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Employee experience

Is an ’employee experience winter’ coming?

Unravelling the shift in employee experience strategies and mitigating its impact on workplace dynamics

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Employers typically invest in employee experience during periods of high attrition.
Only 31% of business and technology professionals prioritize employee experience.
66% of technology decision-makers in software intend to increase investment in Employee Experience.

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Following a period of heightened focus on enhancing the employee experience amid talent shortages spurred by the pandemic, employers are now scaling back, potentially impacting both the workforce’s perception of their jobs and the bottom lines of organizations.

Forrester’s “Predictions 2024: The Future of Work” report reveals a shift where employee experience takes a backseat in 2024, leading to what the report terms an “EX winter.” J.P. Gownder, vice president and principal analyst on Forrester’s Future of Work team, notes a general waning interest in employee experience, making it vulnerable to cost-cutting measures. Strategies aimed at boosting engagement, productivity, and overall growth are being re-evaluated and scaled back.

For instance, Forrester observes a decline in funding for internal Diversity, Equity, and Inclusion (DEI) functions, dropping from one third of surveyed employers to 27% from 2022 to 2023. The forecast predicts a further decrease to 20% by the end of 2024. Some companies are seen prioritizing surface-level compliance over genuinely impactful DEI initiatives, merely checking boxes without substantial investment.

The shift is attributed, in part, to a looser labor market. Gownder explains that employers typically invest in employee experience during periods of high attrition or when facing challenges retaining talent, such as during the Great Resignation. However, with the current market conditions, companies are not as desperate to retain employees, prompting a reduction in investment in talent-centric initiatives.

Despite continued spending, Forrester identifies a potential misallocation of resources. The report notes that 66% of technology decision-makers in software intend to increase investment in Employee Experience (EX) and Human Capital Management software in 2024. However, Forrester predicts that these investments may primarily enhance the efficiency of HR functions rather than significantly improving overall EX outcomes.

The impending “EX winter” is expected to further erode employee engagement, which saw a decline from 48% to 44% between 2022 and 2023, with culture energy dropping from 69% to 66% in the U.S. Forrester anticipates these numbers to plummet to 39% and 64%, respectively, in 2024. Gownder emphasizes the critical role of employee engagement, asserting that declining engagement adversely affects productivity, creativity, and overall employee motivation.

Nevertheless, Gownder suggests that all is not lost, and an “EX winter” can be avoided by counteracting these trends. Organizations are encouraged to maintain their commitment to engaging with employees authentically, resisting the temptation to prioritize cost-cutting measures or superficial compliance.

Gownder underscores the importance of the “employee experience thesis,” asserting that investing in human-centered experiences leads to increased engagement, reduced attrition, heightened productivity, and, ultimately, improved customer satisfaction. Companies committed to investing in employee experience should also prioritize measuring and understanding the impact of these investments on employee sentiments. According to Forrester’s report, only 31% of business and technology professionals prioritize employee experience, viewing collecting employee feedback as a key action. This figure is expected to rise to 34% in 2024.

Efforts to measure engagement include gathering data on digital activities, badge swipes, and analytics related to time off. However, the challenge lies in C-level leaders effectively using this data to comprehend how employee success translates into organizational success beyond mere work compliance.

The key takeaway is a call for organizations to concurrently focus on investment in employee experience and the genuine impact of those investments on employees to foster a positive workplace environment and avert the negative consequences of an “EX winter.”

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