Employee experience technology has the power to boost employee ROI by improving engagement and productivity. In this article, discover key strategies and tools to quantify and enhance your organization’s return on talent.
It pays to engage your people. This fact should be music to the ears of internal communications teams – who are too often mistaken for cost centers – and thus something to shout from the rooftops.
Employee return on investment (ROI), also called return on talent, measures your organization’s financial profit from employing and investing in your workforce. And because humans are at the heart of the equation, a strong return is far from the product of a transaction. Instead, it demands ongoing engagement from all parties – a leading factor in company health and success. Luckily, communicators are well-positioned to seed and scale experiences that breed lasting excitement.
Ahead, find tips for producing many happy returns – and proving your team’s true value in the process.
Crunch the numbers
In its simplest form, the employee ROI calculation goes something like:
(Net profit generated by employees – total employee costs) / Total employee costs
x 100%
A common variation is “revenue per employee,” which equals total revenue divided by total number of employees. Though this metric is what McKinsey & Company calls a “a blunt instrument” because it’s influenced by many factors beyond productivity, it’s nonetheless one that consistently separates high-performing companies from their competitors, according to the firm’s years of benchmarking data.
Of course, these high-level calculations don’t paint the whole picture. Let’s dive a bit deeper into other dimensions that impact employee ROI.
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Employee ROI: Return on talent
The employee ROI equation can be influenced by factors such as:
- Operating expenses, training investments, and compensation (i.e., wages and benefits)
- Absenteeism (unearned PTO), which amounts to 1.2% of the average employee’s total working days – or 3 days per year – according to HR software vendor 15Five
- Turnover, which can cost a company one-half to two times an exited employee’s salary to refill the position
- Quantifiable evaluative and perception data, such as satisfaction survey responses, performance reviews, tracked goals, and customer satisfaction scores
Many online calculators exist to help you quantify employee ROI across these and more metrics.
ROX: Return on employee experience (EX)
A related measure – and one squarely within a communicator’s purview – is “return on employee experience,” or ROX, which measures a company’s financial profit from investing in EX and engagement strategies.
Returning to our napkin math, the calculus would look like:
(Net profit generated by EX investment – total EX costs) / Total EX costs x 100%
More nuanced calculations might consider the range of engagement metrics that can influence performance and satisfaction at the employee, function, and organization levels, including time spent onboarding, in meetings, and searching for information, along with visits, likes, and shares on employee-facing tech.
ROX is the surest way that communications, culture, and people professionals can boost their organization’s return on talent.
That’s because strong engagement – the product of an enviable employee experience – has an outsized impact on company success. Gallup found that organizations with high employee engagement are 23% more profitable, while poor engagement cost employers $1.9 trillion in lost productivity last year alone.
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Engagement can make or break key dimensions of employee ROI. In its 2024 meta-analysis encompassing more than 300 organizations around the world, Gallup found that companies in the top quartile of engagement saw the following median advantages compared to their counterparts in the bottom quartile:
- 10% better customer loyalty
- 23% more profitability
- 14% more productivity based on production records and evaluations
- 51% lower turnover for organizations in low-turnover industries
- 78% lower absenteeism
- 70% higher wellbeing
They also fared substantially better in terms of safety, quality, and participation.
With such profound stakes, visionary communicators are investing heavily in creating experiences that fuel engagement. According to Edelman’s 2023 Future of Corporate Communications study, 60% of comms leaders identify employee experience as the single most critical area to prioritize in the near term.
Recognize the drivers of (dis)engagement
Creating covetable experiences starts with identifying the factors that fuel – or stall – engagement.
As an example, McKinsey found that organizations can save up to an estimated $56 million annually by resolving these six drivers of disengagement:
- Inadequate resource accessibility
- Lack of geographic ties and travel demands
- Unsustainable work expectations
- Uncaring and uninspiring leaders
- Lack of support for employee health and wellbeing
- Non-inclusive and unwelcoming community
Further, the experiences likeliest to produce strong engagement, according to Gallup, are:
- Purpose
- Development
- A focus on strengths
- Ongoing conversations
- A caring manager
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Optimize your digital workplace to increase employee ROI
Creating a thriving digital workplace can help you reinforce drivers – and avoid detours – in employee engagement.
Investing in the right employee experience (EX) tools can lead to increased productivity and performance by providing employees with the resources and support they need to drive efficiency and contribute to better business outcomes.
