The following is a conversation between Jacob Morgan, author of The Employee Experience Advantage, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.
Denver: As regular listeners of The Business of Giving know, we focus a lot on the corporate culture and office environments of purpose-driven businesses and nonprofit organizations. But we have never spoken to anyone who has really studied the workplace in a rigorous and intentional way. But we will this evening. And it’s going to be with Jacob Morgan, whose recent book is entitled The Employee Experience Advantage: How to Win the War for Talent by Giving Employees the Workspaces They Want, the Tools They Need, and a Culture They Can Celebrate.
Good evening, Jacob, and welcome to The Business of Giving!
Jacob: Thanks for having me. Glad to be here.
Denver: Let’s start, if we can, with employee engagement. There has never been more money spent in trying to create it, yet surveys show that nearly 7 out of 10 people report being disengaged at work. What’s not working here, Jacob?
Jacob: That’s kind of an interesting paradox there if you think about because you would assume that the more money and resources you devote to something, the more problems will improve. But as you pointed out, that’s not the case. Although employee engagement had good intentions, I think what we’re starting to see in most companies is that they treat employee engagement like an adrenaline shot. What I mean by that is: you look at any company, and on Day 1, people typically don’t start working for your company or any other company, for that matter, saying: “This place sucks!” And on Day 1, they are genuinely excited to be there. They want to make an impact. They want to get to know their team, what they’re going to be working on. We’re excited to be there on Day 1.
Over time, slowly, our satisfaction starts to decrease, and at that point, the company says, “Uh-oh, we should do our annual employee engagement survey.” They do the survey. They see they have a low score. And then they say, “We need to bump up our score.” And what’s the quickest way to bump up their score? They introduce some kind of a perk: free food on Monday, hot yoga on Tuesday, bring your dog to work on Wednesday — something! And over the time, the satisfaction temporarily goes back up, and it plummets again, and they introduce another perk. They look at employee engagement as this kind of an adrenaline shot instead of changing any core workplace practices inside of the company. Because that’s the approach they take. We as employees are smart. We know when a company is just trying to extract more from us, so we’re not going to be any more loyal. We’re not going to be willing to contribute any more of ourselves to the company because we know that it feels just like manipulation. I think that’s why we’re having a lot of these problems today.
It’s the organization’s ability to design for those three environments. It’s how you feel working there; it’s the spaces in which you work; and it’s the resources and tools you have access to do your job… that is what shapes the employee experience.
Denver: Those quick fixes never really take hold and never work. In your book, you introduced this notion of the employee experience. Can you explain what the “employee experience” means?
Jacob: Sure. So employee experience is essentially this notion of organizations truly knowing and understanding their people and designing experiences that fall into three environments. So every company around the world can control three environments that shape every experience for every employee that works there. And the three environments are: culture, technology, and physical space. Essentially how you feel, the tools that you have access to do your job, and the physical environment in which you work.
Some people listening to this might say: “Well, what about the work itself?” We always need to give employees challenging work and meaningful work. Not entirely true. I’m sure all of your listeners have had this happen to them. Or at some point, we have all worked for a company where we didn’t like the job, and we quit, and we go work for another company. Oftentimes that company is the same size, same location, same industry. In fact, we’re even doing the exact same type of work. But now all of the sudden, we love our job. So, what changed? It’s not the work. It’s the organization’s ability to design for those three environments. It’s how you feel working there; it’s the spaces in which you work, and it’s the resources and tools you have access to do your job. So, that is what shapes the employee experience. And that is what the basis of the book is about.
If you’re listening to this, and you’re a manager, your job is to help make other people more successful than you. That’s what a coach does. That’s what a mentor does. So that was the most important thing that employees care about.
Denver: Let’s talk about those three things. The culture, which you say accounts for about 40% of the employee experience. What are some of the things that you saw among the companies and organizations that you studied? What did they do to really build and nurture a healthy and robust culture?
Jacob Morgan: Culture is a fascinating one, and there are a lot of different ways that we use to explain corporate culture. A lot of anecdotes, stories. I like to think of corporate culture as the side effects of working for your company. And I think if people frame it in that perspective, they’ll get some more clarity around what this means. So, the reason why I came up with side effects is because again, like everybody else… there was a show that I was watching on TV, and in the middle of the show, there was a commercial that came on for a prescription drug. And the side effects for the prescription drug then came on, and they were terrible side effects. Weight gain, hair loss, skin discoloration, bleeding from the eyes, and in some cases, death.
