How do you create a business case for employee experience measurement?
We’ll talk about employee experience and some reports and research we found on the significance of it to the company’s business and profits. Also what affects it and then some practical things on how you can make your business case and make it part of your IT budgeting.
Links from the episode,
Deloitte, From employee experience to human experience: Putting meaning back into work
"It’s hard to question why: MIT research shows that enterprises with a top-quartile employee experience achieve twice the innovation, double the customer satisfaction, and 25 percent higher profits than organizations with a bottom-quartile employee experience.“
Building business value with Employee Experience, MIT Research 2017
Prefer to read, here is the transcript
Pasi Nikkanen: Welcome to happy to day podcast. This is a podcast for those who want to improve service experience of internal services. If you use ServiceNow or other enterprise service management system, then this is for you. Today we are recording an episode with Sami Kallio, our CEO and I'm Pasi Nikkanen, our Chief Product Officer. I guess in this episode we actually got a question through Twitter, so can you explain-
Sami Kallio: Yeah, I think it was really relevant question coming from @Joe_the_IT_guy. He was asking us how to create business case for employee experts measurement, and for me this question itself, it's really intriguing because in a way it shows that, challenges us in a way that, in fact we don't think that you can do a business case for only measuring employee experience. You have to think about this as to being a way to prove the outcomes, what you did in all over your IT, each especially of course, in service management but in digital transformation and all that. So, what are we [inaudible 00:01:07]
Pasi Nikkanen: Yeah, I totally agree. I think it's more like the business case for the employee experience itself and the measurement part is just the part that actually justifies and shows you and proves that did you succeed or not.
Sami Kallio: Yeah. Two points, proves what you did and also points your problems where you should be more innovative and then find the [inaudible 00:01:27] find the problem areas. But today we are talking about, anyway, business case of employee experience and you're spending some time to find out different service about this area because of course, we have our own point of view, but we are kind of small player but you'll find something from Deloitte.
Pasi Nikkanen: Yeah. I went through and I actually found a really new report from Deloitte 2019 and they said that one of the biggest challenges we identified this year is the need to improve what is often called, the employee experience and this is something you'll start to hear more and more and maybe a little summary from that report was that, 84% of the respondents accelerated this issue as an important one. 28% identified as one of the top three most urgent issues in 2019, but the interesting thing was that only 9% believed they were very ready to address this issue. I think that also highlights and underlines Joe's question of how do we actually make the business case. I think people know, they start to understand, they start to believe, now they just need ways of how do we actually testify this, how do we make this as a business critical thing?
Sami Kallio: And also to make it practical, how do you start to do things because I think we had a survey last year with SDI that pointed at about the same percentage that this is so important area and so many people thinking that they are not there yet. But I think it's like everybody's planning to do and I hope we can make this episode maybe help a bit, how to start doing things. But you also found another one, MIT?
Pasi Nikkanen: Yeah. It was actually referred for by Deloitte. It was actually a MIT research from 2019 sorry, 2017. They had made a survey about employee experience and also how they defined employee experience. It was like things that make complex work more easy. It wasn't anything I do about employee engagement or HR or anything like that, but actually what is their experience at workplace with complex tasks and so on. They divided the respondents into quartiles and they compared the top quartile and the bottom quartile. What they found was, the company is on the top quartile where had a twice the innovation, doubled the customer satisfaction and 25% creed their profitability. Those are pretty amazing numbers and thinking a lot about MIT, it is not just some marketing or some vendor that made a report but they actually did it with the proper research.
Sami Kallio: I think kind of it also, never scary if you combine these two researches that home. Few are thinking they are doing well and then that results like 25% in more business outcome, that's... There must be something to be done in this area to really get better. I think in MIT, I love two things. It was talking very much about the motivation of people and what motivates them really in work that they have to feel valuable for the environment where they will go. The other thing was that it really was talking much about CIO's role, interchange, that what CIOs have to be doing and what is their kind of a... They should put the whole change and how well [inaudible 00:05:01] how needy that is. I think that's of course one really big challenge for CIOs who are seen as technical people. Not through all of them, but now they have to be people leaders and that's a change.
