Why employee experience, engagement software may be a hot space

Employee experience software is likely to become a critical--yet ill defined area--amid a tight labor market and dozens of competitors coming at the issue from multiple angles.

While many enterprises are focused on customer experience, or CX, employee experience has been hobbled by a hodge-podge of systems. The returns on these employee experience systems are relatively obvious. Consider:

• More engaged employees boost productivity and stay aligned with business goals.
• Engaged employees have lower churn and companies save on replacement costs and recruiting.
• Engaged employees are likely to be better with customers.

And those returns are just a few of the more quantifiable ones. Some of these employee experience efforts may be simple avoidance of headline risk. After all, you'd hate for your CEO to be on the bottom of Glassdoor rankings. And then there are all the analytics you could get from employee experience efforts to find talent and retain it. .

Gallup has been charting employee engagement and highlighted the following trends over time.

Here's where things get sticky. Is employee engagement and experience the responsibility of human resources, marketing and communication, IT and digital transformation or all of the above? There are a few skeptics. Enter Ray Wang, principal of Constellation Research:

I'd say that this space died with Jive and folks are trying to revive the space. Teams and Slack are driving most of this but there's engagement and then there's the gamification vendors that used to drive engagement around collaboration, ideation, support desk, etc.

Employee experience has received a boost from SAP's purchase of Qualtrics. Qualtrics has a platform and survey capabilities that are used for customer experiences, but there are also modules for employees. SAP is likely to meld SuccessFactors, CRM and its other software lines with Qualtrics.

Yet, Qualtrics isn't totally focused on employee engagement. Dynamic Signal comes to customer experience via the communication space. Dynamic Signal is used to tailor messaging to align culture and goals to boost productivity. The company, which counts UPS, Wawa, IBM and Salesforce as customers, also has survey capabilities and employee advocacy tools that make it easier to rally workers to share messages via social media.

Simply put, Dynamic Signal's buyers may be communications chiefs, human resources, CIOs and marketing leaders. Add it up and it's tough to categorize some of these vendors. Not surprisingly, analysts may be having a little trouble too.

G2 has a category for employee engagement software and it's safe to say the space is a bit crowded.

Among the more highly rated employee engagement vendors, 15Five, Qualtrics, Lattice Performance Management, Kudos, Motivosity, Culture Amp and Officevibe are in the mix. Toss in Facebook Workplace for good measure. Based on the reviews and outlines of the vendors, few of them make for easy direct comparisons.

Gartner's take is that employee engagement and performance management will converge. That prediction means that HR players such as Cornerstone, Oracle, SAP and Workday will take on more engagement functions in their roadmaps.

More: How to keep your employees satisfied in the workplace | 13 takeaways on the future of work | TechRepublic: How to increase employee engagement using AI, machine learning, and other methods

A handy diagram illustrates the moving parts of performance and engagement.

Gartner also has a category for what it calls "employee communications applications." After all, employee experience rely on communication among all levels of a company--including workers in the field.

In a market guide, Gartner noted:

Organizations want to modernize employee communications to improve employee experience, employee engagement, community building and promote a more inclusive culture.

Software buyers should adopt employee communications tools to aid digital transformation and workplace revamps, said Gartner. These leaders should also think of communications inside a company as an ongoing campaign that will reach employees on multiple screens. Forrester also has a playbook for employee experience, or EX.

In theory, these experience tools should aid employee collaboration, which is a hot space that includes Slack, Zoom, Microsoft and a cast of dozens. Slack CEO Stewart Butterfield recently outlined the conundrum facing enterprises.

"Humans are very hard to coordinate. Consider how much of our time is spent coordinating. You walk around any office and just look. This activity accounts for 30%, 40%, 50% of people's time. It's not we think it's unimportant. It's absolutely critical. If there's anyway to get leverage on that time there will be demand," said Butterfield.

I'd toss in that it's also very hard to rally humans behind one corporate goal and stay on point. Needless to say integration points between all of these communication, experience and collaboration tools will be critical. And given that the employee engagement and experience market is immature enterprise leaders are likely to be stitching various applications together for the foreseeable future.

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Butterfield had a slide that illustrated why this employee experience space will be hot. Slack is one part of a broader equation and it remains to be seen how the communication, marketing, HR and culture pieces come together.

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