The New World of Employee Experience: Where The Engagement Market Is Going

This isn't going to be as exciting as flying cars, I'm sorry we're going to talk about employee engagement. But I think that's why you're all here. I'm sure there's a relationship between flying cars and this. I don't have a lot of time but I'm going to cover is a lot of stuff. Sort of stay tuned. Employee engagement, where is it going? Let me start with the world of work. You've heard a lot about this and you obviously all work so you know what it's like.

It's pretty stressful and there's a lot of technology and actually I think we're in probably the second or third inning of a complete transformation of the way we actually get things done in organizations and a lot of this is going to be changed by AI and technology. It's actually happening faster than I even expected. You can see the data here, almost every CEO and CHRO I talk to is concerned about the change of the nature of jobs and the jobs that people are in because of technology.

The impact of that is not though the technology, it's the nature of the work itself. What you find when you look at the evolution of digitization or the digital transformations is not that companies are becoming more technology based, they're becoming more service oriented. Because when you become a digital organization, you become tethered to your customers and you're talking to them and interacting with them and getting data from them all of the time.

Which means that the people become the company and the product, not the technology. And in fact this data indicates really something really interesting. If you look at the stock market capitalization in the United States, 85% of the stock market today which is obviously very high is intangible assets, which means it's service, IP, brand, software, things that are created by people.

And while that's going on and we're getting more and more people centric as organizations and we're needing more and more people and the unemployment rate is getting lower and lower, we're also suffering from productivity. I think one of the most interesting things I'm going to talk about relative to employee engagement is that employee engagement is really the other side of the coin of productivity.

I'll explain that as I get going. But if you think about the most engaged and excited and empowered times you are at work, it isn't just because your manager was nice to you, it was because you really loved your job and you could get things done every day and you really felt like you were contributing to the organization and the people around you. Productivity has to be part of this. The reason I bring up productivity, it's actually a big problem.

You all know this. We did some research with LinkedIn that found that 28% of professionals, this was 2,800 people, spend a day a week on emails that are not relevant to their current job. That could be 20% of their time. And if you look at what the economists have basically come up with, and this is from the conference board just last month, because we have a reduced fertility rate.

I don't know if y'all know this, but in the United States, Germany, the UK, Japan, most developed economies, we're not having enough children to replace the people that we have. All the growth is taking place in the emerging economies that the only way companies are going to be able to grow over the next couple of years is increasing what is called the quality of labor. The quality of labor means skills, productivity and engagement.

This issue of improving engagement isn't just an HR thing, to win awards and obviously everybody wants to win the great place to work awards, it's actually going to be essential to business growth. And it's even more interesting when you think about this, that almost 50% of the workforce isn't even working for you full time. Not only do you have to build a great workplace for the people that are on your balance sheet that you're paying every day through wages, but the part time contract condition people that take force in the workforce are now becoming 40%, 45%, 50% of the workforce in most organizations.

That's number one. Number two that affects engagement is the issue of skills. We've been talking about this, I've been listening to the other sessions all morning. Let me tell you an interesting thing about skills. Not only is it a CEO level mandate, and it's the number one topic I'm on the minds of HR leaders who in my experience and the research that we're doing, but it's really freaking out the employees too.

The employees, particularly young people, are very aware of the fact that the world they live in is changing very fast. And as you can see from this research, this is from Edelman just in January, people are coming to work saying to you, "If I'm not learning how to be better at my job or to advance to the next job or to improve my skills in this company, maybe I shouldn't be working here. Maybe I should be working at a company that will give me those kinds of skills."

So skills development is a very critical sort of essential need that humans have at work. And we know this and research again shows this, that if you look at economic cycles and we're going through one now, we're probably near the peak. I'm not saying when it's going to stop. But during economic downturns and major disruptions, it's the reinvigoration of skills that brings people back. Now, talking about skills for just one minute.

