Employee experience is the foundation of customer experience

three rectangles stacked on top of each other, suggesting one is built on top of the one below. The words inside each rectangle, from bottom to top, are “employee experience”, “user experience”, and “customer experience”

Throughout tech’s numerous seismic labor-market fluctuations of the past five years, one thing has remained true for companies regardless of their scaling plans; losing key people unexpectedly is enormously expensive and disruptive.

Tech suffers from above average annual turnover rates anyway (20% higher than national stats), and significantly lower average tenure per employee, with even Google and Apple struggling (despite significant spending) to consistently keep hold of their people for longer than two years.

Additionally, even during the darkest of economic downturns, there is a perpetual skills shortage across the core ‘maker’ tech disciplines; product, design and engineering — with the top % of talent being largely immune to wider market downturns, still voraciously sought and fought over by resilient companies.

To make matters worse for leaders and their budgets, at least 1 out of every 5 new hires will leave within 90 days anyway, before even making a contribution to company growth. Replacing them — or anyone who leaves abruptly — can cost the business 2x their salary* (even more for leadership roles).

With the costs of re-hiring so high, and with every company needing to replace 10–20% of its workforce every year just to stay the same size, it should be abundantly clear that investing time and resources in keeping people happy is a lot cheaper than paying to replace them.

*recruitment fees, onboarding costs, search & interview time loss, productivity loss, engagement & morale loss, training & orientation, knowledge loss, cultural impact

It’s been pretty well established by now that making employees happy will mean they stay longer and contribute more to the business, being 20% more productive and 20% less likely to leave than their unhappy colleagues.

‘Engagement’ is the metric companies need to grapple with, as a catch-all term for ‘how happy are our people, and how much do they care about their work.’

Engagement drives performance and retention metrics (alongside a mountain of other positive growth and operational KPIs), which all companies should care about no matter their size. These costs and benefits scale on a 1:1 ratio of headcount (mostly).

Thanks in part to the work of scrappy young consultancies like McKinsey and Deloitte, everyone now knows that improving engagement means investing in employee experience. It turns out, real change in people’s happiness at work has little to do with cultural distractions or perks, and everything to do with; feeling fairly treated, listened to, recognised and rewarded for efforts, doing great work, trusting in leaders, being supported in growth and development, or being able to enjoy life more outside of work.

Companies can’t bribe or distract their people into being more engaged, they actually have to listen to their needs, and demonstrably deliver on them across the employee experience.

Without getting bogged down in semantic debates, these are the typical key phases of an employee’s experience, and some of the associated concepts, context, and outcomes;

a flow diagram, showing the key phases of employee experience in a straight line from left to right, each named phase has its own shape connecting to the next one. The named phases are “attract”, “recruit”, “onboard”, “develop”, “leadership”, “offboard”

Whether a company’s headcount is 20 or 2000, and whether these experiences have been intentionally designed or not, they are happening. The business is preserving or squandering money, time, and employee well-being every day as a percentage of its operational entropy.

Saving 10–20% a year on people-ops budgets, whilst also making everyone happier and more engaged with their work, should be just as appealing to a series A scale-up as it is to Google or Apple. Arguably moreso, considering the likely differences in financial runway and ability to make mistakes.

As of late 2022, the things employees care most about are:

  1. The ability to do what they do best
  2. Greater work-life balance and better personal well-being
  3. Greater stability and job security

Given the nature of these ‘wants’ — subjective, diffuse, multifaceted, complex to deliver and maintain — it should be obvious that there isn’t a single tool, system or design solution for improving employee experience (and, by proxy, boosting engagement, retention, wellbeing, productivity, and so on).

Approaching employee experience as ‘One Big Thing’ to design and build is likely to end badly, if it ever ends at all. Having a clear picture of each individual phase — the stakeholders, concepts, processes, tools, costs, risks, possible outcomes — enables specific targeting of effort and budget to where it will have the intended impact.

a flow diagram showing the key phases of employee experience, in a line from left to right. The named phases are “attract”, “recruit”, “onboard”, “develop”, “leadership” and “offboard”, in chronological order. Underneath that is a rectangle running the width of the diagram, with “culture, feedback and data” written inside, referring to these things being persistent across the employee experience, and not specific to any one phase

A recently funded startup with plans to double or triple headcount should clearly focus on their recruitment & onboarding strategy, process, and tools first, as that is where most time and money risks being wasted. Once teams are designed, built and safely onboarded, budget and focus can switch; keeping them happy, engaged and productive by designing the rest of the employee experience with them, collaboratively.

Conversely, if a company needs to freeze hiring, consolidate teams, and identify areas for efficiency, it’s more important to have a strategy and tools for transparently benchmarking skills and competencies across each team. Grounding organizational (re)design projects in ‘skills’ rather than ‘roles’ is a more effective and fair approach; job titles alone typically fail to capture the total contribution and impact an individual brings to the business, or represent all the different skills a person has.

As the landscape shifts, so should the focus — like all complex organizational challenges, it’s an inherently moving target that requires a modular, iterative, user-centered approach.

To know where to focus effort and ops budgets across the employee experience, it’s important to define two basic things first:

  • What does the business currently need?
  • What do (current/future) employees want?

