Bonus Episode: How to Scale Employee Experience (Interview with Volker Jacobs, CEO at TI People)
Employee experience is pretty much the biggest topic in HR and it's set to get even bigger in 2020 so to kick off the Digital HR Leaders podcast this year, we thought we'd start with a special episode on how to scale employee experience.
Our guest, Volker Jacobs is the co-founder and CEO of TI People, and he is one of the world's leading authorities on employee experience having worked in this space for three and a half years, during which time TI People have worked with several global companies to develop, implement, and scale EX programs.
You can listen below or by visiting the podcast website here.
TI people recently published a study on the state of employee experience, which combines the results of a survey of CEOs and CHROs, with practical guidance on how to build scalable EX programs for organisations.
In our conversation, Volker and I discuss:
Why employee experience is growing in importance, who owns it and why a change in manager mindset is required to implement EX properly
How to measure EX as well as how to manage and scale it in large organisations
How to move from strategy to execution by integrating initiatives in areas like employee listening, journey mapping, and digital technology
As with all our guests, we look into the crystal ball and ponder what the role of HR will be in 2025
This episode is a must listen for CHROs, employee experience and people analytics leaders, and anyone interested in how employee experience can drive value for business leaders, the workforce, and help reshape HR for the new decade.
Interview Transcript
David Green: Today. I am delighted to welcome Volker Jacobs, CEO and co-founder of TI People to the Digital HR Leaders Podcast series.
Welcome to the show, Volker.
Volker Jacobs: Thank you, David. I'm honoured to be here.
David Green: Can you provide our listeners with a quick introduction to your background and what you're building at TI People?
Volker Jacobs: Very good, TI People you can think of as an experience company.
So, we are here to help provide better experience for people at work. And we believe that people deserve better experiences at work. But at the same time, we know that companies that provide them are more successful. So, we provide to companies three things. Number one, we bring the data that it takes to manage good experiences.
We have deep rooted HR expertise that it also takes to be done and deliver experiences. And then number three, we help with human centred design of better experiences.
David Green: Over the years you've been building the business and prior to that you're widely acknowledged as one of the leading authorities now I think on employee experience, and I would say that employee experience is probably the biggest topic within HR at the moment.
How should an organisation think about getting started in employee experience and how is it different from engagement? Because I think there's still some confusion there.
Volker Jacobs: Thank you for the question. Of course, engagement and experience are linked. So, when we asked the CHROs about how they would describe the link, it is engagement is the result where experience is the cause.
What that means is that we've measured engagement for many, many years. We have sophisticated models in place to describe how engagement defined as discretionary effort and a high intent to stay with the company. How that drives productivity. Yet, we have not done a very good job at closing that feedback loop, so we can measure it, but it's hard to drive action.
Especially to drive action timely, so, fast. And that is where employee experience comes in. It's directly linked to the moment where the experience happens that drives engagement and as we are now focusing, we're focusing on that moment as such. We can drive more action faster. And that's how the two are linked together.
And yes, it is indeed a key theme for the year. and also, you can almost not go to any HR conference these days without having 10 or 15 people talk at you about experience. And, the thing though is, it's a blurry term at the moment. It's uncharted territory for many, and it is leading to lots of misconceptions about it.
So that is probably the biggest thing that we have to find a playbook for employee experience that works for large organisations that especially works at scale for these organisations. And that's probably the biggest task that we are tasked with at the moment.
David Green: So, I suppose in many respects there's similarities with marketing, because obviously they've been driving and measuring the customer experience for years.
So, there's plenty we can learn from our friends in marketing.
Volker Jacobs: Yes, indeed, I agree. They are 15 years ahead. And marketing or new marketing is all about, customer centricity. And there's one caveat, there's one difference. In marketing, we are really trying to understand 360, what the future buying behaviour of an individual is. In employee experience it's not so much about that. So, we're not there to describe or understand in full what the future work behaviour of employees is. What we want to understand is where the experience breaks. So, we are not providing, a great impact on engagement or a great effortlessness of the work. And that's the difference between the two. But other than that, of course, many EX teams that we see evolve, they are staffed partly by CX, customer experience people.
David Green: Okay. Which makes sense. I guess a bit like with analytics where there a lot of people in people analytics roles, have worked in other analytics roles within the organisation.