Interesting thing about skills, it's not all about technical skills. Now, I was in a meeting yesterday in DC with a big company and big talking about their digital skills academy. It's also soft skills. It turns out if you look at the data on the most in demand skills in the San Francisco Bay Area, where we are, which is the most in demand job market in the United States, the number one skill that is the most in demand in San Francisco is oral communications.

It's not machine learning, it's not software, it's not AI, it's not algorithms, it's communicating with people. And so during this period of transformation, during this period of reinvention, during this period of digitization, whatever you want to call it, we have to help people become better at communicating, at listening, at working in teams and those are the things that particularly young people are asking for from their managers.

In fact, if you look at the data on millennials and Gen Z and the younger workforce, people under the age of 35 or so, the thing they want the most from their leaders is mentorship and coaching to make them better at work. That's a very very big topic. In most organizations it's taking place all the time. It's taking place in existing roles as people are up skilling to be better at their jobs.

It's taking place in existing organizations where we're trying to inject new technologies or new approaches or new techniques into the workforce and it's taking place in those jobs that are going away and we all have those jobs that are going away and those people can be moved and then reinvented and re-skilled to take new jobs too. This is a very very essential part of engagement. Just to reinforce that that's true, let me show you this one more piece of data from the LinkedIn study.

In the same study where we asked people where they were spending time, we asked them, what would you look for that would drive you to a new job? And you can see from this study, it's a little hard for me to read it, the number one issue is inability to learn. Let me just remind you that your L&D department or your L&D function is a big partner in the whole issue of employee engagement. The third thing I want to touch on is this big sort of complicated, messy, very very faddish phrase called the employee experience.

Now, as an analyst I do a lot of reading and I talk to a lot of vendors and I try to figure out what's going on in the world of HR. About three or four years ago everybody but the word culture on their product. If you noticed that, that all of a sudden every piece of software and every tool you bought had the word culture stamped on it. This year its employee experience. The survey tools are employee experience tools. The payroll systems are employees experience systems.

Everything's about the employee experience. The reason for that is it's a very very good way of thinking about this issue of the entire experience at work. I talked to you a little about this. We have a situation in most organizations where people really don't know where to spend their time. There's this problem of, in at least certainly all the organizations I to talk to of FOMO. I got these emails, I got these meetings, I've got to go talk to my boss about this.

My wife just called, my kids just texted me and I didn't have head space on this morning so I didn't spend enough time getting. So I'm sort of burning my energy figuring out where I'm going to spend my time. Of course I'm not getting my work done and I'm not exactly that much fun to be around. While I'm doing that, that unfortunately is more or less to what's going on. And added to that is the issue that because of the issues in wages and income inequality and sort of the stagnation of standard of living, a very significant percentage of the workforce is also saying by the way I also have a mortgage payment due this week and I'm not sure if I have enough money in the bank.

All of this stuff gets thrown into this bucket that we call the employee experience. Now, I'm fine with that. That's the way it goes, that's the way we're going to do it. What does the employee experience mean? The guy who actually started the phrase, and I'm pretty sure he's the guy, is Mark Levy who was the head of employee experience at Airbnb. Lives in the Bay Area, he works at Allbirds around the corner from here.

What happened at Airbnb is they were studying the customer and guest and host experience of their customers. They were studying what it was like to go to an Airbnb host, to be a host doing using tools like design thinking to do that. And they were a very fast growing company and they had a lot of contractors and they had full time people. It is a very complex organization. And he said to himself maybe we should do that for our employees, maybe we should do a design thinking exercise to see what it's really like to work here.

And he said I'm going to take a job as the head of employee experience. I don't know if any of you sort of follow this stuff the way I do, but somebody wrote an article about that. I think it was in Forbes and it just took off and all of a sudden every HR department I talked to started a job as the head of the employee experience. By the way, it's a difficult job. If many of you have that job, I'll be happy to help you.