What the business needs should be pretty easy to agree and prioritize amongst leaders, by thinking through some fundamental questions:

  • What is our 12–18 month People strategy & roadmap? Do we have one?
  • Are we looking to grow our teams or consolidate them?
  • What are our cultural principles and values — are they currently real for our people? Are we meeting our commitments?

What are the outcomes we care most about right now:

  • Faster / cheaper / more effective hiring?
  • Better retention / lower attrition / turnover?
  • Improved engagement / morale / wellbeing?
  • New / better systems & tools for roles, skills, development, career ladders, people-management & people-data, feedback, collaboration, communication etc.

Fundamentally, regardless of what the business wants, if employee needs aren’t fully uncovered and baked into the requirements too, then any new processes or tools introduced are likely to be resented, if not entirely ignored.

User research for employee experience projects should be easy, all the participants already work for the business after all. The challenge is they also probably want to keep their jobs, and not be labeled ‘negative’, so they need to feel safe sharing unfiltered thoughts and feelings about their employers (and also believe that it might actually lead to change, or else good luck getting them to share twice)

The people-ops systems (below) that are going to be created or tinkered with (based on the outcomes sought) will indicate which groups of people and stakeholders to speak to, and what to ask;

  • Recruitment & onboarding
  • Skills growth & development
  • Roles & career paths
  • Feedback & people data
  • Compensation & benefits
  • Communication & alignment
  • Culture & leadership

A big part of the challenge and nuance of this discovery work is that there are three distinct user groups, whose incentives don’t obviously align; the business leaders, the people managers, and the employees.

Finding solutions that meet everybody’s needs is an iterative process that all three groups need to be actively involved in (understanding that they won’t all initially have the vocabulary or experience to do this super well).

For each EX phase / system, we want to know:

  • How do these things currently work for people & the business?
  • Where are the pain points for everyone?
  • What needs aren’t being met?
  • What are the outcomes / metrics / baselines that define improvement?
  • What is the current best-practice / what is the competition doing?
  • What are the relevant People systems, processes, and tools involved? Which ones can be changed / consolidated / improved?

From this, organizations can quickly design and deploy new or improved processes and tools to a small number of users, precisely targeted at the desired outcomes. These can be tested and improved based on real-user feedback, insights, and data, before deploying to more people.

The level of design polish, craft, and formality applied to these “New Things” — the principles, process documents, experience maps, playbooks, tools/apps, sites, libraries, and frameworks — will vary depending on the organizational context.

Regardless, the key measure of success for people-ops initiatives is their ability to fix real problems without adding needless complexity. The more aligned solutions are to real-world experiences, and the more obviously user needs and wants have been uncovered and met, the lower the risk of ‘organ rejection’ by teams.

The sad fact is, most companies don’t take employee experience seriously until the pain of having ignored it is already acute. At scale, cultivating meaningful cultural and organizational change is exponentially slower, more complex and expensive than fixing issues before they become entrenched.

There are illusory short-term business incentives to simply ignoring how employees feel about their work, provided they keep doing it regardless. But not appreciating the differences between ‘doing the work’ and ‘enjoying the work’ is organizational self sabotage. People-ops and employee experience issues at scale are death by a thousand cuts.

And these things don’t stay private for long, with Glassdoor et al providing opportunities for people to vent employer horror stories without losing their jobs. And even if everyone’s too stressed or sad to write blog posts about how terrible things are, Conway’s Law will ensure that customers and users become painfully aware before too long.

“Organizations, who design systems, are constrained to produce designs which are copies of the communication structures of these organizations.”

a diagram illustrating “Conway’s Law”, with two images placed next to each other, one showing the shape of an organisation, and the other, identical image, showing the outputs that organisation will create
In other words; if your product, engineering, and design teams are all miserable, or at each other’s throats, you can expect that to show up in your product before too long

The trick to knowing precisely what to do and where to improve things for people — and so for the business — is to simply ask, and actually do something with the answers.

For groups larger than 100, employee feedback tools and methods need to be intentionally designed; nuanced and consistent, mixing qual and quant data, anonymous and open feedback channels, democratic and individualistic mechanisms and so on (tip: get someone from UXR to help)

But at less than 100 people, the mistake founders typically make is assuming they can intuit how their people feel without help; that proximity and intimacy somehow negates the need for dispassionate interlocutors or tools in obtaining unfiltered feedback.

The idea that people will be more comfortable sharing their unguarded thoughts as to leadership issues, because the leader in question happens to be face to face asking them, is flawed. Without certainty that feedback will be both taken well and lead to change, there’s almost no incentive. Safer to just quietly look for a new job, escape your nightmare CEO, and get a payrise in the process.

And the cost and impact of losing good people is no less for a pre-profit company than at scale. Complacency that the company mission means as much to the new hires as it does to the core team can get expensive quickly.

Creating a culture of feedback takes time and consistent effort, and is best started early, but it shouldn’t be considered altruism or empathy to get things right for people. The deal employees are offering in return is “if you fix these things for us, we’ll care more about your business doing well’’ — which seems fair enough really.

Categorized as UX

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