Volker Jacobs: Exactly. Exactly.
David Green: And who owns employee experience? Because If I think about, as an employee in days of yore, some of the experiences I received weren't delivered by HR. but it seems that HR is getting the responsibility.
Volker Jacobs: Yeah. It's a very good question. Thank you for that. So, what we know is that if you ask CEOs whom they would give the theme employee experience to, nine out of 10 are answering, it goes to HR.
So the theme is landing on the desk of the CHRO. We've built a model for employee experience. It is comprised of 285 touchpoints. Between an individual and the organisation he or she works for. And it's interesting, of those 285, 60%, massively influenceable by the HR function. So it seems like, yeah, it's HR. Yet, if you look into the more impactful of those 285, we have identified 36 that have a disproportionate impact on engagement and on effortlessness. If you look at these 36 of the 23 moments of truth driving the engagement, 22 are owned by line managers. And only one is owned by HR.
So in short, although at first sight, it may seem that HR has a strong influence on the experience as such, for the very important moments where experiences happen, HR does not have a direct impact. So, it's clearly owned by the business, the theme of employee experience, which makes HR the facilitator of a model that drives it.
David Green: The conductor of the orchestra perhaps.
Volker Jacobs: Yeah, I think at best. That's it.
David Green: And a great opportunity I guess for HR to really help increase its impact both for the business and to the workforce as well.
Volker Jacobs: Exactly. So, we've tried to become business partners at eye level in HR for many, many years now. And this actually is the real opportunity to become a real business partner because as I said, the most important experiences are delivered by the business at the direct managers of people.
So, with that as an ambition and a KPI for HR, we are forced to help these managers provide better experiences, which is the business impact that we can provide.
David Green: There's more about those touch points in the State of Employee Experience report, which you've just published and I'm going to ask you for the key findings of the report, but it combines a survey of, I think, of CEOs, CHROs people actually doing the work and the summary of some of your findings that you've had over the last two or three years of since you set up TI people. So, it's almost a playbook for employee experience and a how to guide I think for organisations, which I think makes it so valuable. But what were the key findings of the report?
Volker Jacobs: Yeah, I think the report, there are four really prescriptive findings. So, what to do, findings. And then there's maybe one conclusion that we can also find in the data that we put together. Finding number one is EX is a CEO topic. So that's interesting. 75% of CEOs of global 2000 companies are telling us that they agree employee experience should be a company priority. They are looking at it a little bit like the quote that we're using from Richard Branson who says customers do not come first. Employees come first. If you take care of your employees, they'll take care of your customers. So that's a little bit the CEO thinking, but it goes far beyond a catchy quote.
What's underneath it is a shift, a fundamental shift of the priorities of CEOs. In the past, large company CEOs have been focused a lot at total shareholder return. That was the major KPI and focus point. Now we are moving towards a world where almost total shareholder return is only one out of five priorities.
It's customers, it's employees, it's suppliers. It's the communities that companies operate in and the shareholders. So relatively, employees become much more important in the CEO's view. And that's why three out of four CEOs are saying this is a company priority. So that's finding number one. Finding number two is about the very tangible part of the business value and employee experience provides two kinds of business value.
The first one is super tangible and almost accepted by the CFO, which is employee experience managed well will provide a more effortless experience to people at work and through that effortlessness, we are giving time back to managers and to employees, and our research finds that we can give back 100 hours per individual per year, which for a 20,000 people organisation that operates, in OECD countries, that is more than 70 million US dollars savings per year through this path number one, the effortlessness.
David Green: It's two and half weeks basically isn't it, and that's a 40-hour week as well.
Volker Jacobs: So, it's really impactful. So, that's one thing. The finding number three is looking into the other avenue of business value.
That's how experiences drive engagement. So, the total business value of EX, 55% of that is through higher engagement. So, employee experience drives the sense of belonging and the meaning of work, that drives engagement and that drives discretionary effort and intent to stay with the company and through that business value.
That makes another 80 million savings potential for a 20,000 people organisation. That's finding number three and finding number four is how EX is set up in organisations, and on average, our 20,000 people company, they would set EX up with a central team of three people. They all define a Head of EX, and that Head of EX would report either directly to the CHRO or to direct report of the CHRO.