But as we've gotten into it now for a couple of years, what we've begun to realize is that it's really a whole bunch of experiences. There's a whole bunch of things that happen at work that are sort of like death by a thousand cuts. That didn't go well, but I'm going to forget it. And after a while these things add up and people get frustrated and they start looking for another job or they don't participate in the team meeting or they stay home that day.

And so what we're doing now in the HR profession is we're trying to decompose what are these things that happen at work that we can manage and design in a more designed way to improve the employee experience? By the way, this is all about employee engagement. It's just a new word for the same thing. What we're finding and what I'm certainly finding is that many many of the HR programs that we built in the past were actually interruptions from work.

They were things that you would take or go to or adopt or read or listen to, but they sort of took you out of the flow of work. And more and more of this new idea is to solve problems in the flow of work. Now, the problem that you are going to have is where do you stop? I mean, everything we do in HR is part of the employee experience really. I mean, how much you make and whether you're getting along with your boss and what projects you're working on.

We need to put some sense into this. What I've realized is that right now because the job market is so tight especially out here in the San Francisco Bay Area, you guys are just throwing stuff against the wall. I'm not kidding. There's actually about 50 more of these that I didn't list. I have a friend who runs, and I'm not here to criticize you guys, I know how hard this is.

I have a friend that runs a health and benefits company. It's a very successful company. I won't mention the name of the company. He provides benefits programs to most of the tech companies in the Bay Area. And he came to me the other day and he said, "Is it my imagination or are people asking their employers to be like their parents?" I kind of think that's what's happening now. Now, I'm going to get into a little bit and we'll talk a little bit about how we solve all this in a minute.

But I think what's going on is we're applying more and more and more bandaids to these cuts and things that are happening at work and we got to go back to the source. Now, none of these programs are bad ideas. I mean, I think they're all great. The well being industry as it is now called is a $45 billion, $46 billion industry growing faster than the GNP and it's taking over everything.

 I mean, I was just in the back with a friend of mine who's a CHRO at company right here in the Bay Area and they're one of the best known companies in the San Francisco Bay Area. They have a complete end to end program on wellbeing and they're constantly looking at new things to do too. This is one of your challenges in the area of engagement. Now, I want to remind you though, before we go off and buy all those little benefits, that what the research actually shows, as I mentioned, the beginning is all of that as well and good.

Free lunch, free commute. I mean, my daughter works for a company where she actually gets paid to commute. They get the food paid for and all of that stuff is great when you're being recruited, but after you go into the job and you're kind of used to that, what it really comes down to is the job. What this data shows is that when you ask people what is it that really excites you about going to work every day, it is the work. It is the job.

It is having a great job that fulfills your God given gifts in an organization that you feel a part of where you can accomplish things that help the people around you. The progress principle, if you don't believe me, Theresa Amabile is a professor at Harvard. She studied the job logs of people who had worked in all sorts of jobs, retail, manufacturing, healthcare, different white collar, blue collar jobs.

She looked at what they wrote down at the end of the day they liked about their work and the one theme of all of the notes they wrote was the happiest people felt like they had accomplished something at the end of the day, they had gotten something done. That's why I mentioned earlier that I think productivity is such an important part of this equation. What does that mean relative to employee engagement?

Well, as you heard a little bit earlier from the folks at KPMG and I heard a few from the synchrony, from the banking folks, it's actually really complicated. I think the great places to work model, and I was talking to Marcus about this, the head researcher about this a couple of months ago, maybe three or four weeks ago. He was telling me, he says, "We study all of these programs and employee engagement strategies and initiatives and what we found is that there seem to be very little correlation between the programs and the results on the survey."

In other words, if you do all of these things, that's all great. But he said what we basically found at the end of it all was the thing that really mattered the most was a sense of trust of employees feeling that you or your employer or your CEO really does care about them. That gets back to what I just showed you at the beginning. In an economy where 85% of the market cap of most companies is services and IP and brand.

