Investment in employee experience reduces absenteeism and turnover


PwC study ‘The benefits of investing in people’

By investing in the employee experience, organisations can realise savings of up to 12.6 per cent of their revenue. A positive employee experience increases the productivity of organizations and reduces absenteeism and turnover. The latter are major costs for employers. That’s the conclusion of the PwC study 'The benefits of investing in people'. The report examines the financial returns (expressed as a percentage of turnover) by investing in those aspects which have a major impact on the way people experience their work.

Investing in employee experience really works

‘There is now a reasonable consensus among modern organisations that it makes sense to invest in the employee experience’, says PwC’s people and organisation expert Bastiaan Starink. ‘This report provides hard evidence that investing in employee experience really works. We show that investing in employee experience has a positive influence on the financial performance of organisations. We also make clear that investments in different elements of the employee experience have different effects, which provides a basis for a well-considered mix of interventions.’

Increasing each driver brings different benefit

Investment in separate elements leads to different returns

The report identifies the most important elements that positively influence the employee experience. These include amongst others well-being, training, development opportunities, the (physical) work environment and the autonomy employees have to organise their own work. The PwC researchers then analysed the extent to which investments in each separate element lead to improvements in absenteeism, turnover and productivity and thus to improvements in the financial performance of organizations. Investments in well-being can yield the most: 1.78 per cent of total turnover. Increasing salaries can lead to a yield - expressed as a percentage of turnover - of one per cent. Investment in all elements can lead to a yield of 12.6 per cent of total turnover.

Making the value of a positive employee experience concrete

'With this research, we wanted to make the value of a positive employee experience concrete’, says PwC people and organisation expert Bastiaan Starink. ‘A good employee experience has value. It contributes to an organisation's financial results, and it helps attract and retain talent. We see that the subject is also moving higher up on the agenda of investors, in the sense that a poor employee experience is a risk that destroys the (stock) market value. Apart from that: it’s in the interest of society that employees can reach their retirement age in a good and healthy way and in balance with their private life.'

Increasing return on investment in employee experience

In addition, the report ‘The benefits of investing in people' gives HR managers a basis for estimating the return on investment when planning investments to enhance their employee experience. Starink: ‘Most organisations are aware of the importance of their employee experience. Yet investments often lag behind - either in the size of the investments made or in the return such investments yield. According to a global study, while organizations spend an average of more than 2,200 euros per employee per year on employee experience, only thirteen per cent of employees report that they are fully satisfied with their experience. This is an indication that the money could - and should - be spent more effectively.'

Companies will always have to analyze their own employee experience

The report warns, however, that the outcomes of this report can’t be translated one-to-one to every organisation. Starink: ‘We're not saying that if you invest in well-being now, you'll automatically get the highest return. Organizations will always have to first analyse very carefully how their employees experience the various elements of their work. Effective interventions can only be made on that basis. Investing in factors in which a company is lagging behind, will probably yield a greater return than investing in areas in which a company is already performing well.'

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Bastiaan Starink

Bastiaan Starink

Partner, PwC Netherlands

Tel: +31 (0)65 375 58 28

Jan Willem Velthuijsen

Jan Willem Velthuijsen

Chief Economist, PwC Netherlands

Tel: +31 (0)62 248 32 93