Denver: Feelings of suicide, I hear all the time, when they’re doing those…
Jacob Morgan: Exactly! I’m thinking: Who in their right mind is going to take that kind of a drug? But then, so many of us around the world work for organizations that have the exact same side effects. Where from working there for a long time, you argue with your spouse, you lose your hair, you gain weight, bleeding from the eyes. We’ve all been to those meetings. So, we know what that’s like. The side effects can be good. Or they can be bad. I like to think of culture as the side effects of working for your company.
There are 10 things that contribute to the cultural environment, and I won’t go through all 10. But the most important one actually is that the managers and executives of the company act like coaches and mentors. What that means is that your leaders at your organization believe that their job is to help make you more successful than they are. If you’re listening to this, and you’re a manager, your job is to help make other people more successful than you. That’s what a coach does. That’s what a mentor does. So that was the most important thing that employees care about. It’s also one of the things that organizations struggle with the most. I can just list a couple others in there. Everyone feels valued. The company is viewed positively, not just by employees, but by the world in general. Diversity and inclusion. All those things are in there.
Denver: The second thing you mentioned was physical space, the environment where people work, and I think that accounts for, let’s say, 30% of the employee experience. Now, I know that every employee cohort is different, but were there some things you saw that were consistent across the better workplaces you examined?
Jacob Morgan: Absolutely! And the physical space is not just a ceiling with four walls. The physical space, at least in the eyes of your employees, represents what your organization stands for. It’s the symbol of the company. So, think of your favorite superhero, whether it’s Batman or Wonder Woman or Spider-Man. They all have their symbols, their logos that represent who they are. Your symbol — at least in the eyes of your employees — is your physical space. It’s not the logo. It’s not the values. It’s the spaces in which employees work. And one of the things that is most important in this category is working in a physical environment or working for a company where their values are physically manifested in the spaces in which employees work. So simple things that you can do: write down all of your values on a sheet of paper, and they may be things like trust, integrity, fun, collaboration. Whatever they are: write them all down, and then walk around your space and see if those values actually come to life. Do you see trust? Do you see collaboration and fun and integrity? If not, then those values are meaningless. It’s just words. It has no impact and no meaning on the company. So, that’s one of the areas that employees care about most.
And then I look at other things such as workplace flexibility and making sure that organizations are actually leveraging multiple workspace options… as opposed to just open versus closed spaces. The values manifested in the space is probably the biggest one.
Technology is the central nervous system of the company.
Denver: I would agree. They have to be animated every single day, and by everybody in the organization. The final leg of the stool was technology, and I love this one. Those are the tools that are available for people to get their job done. Why don’t you speak to that… What tools are popular… and the difference it really makes for the employees that work there.
Jacob: Technology is the central nervous system of the company. That’s a way that I like to look at it. In all of the concepts, if anybody ever hears about the future of work, workplace flexibility, annual performance reviews and getting rid of and changing those things…. We have to remember that none of that is possible without technology. Technology is a huge, huge factor for trying to understand and trying to create, empower the future of work inside of our organization. I like to think of it as the central nervous system of the company that allows the future of work to happen. One of the things that employees care about most in this environment is having tools that are not just focused on the needs of the business, but those that are focusing on the needs of the employees. Not just business requirements, but understanding the needs of the employees. And this essentially usually means human resources and IT teams working together. And that is very, very important for the technology aspect in there.
Technology refers to all sorts of things: devices, hardware, software, internal social network, video conferencing solutions. I mean whatever it is that you have access to to get your job done, that is a part of the technology environment. There are three things that are important here. I touched on one, which is the focusing on the employees. The other two were having technology that is available to everybody, and having technology that is consumer-grade is the other one. That means tools that are so useful and beautiful and valuable, that you would consider using something similar in your personal life if it existed. And that essentially what constitutes the technology environment.
Denver: That’s a wonderful way to look at it. Well, you created, Jacob, an employee experience index, and you ranked 252 companies and organizations that you examined through the 17 attributes across these 3 major areas that you just described. And Facebook came out on top. What was it about them that made them so special and so unique?