If you don't care about the people, all of these things are just artifacts of HR. It's hard. I mean, every year I look at employee engagement, I see a bell curve like this. It is going up. I mean, I will say interesting thing is over the last three years, the average ratings of employee engagement have gone up almost 9%. That's a big big increase. All of this hard work is paying off, but it's always kind of a bell curve. If you look at the companies on the right, at the very right tail of this data and you ask yourself, and I do this all the time.

At least once a year I go through this data. Who are these companies? Are they tech companies? Are they small companies? Are they new companies? Are they fast growing companies? Are they in a particular location? Is there anything we can spot about them that allows us to learn what we need to do? No patterns. There's absolutely no statistical patterns. The only thing you find about those companies is they are companies where the CEO and the top executives and the leadership seriously and significantly invest in their people during good times and during bad times.

It is going to come down to the basics. Now, one of the things that's very new and I think really important part of this market and maybe this is the reason that we've moved the needle 8% or 9% in the last three years, is this idea of getting feedback. When I worked at IBM in the 1980s which I loved, it was a great company. We did an annual, I think it was called employee opinion survey. I forget what it's called.

It was this gigantic project and every manager in the company, those of you who have worked at IBM probably remember this. Every manager in the company had to look at their results and present them to their teams about why they were what they were compared to their peers, people lost their jobs, but it was once a year. I mean, they did, but it was a very very significant process.

But it was once a year and as you know, things happen very very fast and there's lots of things going on in the workplace that you don't know about and senior leaders don't know about. And so we now have tools and instruments and all sorts of technology that allow us to get data back in real time. Three or four years ago I wrote an article on, I think I called it something like feedback is the killer app.

It was the beginning of the market for these pulse survey tools and companies were telling me, "We're afraid to use that. Nobody will take those. That's too much. We don't want to give people." Actually that's not what happened. These tools have been incredibly successful. I found out this week that amazon.com sends a survey to all of its employees every day. Companies like in the healthcare industry that I've worked with survey their nurses and their practitioners every Friday.

I think Greg Prior's out there somewhere, at workday I think they now do it also every week and I think they use a great place to work IP to do that. You can get incredible amounts of data about what's going on in your workforce and your workplace. And what you find is the things that are actually getting in the way are not necessarily bad managers. Sometimes it's a bad business process, it's bureaucracy, it's the store hasn't been laid out correctly.

We didn't put enough budget into something. There's some IT problem that doesn't work. And what this is doing is it's teaching us in the HR domain how to get more involved in sort of the operational things going on at work to sort of flatten these issues and make work better. What's happening in employee engagement is we're starting to enter a whole new era. I would say employee engagement 1.0 was the once a year engagement survey.

And about 60" or 70% of companies still do it once a year. It's still a pretty high number. That's great to a degree and it's great for benchmarking obviously for great places to work and other things like that. But the data is out of date, things change, you do a re-org, you have an M&A, there's a new product introduction. You need to do them more often. We really moved to this engagement 2.0 where we start asking people for feedback on a much more regular basis.

Funny thing about that is because the HR tech market is so innovative, every tool, every vendor, every platform now has feedback enabling technology in it. My guess is that a lot of you have feedback systems in your company already. You may not be using them enough, but you'll be amazed at the power of having those systems. We're moving to a model in the future which will be much more based on AI where that data will come in and some of it will be anecdotal and textual data and some of it will be filling out forms.

And the system will come back and give people recommendations on what to do. I know Laszlo Bock is out here somewhere running around and he's going to talk a little bit about what they're doing at Humu. ADP has had a product for two years called Compass which actually goes out and asks people for feedback, it asks your peers for feedback on your behavior and your activities at work and then gives you developmental tips all based on Ai.

This is all going to be very very exciting stuff that's going to make HR even more effective at dealing with this issue. The one thing I will say though that I'm going to get to in a minute is that you're going to have to get a sense of trust with your workers, your employees, because if they know that this amount of information is being captured and they don't trust you, it's not going to work out very well.