So that's the level and the size of the average team how to get started with employee experience management. And the average annual budget increase for these teams is 13%. So that's a little bit how you can look at the delivery part of employee experience. And then there's one fifth interesting thing that led us to the title of the research, the title is three, two, one on the launchpad. We found that as I mentioned, 75% of CEOs think it should be a company priority. They put it on the desk of the CHRO this year, 2019, 55% of CHROs have made it a stated priority. So, it's written somewhere in the people's strategy or the annual roadmap of HR.
It's written somewhere that EX is a priority for them, yet only 14% can show us their roadmap. So only 14% have dedicated milestones, responsibilities, and budget attached or underpinning that priority in 2019. There's clearly a strategy to execution gap that we see and that we believe will be closed in 2020.
David Green: Yeah. And it's interesting because obviously I spend quite a lot of time with big companies and speaking to their People Analytics leaders and some of their HR leadership team. And I definitely sense that it's definitely on the strategy. People are trying to almost design what their approach to EX should be.
But the number of organisations who can actually, as you said, demonstrate that they are executing on it is still relatively low. But I suspect that will be very different if you do that research again next year.
Very interesting. And I think that's obviously some of the key learnings coming from the research, but I think what I really like about the report as well, you basically put some of the key learnings that you found about employee experience that you've uncovered in the three and a half year journey of TI people.
Which companies are doing it well? And what are the key learnings that you've found? Outside the main findings of the report?
Volker Jacobs: So just to give you some background, the last three years in TI People have been mainly about co-creation. So, in the employee experience arena, we've identified common problems.
And then we've defined problem statements and then we've put together co-creation groups across 10 to 20 companies each and have tried in co-creation to design solutions for these problems. And if you put the three years into buckets, I'd say year number one was all about framework. So we needed to understand what's the employee journey, what's a moment, what's a touch point?
What does a good touch point experience look like? What are personas, employee personas, how many do you need? So all that, defining the framework, a language. That is year number one, co-creation. Co-creation year number two was all about measurement. How can I measure experience? What's the KPI?
David Green: A silver bullet
Volker Jacobs: From an analytics perspective it's a silver bullet. It's part of the equation, I'd say, so year number two was how do I measure? What do I measure? What's the KPI? So what's the technique of measurement and how far can we go? Can we explain what's not? So that's year number two. And now year number three.
I think it's all about delivering experiences at scale. So, the scale part is what's blocking companies these days. They have their framework. They know how to listen to employee experience in some shape or form, but it's really hard to design and deliver at scale in these large organisations. So that is probably the journey of learnings and experiences that we as a company have had in co-creation with our client companies.
I'd say the arena has changed over the last three years. And of course, companies that are doing it well, there are some that have really done a good job in laying a foundation and building their frameworks within the framework, now they are probably, most of them are in the stage of experimenting and running pilot projects. Just to point to a couple of them. I'd say Bosch for example, in the technology and engineering space, 380,000 people across the world, they have done a pretty good job in building an experience infrastructure throughout the company, not only for employee experience, but also customer experience.
So the experience infrastructure is there, and then they've built together with us an employee experience framework. And within that framework, they have now defined their roadmap and are now executing on it. So that's a very good example, I'd say for a very large organisation that now goes from foundation to scale, in a robust roadmap.
And then, we are working in the US with a very large health insurance provider. I think the way they have set this up is it's very compelling. So, they have really, from the CEO down, defined the mandate and defined the operating model by which to scale employee experience up. I think that's also an interesting way a large organisation could go about it.
And also in the blue collar space, we've found smart ways of companies like Alex Lee who have created better experiences, for example, for their warehouse workers and through that have proven productivity impact, so that's three examples of what I see that companies are doing
David Green: So Volker, with the work we're doing at Insight222 I'm seeing an increasing number of people analytics teams getting involved in EX. In fact, some of them are even having the responsibility for EX as well. What do you believe the role of analytics is in employee experience?
Volker Jacobs: I mean, I get questions like these every week. I'm looking at analytics and employee experience as siblings, almost.