Jacob: Yes, FB did indeed come out on top. It was a close race. Google was very, very close right behind them. But all the organizations, there were 9 categories of companies, and the top tier category was called experiential. A lot of them scored in that category. There were 15 companies that scored there. Facebook was one of them. Others included Adobe, Microsoft, Cisco, Accenture. As long as any of them scored in that top experiential category, that’s fantastic. And the fascinating thing was that there were only 15 companies that scored so well. Out of 252, only 15 of them scored in that category.
What they all have in common, whether it’s Facebook or Google, is that they implement these three things, and they focus on these three environments very well. So, there are 17… If you look at all the things under culture, technology, and physical space; there are 17 total attributes that organizations can focus on. Simply put, what separates Facebook and all these other companies from every other one out there is that they do a fantastic job of investing in all of these things. Everything that you look at. They have managers that act as coaches and mentors. They have very strong diversity and inclusion programs, health and wellness programs. Employees are using modern technologies; the spaces leverage multiple workspace options, the managers act like coaches and mentors. They do all of these things, very very well, so that employees that work at Facebook truly want to show up. They don’t feel like they need to show up. And they just scored across the board… not quite perfect, but very, very high in all of those environments.
The assessment is public. Anybody can access this and test their own companies as well. It’s on my site at thefutureorganization.com, and you can see how you rank with Facebook and Google and all these other companies out there.
There clearly is a significant and real ROI from investing in your people.
Denver: Are we able to measure the return on investment for organizations that dedicate resources to the employee experience?
Jacob Morgan: Absolutely! As part of looking at these 252 companies, I looked at the ROI in a couple of different areas. First was anecdotal data… just executives telling me that they believe they saw stuff, but that was still a push in the right direction. The second thing that I looked at was how often these experiential companies — these top 15 companies — how often they appear in best-of lists when compared to other companies? And best-of lists are like: most innovative companies, best places to work, customer satisfaction hall of fame. Those types of best-of lists.
These organizations… depending on the list… are on them 3 times as often, 10 times as often, 40 times as often. Next ROI I looked at was around business metrics… just specifically looking at financial data. And here too, we see that the experiential organizations are on the average 24% smaller, which means that they are doing basically more with less. These organizations on average, their turnover is 40% lower. Their average profit per employee is 4 times higher. Revenue per employee is almost 3 times higher. So, across the board, they are outperforming everybody else. The last thing that I look at was stock price performance, and I took these experiential companies. And almost over a five-year period– a little bit less than 5 years, probably 4 and some change. I compared them against the NASDAQ, the S&P 500, Fortune 100 Best Places to Work, Glassdoor’s Best Places to Work, and several others. Then here too, the experiential organizations completely outperformed and crushed everybody else. There clearly is a significant and real ROI from investing in your people.
Denver: Absolutely. This is certainly not a soft and touchy/feely type of stuff. It really does hit the bottom line. Finally, Jacob. For organizations that want to put into practice some of the recommendations you lay out in this book, where would you suggest they begin?
Jacob: There are a couple of things that I look at in the book, and there are some more concrete steps there with examples. The first thing simply put, put people in positions of power who care. And this is important because we always are used to putting in people in positions of power who make the most money. So, that is not a very good approach. Putting people in positions of power who care is where I would start.
The second thing that you can do is: truly know your people. And you know your people on two levels… at a human level: meaning you have conversations with them. And on a people analytics and data level: meaning you have data about your employees that help guide the decisions that you make inside your company.
The third thing that you can do: treat your organization much more like a laboratory and less like a factory. I create books, and I have podcasts and all sorts of stuff that are good resources. But even with something like that, you can’t just copy what you read in the books. You can’t just copy what Facebook is doing…copy what you hear on a podcast. You need to be able to make decisions based on the data you have about your company. Test things out. Experiment with them. See what works, and see what doesn’t. It’s good to be aware of the reports and the studies and what other companies are doing. But you gotta do what makes sense for you. And the only way that you can figure that out is try to experiment.
Denver: Just blindly replicating never works.
Jacob Morgan: Exactly. So, the companies that run the most experiments most frequently I think are the ones that are really going to win.
Denver: Well. Jacob Morgan, the author of The Employee Experience Advantage: How to Win the War for Talent by Giving Employees the Workspaces they Want, the Tools They Need, and a Culture They Can Celebrate, thanks so much for being with us this evening. It was a real pleasure to have you on the show.
Jacob Morgan: My pleasure. Thanks for having me.
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