See the table below for an idea of EX software features that can enable each core driver of engagement.
| Driver | Detours | Example features |
| Purpose | Lack of geographic ties and travel demands Lack of support for employee health and wellbeing Non-inclusive and unwelcoming community | Content managementMobile intranet Personalization Social intranet Workplace search |
| Development | Inadequate resource accessibility Unsustainable work expectations | Content managementMobile intranetPeople directory |
| Ongoing conversations | Lack of support for employee health and wellbeing Unsustainable work expectations | CommunitiesForumsIdea managementMobile intranetPeople directoryPersonasSocial intranet Surveys |
| A focus on strengths | Uncaring and uninspiring leaders Unsustainable work expectations | Rewards and recognition |
| A caring manager | Uncaring and uninspiring leaders | CommunitiesContent management Social intranet |
Let’s dive deeper into each driver and its digital workplace enablers.
Purpose
Nearly two-thirds of executives from highly regarded organizations attribute 30% or more of their companies’ market value to culture, making it the “most underrated” determinant of “a company’s future success,” Korn Ferry found. When it comes to cultivating a culture imbued with purpose, collective and individual experiences are equally important.
Shared values
According to Gallup, only 27% of U.S. employees strongly believe in their organization’s values, and less than half even know what those values are. This disconnect can lead to checking out: One in five employees feels disengaged from their work when they aren’t connected to the company or culture, says collaboration technology vendor Owl Labs.
Look for employee experience software that can broaden access to tools and resources, thereby radiating your organization’s commitment to not only a clear mission, but also top values of today’s workers, such as sustainability and inclusion.
EX software features like content creation tools, enterprise search, topic tags, and social functionality can help improve employee ROI through creation, organization, and promotion of a knowledge base of resources and inspiration that embeds and radiates your values.
A mobile app, meanwhile, can allow deskless workers – who make up 80% of the global workforce – to stay connected to colleagues, leaders, and your organization’s north star, whether they’re on the factory floor making your products or the open road delivering them to customers.
Personal clarity
To feel a sense of purpose and fulfillment at work, employees must understand their role in achieving the company’s mission.
Personalization features in an EX platform can boost employee ROI by clarifying, reinforcing, and energizing your people around their distinctive contributions. Organizations can deliver on it through personas, permissions, and built-in intelligence, ensuring relevant content is delivered to each employee based on factors including role, location, and preference.
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Profiles and past interactions, for example, can help pinpoint and push relevant news, announcements, and resources to everyone, as well as ensure content being created and shared by active employees is reaching audiences interested in the subject matter.
An AI-driven recommendation engine, meanwhile, can facilitate the automatic discovery of new content, while geofences – virtual perimeters set up around specific locations – can ensure employees see only content intended for them each time they log on. This can be especially helpful for individuals who travel frequently and require different content depending on their context (e.g., salespeople or senior leaders on location visits).
Development
According to McKinsey, one of the top ways to build a higher-return workforce is to focus L&D efforts on skill-based learning journeys, which can be “more cost-effective than building traditional cohort- or role-based journeys.” Plus, reskilling current employees for new opportunities cuts down on the recruiting costs that so commonly impact employee ROI.
Here again, personalization can play a role. “The most effective organizations encourage personalized, adaptive learning,” McKinsey explains. “Employees are motivated to own their journeys by deciding which skills and areas of expertise they want to focus on. They are given feedback, along with coaching and peer-learning opportunities, and they are supported by a digital ecosystem that can help them track their progress over time.”
Enabling this dynamic experience can be tough in today’s ever-more distributed world of work: According to Owl Labs, nearly half (48%) of hybrid workers believe they’re missing out on impromptu feedback and development that could hamper their career growth.
So look for software features that spark in-the-moment learning and collaboration, such as a comprehensive knowledge base of courses and materials, a searchable directory of in-house experts to call up at a moment’s notice, lively discussion forums that allow team members to crowdsource precise solutions to their queries, and a mobile app that makes it all available on the go.
A focus on strengths
Strengths-based feedback is critical to increasing employee ROI through engagement. According to Gallup, employees who get enough information on goals and successes are 2.8 times more likely to be engaged. But it’s far too rare an experience: One of the hardest statements for an employee to strongly agree with is, “In the past seven days, I have received praise or recognition for doing good work” (Gallup again).
To cement and scale a culture of recognition, look for EX tools that reward good work and citizenship with points that can be redeemed for gifts and distinctions.
