Study makes clear the link between great employee experience and performance.
Experience for success.
A compelling and predictive link between employee experience (EX) and employer’s superior financial performance has been identified by Willis Towers Watson. Supported by analytical work, the study found that companies demonstrating a strong EX consistently beat their sector on average by a clear margin of two to four percentage points (pp) across key performance metrics, including return on assets and equity, one-year change in profitability and three-year changes in revenue and profitability. In contrast, companies delivering less effective employee experience consistently underperformed their peers by 1 to 10pp.
The analysis is underpinned by a rigorous data source of employee feedback, including a survey of over 500 companies, close to 50 years of research and a total database approaching 250 million employees.
“Our breakthrough research shows that companies with a strong overall EX outperform their sector peers on top-line growth, profitability growth and returns on assets and equity, not only in the short term, but over the long term too,” explained Stephen Young, global practice leader, Willis Towers Watson Employee Insights. “Meanwhile, companies with poor overall EX will likely underperform their sector. This confirmation that EX sits at the heart of delivering exceptional customer experience and superior financial performance has profound implications for human capital strategy.”
The study measured several performance metrics for companies, including return on equity, one-year change in gross profit and three-year revenue growth, as demonstrated in the chart below. It found that for each financial measure, companies with low employee experience scores also had the poorest financial performance and companies with high employee experience scores were also the best financial performers, for example:
- Return on equity: Low EX companies were -6pp below the index, whereas strong EX companies performed +3pp above the benchmark.
- One-year change in gross profit margin: Low EX companies -10pp below the index, strong EX companies +3pp above the index.
- Three-year revenue growth: Low EX companies -1pp below the index, strong EX companies +4pp above the index.
Patrick Kulesa, senior research director, Willis Towers Watson Research & Innovation Center, said: “The world’s leading organisations are increasingly focusing on employee experience. We have found that the highest performing companies have a very strong focus on how their employees feel about the organisation, from feeling inspired by its purpose and a trust in leadership, to feeling confident in achieving their career aspirations. These factors set organisations apart.”