So I'd say analytics is the firstborn. It's probably five years older than EX. And, with that, the older brother or sister can offer ways to listen to experiences, to measure them, ways to use advanced ways of pulse checks and digital listening and natural language processing to actually bring the data that describes what the experience is that is created in the moment. In the moment when it happens. So, in the moment measurement of experiences is the big value that people analytics can bring to the EX space. And a younger brother or sister, EX can give back by helping analytics teams to actually close the feedback loop. I was referring to it earlier. We have in the engagement space, measured a lot, but little action was driven by it, with EX and the new focus on moments where good or bad experience is created, we have the big opportunity to act on the data that we collect, and that is what EX can give back to analytics. And that's how I think these siblings can live together very well.
David Green: And the ‘Act’ part is of course the most important part, because you can have the most sophisticated analytics and most sophisticated program, but if you don't do anything with the insights...
Volker Jacobs: Indeed. I mean in Insight222 we're talking a lot about influential skills of analytics leaders and so forth with employee experience attached to that, that can be a really powerful force then.
David Green: And where are... side question for that because analytics increasingly is becoming a kind of vertical within HR, I'd argue it should be a horizontal. But anyway, and probably the same applies to EX, where are you seeing it being positioned by organisations, is it reporting directly to the CHRO or is it somewhere else?
Volker Jacobs: Yeah, so nine out of 10 will have EX report into HR and, in a global 2000 company it's either a direct report to the CHRO or it's a report of a direct report of the CHRO. So, it's C minus one or C minus two, level wise
David Green: And probably similar as I believe with people analytics, you believe that that should go up to be reporting directly to the CHRO at some point because then you get the airtime, the investment and the visibility?
Volker Jacobs: It's true, but let's be realistic. We have to earn our right to be a direct report of the CHRO. And as I said, it's probably a journey that we're on. So we have to build our foundations. We have to have approved projects in place so we can prove the business value that we're providing.
And then. Well, I think we have a very strong argument for being direct reports and having lots of business impact through direct interactions with the business.
David Green: And you're helping a lot of organisations have more impact with their EX programs. You've worked with a lot over the last three, three and a half years.
Can you share a couple of case studies with our listeners of the type of work you do, but also how an organisation can move through that process that you described earlier and get to those deliverables?
Volker Jacobs: Yeah, let's just take an oil company. So it's an oil company and its situation was, they had problems in a very tight talent market for oil exploration engineers, it is a very tight market for it. And, so they wanted to create better candidate experiences. So they had a higher conversion rate between applicants and then contracts. And, what we did is we, we tried to identify problem spaces, tried to identify the moments where the actual candidate experience is created.
And one of those moments is the first manager interview. That's a moment of truth. It has a disproportionate impact on the attraction of people. So, we measured it in the moment. So we measured right after the first manager interview, measured the experience that people had, and the company was really surprised by the results, because the experience was so good.
It was extra ordinary good. These people felt so honoured to have a real expert in the interview that they could talk to because it's such a small field, right? It's such an expert field. There were comments that we collected, verbatim and there were comments like, I wished the interview was longer.
So that was really cool. And what turned out to be the case is that this first manager interview was the one biggest driver of attraction for candidates in the field. In parallel, the same company was about to change their recruitment process, so they wanted to bring in artificial intelligence and video interviewing to make the recruitment process faster because they thought that was a big driver of attraction and conversion rate in recruitment.
Now that they saw that this first manager interview was the biggest, the one biggest driver of attraction. They said, okay, we will change the recruitment process, but not for this talent segment. That's a surprising finding, but that's a typical one, whenever you ask people in the moment about the experience, not a month after or a quarter after, but in the moment, I have never had a company case where there were no surprises.
That's actually a cool thing. Another case study, a very different case study is we are working with, 12 international financial services companies. These 12 companies together are defining the EXI employee experience index for the financial services industry. So why the hell would these companies do that together?
They're all mandated by the CHRO and they are bringing the Head of People Analytics and the Head of EX into this co-creation group. And the aim of that is to create a board level KPI that is validated to show the actual experience and the impact it has on company performance. That's a high goal and these 12 companies together think that in co-creation, they will get there faster. And with more validation power behind it. And that I think is a very good example for the business value part of employee experience. If 12 companies that compete on the market together define a way to create or provide superior employee experience, that says something. That the aim of the companies, I mean, financial services, they are all under huge digital transformation. There's a lot going on there, but for them to put their heads together and create this employee experience index, that means that they all feel that there is a gap between all the analytics sophistication that they've done in the past, all the many, many years of measuring engagement that they've done in the past.