Ongoing conversations
The ability to use talent feedback in transformational ways will set the best companies and communications leaders apart in the future of work. The ones “to watch will be those that actively listen to their employees, harness the power of their sentiments and insights, transparently communicate next steps, and drive meaningful change while involving others in the journey,” says Julia Christenson, Edelman’s U.S. Chair of Employee Experience.
Listening
Employee listening, also called continuous listening, involves the ongoing capture, analysis, and actioning of employee sentiment. In short, it’s how you tap into how your people are doing, individually and collectively, so you can respond in smart and helpful ways. And it can be a powerful driver of employee ROI.
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This practice can also boost goodwill and the bottom line. According to The Workforce Institute at UKG, 74% of employees say they’re more effective and engaged when they feel heard. And yet it’s an experience that’s markedly uncommon: Only 30% of U.S. employees strongly believe that their opinions count at work, Gallup says.
To help power your listening strategy, look for platform features like:
- Surveys and questionnaires
- Social intranet and advocacy features
- Idea management
- Personalized content
Just don’t overdo it on the outreach. Gallup found that employee engagement efforts are prone to failure when they introduce too much surveying or complexity.
In its 2023 corporate communications report, Edelman points to a few creative ways to solicit and action feedback, including ideas jams that empower all people to weigh in on important decision points and councils that allow frontline workers to regularly engage senior leadership.
Also consider taking your listening to the next level with employee activation.In this emerging practice, your employees become catalysts of company culture, strategy, and reputation through your systematic collection, synthesis, and application of their insight and enthusiasm. It’s a propulsive combination of listening, empowerment, and advocacy that’ll mark the future of an engaged workforce and a peerless employee experience.
Collaboration and knowledge sharing
“Today’s technology estates are complex and poorly integrated, with workflows that span multiple applications and domains,” Scalable Software notes of its 2024 Digital Employee Experience (DEX) Report findings. “Employees are burdened with too many apps, and to make matters worse, most don’t even know how or why to use what they’ve been given.”
To reduce such digital friction and facilitate seamless collaboration, look for an EX platform that lets you:
- Cut through the digital glut with features like single sign-on (SSO) that eliminate the need to remember numerous passwords; biometric authentication options, such as Touch and FaceID, that improve speed, security, and ease of use; and intuitive integrations that curate access – and guide attention – to a single source of truth
- Create a one-stop shop for core tools, processes, policies, documents, and other information that your employees use the most, all quickly discoverable with built-in intelligence and enterprise search functionality
- Ensure your entire workforce – including members who are on the go far more often than they are at a desk – to instantly access the tools, information, and colleague connection they need from a shared digital headquarters via a mobile intranet and people directory
- Promote seamless, accessible information sharing through features like multilanguage translation of text communications, alt-text generation for images, automatic captioning of video content, and text-to-audio conversion for a podcast-like way to digest company news
Connection
According to Owl Labs, more than a third of managers (34%) who lead remote or hybrid teams cite maintaining cultural connection, team camaraderie, and communication as a top concern. An EX platform’s social features can forge strong bonds across ever-more distributed workforces.
Look for social media functionality that makes your platform sticky and keeps your people in conversation. Think @mentioning, #hashtagging, image-friendly newsfeeds, commenting, sharing, and gamification. Also curate forums, discussion boards, and communities of practice that giveemployees a place to connect over specific challenges or interests.
A caring manager
As the adage goes, people leave managers, not jobs. Though reality holds more nuance, the link between manager and employee experience is inextricable.
McKinsey research on organizational health shows that leaders who effectively “run the place” – e.g., by making good decisions, allocating the right resources, and leading thriving teams – build healthier organizations, which, in turn, deliver three times the total shareholder returns compared to unhealthy organizations.
Managers influence all the dimensions of employee experience discussed so far. EX software can facilitate their success through features that allow them to do things like:
- Foster development by curating goals-focused learning resources and making career-building connections with the help of a people directory
- Cultivate team camaraderie through communities, forums, and social capabilities
- Promote smooth transitions and healthy dynamics through onboarding and enrollment features that get newcomers up to speed quickly
Radiating your impact on employee ROI
Using hard data to measure and enhance your employee experience (EX) initiatives can significantly boost your employee ROI. As an example, in addition to a free intranet ROI calculator and guide, Interact has advanced analytics and integrations that help organizations deliver on numerous dimensions of experience and engagement.
As you use such enablers, synthesize the data they collect to quantify your impact on your organization’s overall return on talent. It’s a far more dynamic and human affair than your standard ROI calculation – and it ROX even harder when you get it right.
