Gallup researchers found companies with engaged workforces have higher earnings per share (EPS). They examined 49 publicly traded companies with EPS data available from 2008-2012 and employee engagement data shared with Gallup. This study found that businesses with a critical mass of engaged employees outperformed their competition.

REF — https://www.gallup.com/workplace/231659/performance-measures-motivate-madden-employees.aspx

Organizations that score in the top 25 percent on employee experience report nearly 3X the return on assets (ROA) and 2X the return on sales (ROS) compared to organizations in the bottom quartile.

Those highlights are from a published white paper by IBM and Globoforce: “The Financial Impact of a Positive Employee Experience” (June, 2018).

Their analysis drew from surveys of several thousand people and subset of 600 respondents from 113 publicly traded companies.

First they found several research-backed drivers of employee experience:

• Belonging – feeling part of a team, group, or organization
• Purpose – understanding why one’s work matters
• Achievement – a sense of accomplishment in the work that is done
• Happiness – the pleasant feeling arising in and around work
• Vigor – the presence of energy, enthusiasm, and excitement at work

This led them to develop the EXI - a measurement of employee experience.

They then looked at ROA (net income to assets) which measures how effectively assets are being employed and ROS (operating income to sales) which measures how efficiently profits are drawn from revenue.

They found the top quartile of employee experience had about 3X the ROA of the bottom quartile: 6.3% to 2.2%.

They found the top quartile of employee experience had about 2X the ROS of the bottom quartile: 16% to 8%.

“Here is an example to explain what these numbers could mean in practice: Imagine if Company ABC’s sales revenue was $600 million and its ROS was 15 percent in 2017. At the same time, Company ABC had an average EXI score of 3.50, measured on a five-point Likert agreement scale via an employee survey. According to our analyses, if Company ABC could increase its EXI score by 0.25 (from 3.50 to 3.75), its ROS could increase from 15 percent to 16.81 percent. Assuming the same sales in 2018, the associated increase in operating income would be $11 million.”

They recommend two primary levers to improve employee experience:

• better work-life balance by providing more opportunities to recharge
• increased recognition for good work and contribution.