There is this missing bit and that's the employee experience part that they're adding to it.
David Green: And I guess as an industry as well, it’s a shared interest that they're delivering collectively great employee experience because they're trying to attract talent to that industry or trying to stop talent going away from that industry to others.
Volker Jacobs: Indeed. I mean we have quotes from CHROs of these companies. They are saying things like, the EXI for the industry has the potential to inform investment decisions and recommendations of analysts, which is actually a real board level KPI then. And others are saying this EXI helps us to retain talent in the industry because by reputation that's hard at the moment. So that's a little bit of where the ambition is going. So it's quite impressive.
David Green: And I think it's a great example of something you said earlier, you were referring, I think to the business round table announcement by the CEOs of some of the largest organisations in the US, I think there's 180 or something like that.
And the cynics would say, well, it's just nice marketing to say that we're thinking beyond the shareholder. We're thinking of our customers, employees, we're thinking about communities, et cetera, and suppliers. But actually, I think it's being driven by society, so I don't think the CEOs have just come up with this, it's because people, their employees, their customers actually expect this. But it's also because investors as well, they want more measures to look at organisations, whether they're going to invest in just this and that EXI is a perfect example.
Volker Jacobs: Exactly, exactly.
So that's exactly the thing. I mean, I'm pretty proud of it because Financial Services. That's a numbers driven industry. They're pretty sophisticated in analytics and if they want to use this employee experience index or employee experience as a tool to tell their investors how they are doing, that's actually cool.
David Green: And I'm sure they won't be the last industry that comes together to do something like that. Obviously the research report is subtitled "from strategy to execution". And I take scale as that. How do you scale EX in a global organisation?
Volker Jacobs: That almost feels like the EX question of the year 2020. It's really the driving question for these large organisations, so in the past years I think they have more focused on one out of three things that were reasonable and typical to do. One was employee listening, so I've learned to capture more feedback so I can provide better experiences. Number two, they have learned to embed design thinking and journey mappings or human centred design aspects into the work.
Or number three, they've invested in new technology that has cool apps and better experiences through that. And what they now see is that these three avenues alone and in isolation won't get them to the business outcomes they were hoping for. So now they're thinking about how to bring the three together and manage it at scale so it's not all about designing experiences, it's actually about delivering them in these large organisations, multi matrix, organisations across the world. That is the big question. And the answer to the question is, in one sentence, think big, start small and then iterate as you scale. By doing that we've developed a five-step model and probably that's the real answer to your question, what large organisations are doing?
So step number one is create an experience baseline. So measure the experience and the most important moments. Don't do that in a super sophisticated way, but in a simplified way. Have your employee experience baseline created that will help you identify problem spaces and will at the same time identify quick wins. So you can quickly produce and you know what the real problem spaces are. That's a good thing. You can benchmark it. So if it's a standardised baseline, then you can benchmark it, create urgencies and burning platforms. That's step number one.
Step number two is then out of that or from that baseline, you'd create your roadmap, your priorities, because what's the most important part for that is to align the organisation, actually the entire company behind it.
David Green: Because of course, it's not just HR that are responsible.
Volker Jacobs: Exactly. So, in this roadmapping. You can almost say it's a strategic intent plus strategic response thing. So in this strategic intent, you have to be very clear on the business value that you want to provide. In the roadmap you have to be very clear on how do I do that? So what are my priorities, my budgets, my responsibilities of it for the typical roadmap, which is 18 to 36 months. For the next one and a half to two or three years. That's step number two.
Step number three is then, we strongly advise that the first three months of that roadmap is a proof project. So find the two, three, four, five moments that matter. And find a business in which you can test it and prove the concept.
And in this three months proof project, what we see companies do is they do two things. They are actually redesigning the experiences. So they are using human centred design. They are involving line managers and employees and HR and other support functions and specialists to redesign the experience.
And then to measure if the improvement is actually showing, that's the re-design part of the group project. In parallel, another team would work on how does this work in our organisation at scale? So how do we embed employee experience redesign and delivery in the flow of work. So what's the operating model almost of employee experience in this very company, how does it work?