Pasi Nikkanen: I think there were like four steps and maybe these are the things that IT managers or CIOs should or they were going to recommend how to start tackling this issue. The first one was, I think what we and most of the listeners are dealing with this delivering outstanding employee facing digital capabilities. So, if you think like ServiceNow making work better and what else, you have chat bots automation, so always trying to bring the technology to actually create outstanding capabilities. But then the second was actually to create the channels to continue identifying employee friction points. I think this is the topic, well maybe what Joe is also asking, like the measurement pot. So I think this is what we are addressing as a company, is how do we actually identify the friction points?
How can everybody agree that this is the next step that we need to improve, this is the next place? So, I guess that ties in nicely to the Joe's question. The three and the four were like designer accountability for maintaining focus on employee experience, and I know this one Finn, CIO who always brings his service on us to the room and ask them, "so, how is your service doing?" And then shows it from the dashboard if they don't know. So you need to take it from the CIO level to make sure that you all the time are asking what is the employee experience on all your services, otherwise it is not seen as an important thing. If you ask about budgets and up times and how much can you save more from your service then and work experience, it doesn't have any business value. I guess the last one, communicate the strategic significance of employee experience initiatives. So, this probably ties into digital transformation and that kind of things that actually what all the things that you are doing, you're doing it because of employee experience.
Sami Kallio: Yeah, because of some change. I think it is too often still kind of IT project whatever projects they are. If you talk to the project manager or the owners of the project and make a question to them, what is the target of this project? If they answer to September the 15th something is totally wrong. If they are not even able as a leader of the project say, no, we are changing this and this for the customer or we are changing this for our users, then something is totally wrong.
Pasi Nikkanen: This time it sounds like we need to do totally one episode about digital transformation and why you're doing it. But this was little bit something we found from research point of view, but you go a lot in events, you talk a lot with our customers, with CIOs, so what are the concrete things or how can you actually start doing this in your opinion?
Sami Kallio: Yeah. I can talk about how really the business case based off the data that we collect, but I'd first like to steal reference to the discussion we just had because one, from those events, we are having event with SDI in the UK and Dean Underwood from Virgin Transfers Talking and I think what they did in Virgin Trains with the John Sullivan, the CIO and Dean, how they start every project is really practical thing to go in this direction that MIT is now proposing. They start all projects by doing a kind of a imaginary news article. What is the outcome of this project? That's puts the right mindset. It's not 17th of September. It is something that they want to communicate to the users after the project is done and what they achieved by it.
So, it's totally different mindset. I think the points you listed test from two to four, they are all about this approach. But more practically, if you're trying to talk about how to do a business case of employee experience, if you're listing both [inaudible 00:09:25] most likely know that we measure both the happiness of end users to service management, but also how much they think they lost by incidental request. In our benchmark, if you are doing really well your happiness score is in the level like 75 and then if you are on that level in happiness, then you are losing petty get to one to two hours per ticket.
Pasi Nikkanen: Yeah. Maybe a little definition for the listeners who don't know it. So, what we're talking about is the lost productivity from employees with every service request or everything you go through with your service management system. So every ticket case requests change, whatever it was, we always ask from the employers how much of your time was wasted. [inaudible 00:10:06] please -
Sami Kallio: From the perception of data. But of course we know when talking about these numbers, it is a perception. It is not the fact that number measured by... But anyway, so, I said happy people losing one to two hours per each incident ticket. If they are really unhappy or they dig the other end of our spectrum when your happiness is on level 40, you are losing six to seven and a half hours. So these two, the happiness of end users and the last project, they really correlate very heavily.
So, what is really the business case of employee experience? It is not how efficient you will be in IT. It is how efficient the end users are in your business areas and being able as a provider to them, to prove how much time you saved from their side because of you did some, trigger that transformation or you changed channels or you insert your service desk or you change the services provider but whatever vast action, you did, what was the value of that to their interior experience, because if you think about that one hour to seven and a half hours, you try to optimize your ideas, services and reduce costs in IT compared to saving one hour from end users, the business case is totally different. Perception of the time again, but anyway if only 10 or 20% of that would be true, it is a huge business case.
