customer and employee insights. EX and CX Pioneers become flatter, less hierarchical.
  • EX pioneers e.g. Google, LinkedIn, ING and Intel borrow heavily from Design Thinking, starting with listening on multiple channels; observing, interviewing, feedback tools, hackathons, utilizing employees to identify holistic journeys, listening for feelings and emotions, creating personas, designing experiences which in turn are vetted, tested and prototyped, and ultimately folded into a Digital People Strategy (see Figure 1).
  • EX (just like CX) is designed around a series of questions to get at feelings and behaviors that build on predictive data e.g. Why do our top performers join or leave? Why do our expats leave? Why do some teams outperform the rest?
  • EX Pioneers are constantly testing what they roll out, getting more feedback which is brought back to EX design teams who make changes and then the process starts all over again.
  • EX and CX companies are “insanely” data-driven; they borrow, buy or build analytics capabilities to collect and interpret data. They build seamless and borderless cooperation between different data-intense parts of the company and seek to integrate and connect a wide variety of data points
  • Hot new role: There are only 40-50 Heads of EX and new Heads of EX positions are being created all the time. In some cases, like Airbnb and Adobe, the CHRO role is being replaced by the Head of Employee Experience. We believe that this is the way of the future.
  • The lines between HR and Marketing disappear as they start sharing a common responsibility for both their internal and external brand (Adobe and others have one person who is Head of EX and CX, replacing the CHRO). But it doesn’t stop there – EX Pioneers have Marketing, Design, Facilities Management and Analytics roles in their EX Teams.
  • ·Talent, Learning, Recruiting, etc. realign to reflect holistic journeys. Key processes also are radically redesigned e.g. Performance Management (more ongoing development focus), Learning (bite-sized, Just-in-time), etc.

Figure 2 – Key steps in designing the Employee Experience

Sample of insights from EX Pioneers

We discovered in our interviews with EX Pioneers that companies have many different business cases for investing in the Employee Experience. Here are a few examples of companies we interviewed:

  • Scaling Culture for growth - AirBnB’s CEO Brian Chesky was adamant about scaling their Culture. When the new EX Head Mark Levy brought together the groups touching Culture (Recruiting, Events, Facilities, Real Estate, Design, etc.) to create an End-to-End journey for employees as they had done for customers, Brian liked it because ‘it wasn’t HR!’ AirBnB have used EX to change the way they interview, to judge whether someone is joining for the right reason, assessing how they fit with AirBnB values, and approach to life and work.
  • Regain Market Share and Competitive Advantage - Maxis was the largest, most successful Telecom company in Malaysia but lost their market position to disruptive startups with leaner, better business models. They used EX as a primary way to accelerate growth and build their way back to competitive advantage. Along the way, they flattened from 51 job grades to 4 and removed titles. Their CEO Morten Lundal sits in the same kind of open space as everyone else.
  • Integrate 2 distinct Cultures - Startup Learnvest was built around apps for Millennials to do Financial Planning, and was bought by 160 year old Northwestern Mutual Life, who saw the EX concept in Learnvest as the key to integrating their two distinct cultures. Head of EX Lina Stern says EX starts with the idea that 'Employees are your first customer'. LearnVest wanted to be the destination of choice for innovators – by attracting, engaging and learning to do things differently. They focused on building an enriched and flexible environment, building great data, and helping people engage in immersive experiences e.g. virtual reality offices where people can come together, and having a professional film editor to help you create your own movie. 
  • Digital Strategy – ING began with CEO Ralph Hamers declaring to his business leaders: ‘Become Disrupters before someone disrupts you’. ING developed a clear Digital Strategy for CX, based on Design Thinking understanding the psychology of our clients. Then we asked, if we can do this for our clients, why can’t we do this for our employees? We started by interviewing employees – asking "What are your common pain points, hurdles", defining with them what a good solution looks like. We developed an App to help employees develop at that point of their career where they might have a short term assignment.
  • Raise Productivity - GE recognized that EX was the pathway to raising productivity and getting the best work from their people. Paul Davies, GE’s Head of EX, spent his first 100 days visiting other companies e.g. Airbnb, Disney, Deloitte and Brooklyn Navy Yards, and saw that everyone is doing EX differently, according to what makes sense for them. At GE, they focused on designing the digital and physical space as well as the Culture, putting the employees at the center of what the company does. Paul has a small team with people from Technology, Analytics and data scientists.
  • Restructure under new business model – ABN Amro’s Head of EX, Frank van den Brink says EX and Digital HR are key to success in their 4 ‘Must Win Battles’. Frank and his team have used insights from EX and CX to do away with traditional HR and build a new operating model, based on what they designed for 5 Personas and their Employee Journey.

Final Thoughts

We initiated this study to create an objective view of Employee Experience and develop greater understanding of some critical building blocks as we saw an effort to re-brand and re-purpose other, older concepts e.g. Engagement and Employee Life Cycle or Employee Branding. EX is something different, driven by new generations, disruptive technology, and based on Design Thinking, where organizations are created around people, from the bottom up. It’s about ‘What works here’ vs. large models of ‘What works everywhere’. It’s bigger than HR or the HR Service Model while it completely reshapes HR and breaks down functional walls. 

EX is centered on greater face-to-face interaction. Its goal is to help organizations become more human. Simultaneously, EX is the foundation of a Digital People Strategy.

In the end, we can be customers and employees at the same time. We believe EX is an important step in a journey towards creating the Human Experience ‘HX’ where we seek to understand all people around an organization. 

Where to get more information

These are just a few short excerpts from our interviews and research. We invite you to join us in the coming weeks as we share more insights and details from our study, including an EX Playbook, and stories and lessons learned from EX Pioneers. Here is our schedule of upcoming events:

  • Listen to our presentation from Qualtrics’ Experience Week: Employee Experience: the Winning Company Playbook. Go to: www.experienceweek.com
  • Join our interactive workshops in New York, Zurich and Amsterdam, where we help you develop your own plan for an EX-Centric Organization (the link takes you to our EX/CX Resources page & workshop registration).
  • To receive our full EX Report, arrange a workshop or presentation in your company or to explore how we can help you design an EX-Centric Organization, email me at: elliott.nelson@kennedyfitch.com

Figure 3 – Infographic of Key figures from our Global EX Study

Elliott Nelson is a partner at KennedyFitch, a consulting and search firm building new ways of thinking and practices on the Future of Work. He coaches and advises leaders and organizations on Disruptive Transformations and building EX-Centric Organizations. He is a former head of Talent, Learning and Organization Development at Pfizer, AzkzoNobel, Novartis, Fujitsu-Siemens Computers and Compaq. 

Hannah Olvera Doman is a Research Assistant at KennedyFitch, specializing in studying how companies design and implement the Employee Experience. Hannah is working towards a Bachelors’ Degree in HR at Brigham Young University, where she is also a Board Member and writer for the Marriott Student Review, and leader in the local SHRM Chapter.

[1] “The Employee Experience Advantage: How to Win the War for Talent by Giving Employees the Workspace They Want, They Tools They Need and Culture They Can Celebrate”, Chapters 11 and 12, 2017.