How does it relate to other things that we're doing and who has to act when, that has to be conceptualised, and it's also happening in this first three months of that roadmap in the proof project. That was step number three, the proof project.
Step number four then is build a platform so that everyone can see the employee experience, the platform would provide access to what a good design of an experience looks like. And what, I don't know, our teams in Brazil have done to improve the informal career conversations of managers with direct teams. So, share is one big aspect of the platform.
The other aspect of it is measure. So you can see in dashboards how the experience in your team is doing compared to other teams in the organisation. These two things are the big enablers for employee experience at scale. There's a single point of truth and there is data and dashboards that trigger action, so we can almost reverse the direction by which we manage employee experience.
It's not driven from the top into the organisation. It's a pull effect. Single teams are...
David Green: So for example, if you look at onboarding, for example. So you could show a moment that matter could be, you sit down with your manager in your first week, and you could show parts of the business where that's happening and the impact, that's a positive impact that's having on experience and you could see other parts of the business where that isn't happening and the detrimental effect that it's having.
Volker Jacobs: Exactly, that's one, so the logic would be, I as a team manager somewhere in Kuala Lumpur would see that the onboarding experience and my team is not as good as the average onboarding experience. I can look into which of the four or five moments with an onboarding that matter the most is where the experience breaks. And I can see in my employee experience platform, what a good design of that manager interaction during onboarding should look like. So that's a little bit the way that the platform is helping, to scale it up.
And then step number five is to add something onto the platform. A platform as such is not good enough in these large organisations. We need a partly agile team to help with redesign and delivery of experiences.
So this agile team has two or three people from the central EX team in it, but also has experts depending on the very question that we now have to redesign, to be drawn into this agile team. So that's the five steps that bring organisations to scale. And that's, as I said, the 2020 number one thing to go after.
David Green: Well, Volker, I certainly recommend that people read the report. We'll provide a link, in the commentary, it's the state of employee experience 2019, three, two, one from strategy to execution, have I got the right title there?
So this leads onto the question that we ask all our guests on the show or certainly to date anyway, what do you think the role of the HR function will be in 2025?
Volker Jacobs: Yeah, that question clearly goes beyond employee experience I'd say. I believe that the next transformation of the HR function will be driven by the employee experience. And I think that in 2025 the HR function as such will be more people centric.
It will be more agile and it will be smaller than today. Moreover, it will have a KPI by which it actually really proves the business value. That's the four things. So I'd say more people centric. That means more driven by having people engaged and providing them with what they need to work productively in this organisation.
Human centred design is a key tool for that. When I say more agile, what I mean is I believe that the future HR function will have 50% of its capacity pooled, and then centres of excellence and other specialist units will draw from that pool by project. Or business HR will draw from that pool by project, but we won't have many people in as HR generalists in local teams, and we won't have large COEs, we won't see that anymore.
So we'll have a pool of HR. And with that, more agile HR and lines between HR and the business will blur because this agile team will not only consist of people from the HR pool, but also from other people. And by that, we will break the silos, not only within HR with that HR pool, but also between HR and the business.
So that's the agile part. And when I say HR will be smaller, my prediction is that 2025 we'll see a 30% smaller HR team in large organisations. And that is mainly driven by technology because we can give more tasks into the hands of employees and managers where HR actually belongs and that's my prediction.
And when I'm saying, by 2025, HR will have a KPI in place that is a board level KPI that's recognised by all board members as the business value that HR is adding to the organisation. Then I'm thinking about a KPI that encompasses the two things that I mentioned earlier, which is the effortlessness that HR is bringing in to the way people do their work and the engagement that HR is helping to drive through a better experience at moments that matter the most.
David Green: Finally, how can people stay in touch with you?
Volker Jacobs: Yeah, people can easily link in with me. So I think find me on LinkedIn. That's probably the easiest way. And I encourage everyone to download this employee experience research report that, you were kindly referring to that is to be found under ti-people.com/state-of-experience-experience.
David Green: Well remembered.
Volker Jacobs: Yeah, that's, that's probably the easiest way to stay in touch.
David Green: Great. Well Volker it's always a pleasure to talk to you and I suspect that EX will become an even more important topic as we go through 2020.
Volker Jacobs: Very good. Looking forward to it. Thank you, David.
David Green: Thank you.