Putting a dollar value on better employee experience is easy with our free intranet ROI calculator.
Communicators, HR specialists, and leaders have spent decades discussing employee engagement and satisfaction, but the last two years have been dominated by employee experience (EX). As a result, everything from human capital management systems to intranet software have been rebranded as employee experience platforms.
In a sense, any internal system that consistently and frequently connects employees to employers throughout their tenure is an employee experience platform.
So, business leaders have plenty of choice when it comes to products that may improve their employee experience then, but EX can be a nebulous term that relies on hard-to-quantify soft benefits. This poses a challenge because it can obscure the potential return on investment (ROI) of an intranet and make committing to a financial outlay hard to justify.
However, there are three key ways to calculate employee experience ROI and to decide whether implementing a new system is financially worthwhile. Our intranet ROI calculator is a free tool to help you do this.
Before you head off to discover how much a new intranet could save your organization, the following post details why employee experience has suddenly become important and outlines the three financial benefits that intranet software can drive when improving EX.
Employee experience is a growing priority
Accelerated by the pandemic and the paradigmatic shift of knowledge workers from HQ to hybrid, there has been a bleeding of the once formerly solid line between work life and home life. While many organizations have benefitted from the hard work put in by an always-on workforce, it has also resulted in workers themselves demanding better benefits and experiences.
Organizations have responded to this. WTW’s 2021 Employee Experience Survey found that 91% of employers surveyed in Western Europe said that enhancing the employee experience will be an important priority at their organization over the next three years. That was up from just 40% who said it was important prior to the pandemic.
But is it enough of a priority?
Employees want better experiences across all touchpoints and employers want productive, happy employees who don’t leave in the Great Resignation. That trade-off seems so straightforward that it should make the C-Suite invest in tools to enable it.
Having worked with intranet software for over a decade though, I have seen the same question come up countless times in response to similar proposals to improve employee experience through technology; what’s my ROI if I invest in this? Many of Interact’s customers are internal communicators and HR professionals who have encountered the same challenge from CFOs and other senior leaders.
Understandably, most senior leaders want more than promises of “improved experience.” They want to know how lower churn and increased productivity will be seen on the balance sheet. They want to know what the financial value of intranet software is.
Fortunately there are three metrics that can be used to provide that figure: productivity, onboarding, and retention. It’s these three financial markers that our free intranet ROI calculator uses to measure the value of an intranet.
The value of productivity in the ROI calculator
When we talk about productivity, we’re really talking about the value of time. In 2018, an IDC study found that data professionals admitted to losing more than 30% of their time every week searching for data. Finding information quickly and easily remains an issue for complex organizations with multiple applications and data repositories.
A modern intranet can help in terms of productivity because it acts as a single point of entry and a trusted source that enables all employees to self serve when finding information (policies, for example), accomplish tasks such as booking vacation, and resolving common HR and IT queries without contacting colleagues and generating additional work for them.
Data from McKinsey suggests that knowledge workers lose as much as 19% of their time to inefficient searching (more than 90 minutes a day per user, based on a 40-hour week). Thinking about what we might capture back by providing a more effective system then, even a conservative view of 3% (for desk-based) and 2% (for frontline) time savings from improved content and search functionality would equal around 15 minutes a day per user. Over the course of three years the potential savings amount to hundreds of hours captured back for the organization.
By giving employees an enterprise search tool that works well, time and money is saved for the company.
The value of onboarding in the ROI calculator
Creating a smooth and effective onboarding process was challenging for many companies pre-pandemic, so doing it virtually has added extra complexity. Some of the cost of onboarding comes from administrative tasks done by HR or IT, but much of it is caused by a lack of productivity during the first weeks of a new hire’s role.
No matter how good they may be, new employees are less productive in their first three months. Investopedia suggests that employees work at 25% of future capacity in their first month, 50% in their second, and 75% in their third (a 50% average). Employers can minimize the lack of productivity during this time though by using their intranets to orchestrate preboarding and onboarding. This can help new employees complete necessary paperwork, begin getting up to speed faster (e.g., understanding the purpose of their role and exploring relevant videos and documentation), meet new teammates, and enjoy (when combined with other initiatives) a better employee experience.
By initiating new hires seamlessly through an enhanced digital experience you can upskill them quicker and reduce the burden on existing staff. This makes everyone more productive and the organization more profitable. Once again, the time saved is returned to the organization in the form of revenue-driving productivity.
The value of retention in the ROI calculator
The cost of replacing workers when they leave is significant. In fact, conservative estimates suggest that the cost of replacing a single staff member can range from one-half to two times the employee’s annual salary. All in all, voluntary turnover costs US businesses $1 Trillion annually.
A higher than usual employee churn rate can lead directly to additional costs for training and onboarding, but it can also be a sign that low productivity and poor employee engagement have become entrenched within a company. This is bad for those on the low-engagement end because not only do workplaces with high engagement outperform those with low engagement on metrics of customer ratings, profitability, and productivity, but they’re also more likely to retain staff.
One way to protect against a worsening of company culture and the additional costs caused by voluntary turnover is to improve employee experience. By engaging more employees and creating a more satisfied network, businesses stand a better chance of reducing the drain of knowledge and profit.
Providing better internal systems that promote communication and collaboration is one way to improve employee experience and engagement. Modern intranet software supports improved one- and two-way multichannel communications using rich-text media, design, UX, and social media features. By creating a better culture of communication, an organization can help to improve morale and keep employees informed about events and activities.
In the long-term, these engaged employees are less likely to leave and so to cause that additional financial cost.
The benefits of communication are measurable
The value of effective internal communication and of the digital workplace technology that supports it should not be underestimated. In many cases when making a business case for new intranet software, it is not enough to focus solely on soft ROI. Employee experience platform projects can be measured with an intranet ROI calculator and expressed in the language that CEOs and other senior leaders understand and respond to.
Although the value of communication as a central business operation is accepted by CEOs, many comms directors will need to make a more convincing ROI case for the impact of their own work.VMA Group, Beyond Communication
When you are able to present data and success stories together, you can show how critical internal comms is to the success of your organization. With this affirmed, you have a much higher chance of securing investment in your team and the tools you need in the future.