There's lots of new tools to do this including the tool from great place to work which is built on the great place to work IP. Let me sort of finish up with this idea of trust. Let's suppose we do all of that. We instrument the employee experience, we identify the moments that matter, we get all this feedback, we start to get all sorts of great information about what's going on in our organizations.

Is that going to move the needle? I think so, but I think there's something else and it's very ironic to me that we're sitting up here at a big conference talking about trust the day Michael Cohen published that report. I'm not going to make any comments on that, but it says something about how important this word is. This is data from just a month ago from Edelman and I think everybody in HR should read this.

Edelman does a global survey every year on a sense on sort of citizen trust. And what they found this year is that people are really worried about the system. Whatever the system is, the political system, the economic system, the city, the county, the country, wherever you live, but they trust their employers. We have been given because of the nature of the economy and what's been going on around the world, this honored opportunity to take advantage of the trust people have in us as employers, you as managers or you as an HR leader.

What that means is that we have to take advantage of it. Now, if you look at issues like employee engagement, let me show you some interesting data. This is a study of happiness and it's done around the world. It's a very very interesting piece of research. They ask people to rate their happiness on a scale of 1 to 10. It's like a net promoter score. I looked at the data allows couple of years and if you look at the United States versus the Nordic countries, the United States is about 6%.

Our happiness dropped by about 6% over the last 10 years. The Nordic countries went up by about 11%. They go through and they try to diagnose based on a bunch of other questions, what is contributing to that sense of happiness? They came to the conclusion that's basically four things. It's quality of your health care, your life expectancy, your financial wellbeing, how much money you have, can you pay your bills, send your kids to college?

Your sense of social relationships, your family, your friends, your community, your neighborhood, and your sense of trust in the political institutions in the country in which you live. What the research shows, and I did a little bit of analysis on this, is that in the United States we're healthier than the Nordic countries, our earnings went up higher than the Nordic countries, but our sense of social support has dropped and our sense of trust has dropped and that is the reason that we're less happy.

If you do the math on this particular dataset and try to figure out what we would have to do in the United States to reach the level of happiness in the Nordics, we would have to double our GNP which gets back to the message that Dan mentioned earlier, money is not the answer. It's a sense of relationship, it's a sense of trust and it's a sense of being part of something bigger than yourself. That's really what I want to leave you with.

It turns out, you saw in Michaels data earlier, it pays off. The folks at Edelman actually looked at the stock market change over the last couple of years when we've been through lots of issues and trust in the United States and the companies that are the most trusted, and these are probably also the companies that win the great place to work list, have actually outperformed their peers even in this economy where almost every stock went up.

And lots of other research has proven this going way back. I think this book, if you haven't read it, Firms of Endearment, was really the book that taught me what this was all about. If you give employees a sense of belonging and a sense of trust and a true understanding that you care about them, then your engagement will go up. I think what this has turned into is a new management imperative, a new paradigm.

If you can spend time and show a chart like this to your CEO, and I've shown this chart to a lot of companies and they at it and they're kind of thinking to themselves, where are we on this paradigm? I think at the bottom of it all, if you can instill a sense of belonging, purpose, and trust in your organizations, you're going to see your numbers go up. You're going to see your engagement go up.

You're going to see your employment brand go up, you're going to see your performance go up. The final thing I want to talk about just for one minute is the great place to work organization. I happen to be neighbors with Michael Busch. We happen to live right around the corner from each other. We've had coffee a number of times and I cannot tell you how much I respect what they've done.

Through research, through many many years of studying what really matters in organizations, they have decoded what really makes a difference. And so the fact that you're all at this conference tells me that you're all seeing as much value in it as I am. I am going to spend some time over the next several months developing an academy of content to help you understand that.

One of my jobs as an analyst is also to help educate you so that you can take advantage of all the things that we've learned in the conference today and through all the research that they've done. I think 2019 is going to be a very very exciting year. I hope this has been an educational little inspiration on what's going on in employee engagement and it helps you drive an engagement strategy in your organization as well. Thank you.