Pasi Nikkanen: Yeah and I think the perception it's... We have been talking about it earlier as well, but the perception usually for the business critical services is quite accurate because the second, let's say priorities suits them or tools that you're using, you forget it when in parallel you are doing the important stuff, but when you have problems and productivity issues with the important stuff, then you are really reporting kind of that really high numbers that you are [crosstalk 00:11:56]
Sami Kallio: But, if now try to go deeper to that question that showed it. Our first take is an overall example and then let's go deeper, do you like an example of changing your reassignment counts and how to produce that with automation. But in overall we are typically using a gaze for the company that would have 10000 end users. We typically estimate they would have eight tickets per employee, so they would have 80000 tickets per year.
If these company would have average cost of an hour, internal hour would be 50 euros. Five- zero but per hour. If you only save 15 minutes of all those 18000 tickets, you already save 1 million for your business. These numbers are so enormous, but yes, of course, we are not saying that, that one million is the business get wild product, but you can prove to your business that you are now doing things that are saving time for them. So, that is the overall value of your whole service management or service desk, not only measuring employee experience and that's the thing why you exist is because of the end users. So why not to do it for them?
Pasi Nikkanen: I think the MIT report was like double the customer satisfaction. If you make your employees more productive, they will serve your external customers faster. That is how you actually bring value through the service management and the support services.
Sami Kallio: Yeah. It's time for doing the planning for next year. You are budgeting for next year and you're thinking what are the actions you want to have there? Are you renewing your service portal or are you maybe adding chat bots or are you maybe doing some automation work and you're thinking about what is the business case for those and let's use an example of the reassignment counts, because that is one thing and that is related to the automation. So, if you are automating some services, you are maybe getting rid of the reassignment cons by being able to take tickets more directly to the expert or get in your portal. You get more information that it costs. You are faster, you don't have to ask again and again and transfer that to another team. But you get rid of free assignments. So, what we have seen in our pens mark, is that an additional reassignment means on average that you lost 10 points in happiness, but you add one hour in lost productivity.
Pasi Nikkanen: So, every time you bounce ticket from team to team, you waste 50 euros because the employee needs to wait one hour longer.
Sami Kallio: Yeah. And even now think about, if you are by doing some actions, being able to, let's say for 10% of your tickets been able to ready use one reassignment, that's the same example. You had 80000 tickets, that is 8000 tickets now and you reduce one hour. I can't do the mathematics in my head, but 8000 times 50 euros is your business case for that action and that should be the thinking now when you are doing next year's budgeting that they recommend really to start to measure as soon as possible. You understand the starting point and been able after the whatever project you are doing, the proof the business value that, okay there was a value and using that along the way to motivate the team and even some cases get the money from the business because pulling them, okay this is why you do it. This is why you need an investment for changing your ideas into whatever ISTE what you need to do.
Pasi Nikkanen: All right. So, how would we summarize the question for Joe? The important things.
Sami Kallio: So, I would say that, maybe the main part is there is no business case for employee experience measurement as such separately. Yes, you could think about it, that saving time that we have very made servers and all of it. It's not really the case. You have to be thinking about the whole thing. You recognize areas to develop and then you do and being able to show the business case to your business units. So, there is no variety internally. I think there is no business case, but their business case is to be more focused on the same things. You don't do stupid things because you are doing the same thing with your providers and your customers. You focus just on the real problems.
Pasi Nikkanen: I also see it in a way that just the measurement pop is not the way you have that business case. It's the whole management. But you can't manage unless you measure, because then you don't know what you're getting, so, how can you make a business case out of anything. All right. Is that something we want to end this episode on or...
Sami Kallio: Yeah, and Joe would love to hear your comments on this episode. Was this anything you asked us to do for?
Pasi Nikkanen: Yeah. Follow up on Twitter or you can come to our Linkedin page or whatever, ask additional questions. We'll post this episode too, to all the medias and I think I will... There were certain topics from this episode that we realized that, like automation and digital transformation. So, I think those will be one of the next episode that will open even further. How does then the measurement part and the management part fit into those? How do you really tackle those topics? All right. Thank you, Sami.
Sami Kallio: Thank you, Pasi.
Pasi Nikkanen: Stay happy.