Happiness Isn’t Enough: Uncovering What Truly Connects Employee Experience with Customer Experience

By Amelie Bedford, Senior Director, Strategy and Innovation at Material

Despite significant investments in employee engagement (EX) and customer experience (CX) initiatives, many organizations struggle to see the results they anticipated. Leaders find themselves frustrated as these efforts fail to deliver the kind of EX-CX alignment that drives real business outcomes.

The issue isn’t a lack of effort – it’s that organizations often focus their EX and CX strategies on what they are already comfortable with, such as incentives, benefits or training programs, while ignoring the root causes that truly influence the connection between employees and customers.

To bridge the gap, organizations need to go beyond surface-level metrics like happiness and dig into the key factors that drive employee behavior and impact customer satisfaction. These factors can be uncovered by connecting data across the organization and using behavioral science to interpret what employees need to thrive. By identifying and addressing these root causes, organizations can design strategies that maximize both employee and customer experiences.

Why Happiness Falls Short

Happiness is often considered the hallmark of a positive workplace, but it’s not a reliable indicator of EX-CX success. Happiness is subjective, influenced by personal circumstances and often shaped by factors unrelated to work. In addition, most people exist in a state of homeostasis, where they are basically “fine.” Even when things are bad, they tend to adapt to the “bad thing” until it becomes the norm – and then they are “fine” again. Our ability to adapt and habituate means that unless people are asked how they feel during an acute aversive or positive event, most answers will hover around “fine.”

While it’s important for employees to feel good at work, focusing solely on happiness oversimplifies the complexity of human behavior and workplace dynamics in today’s world. And it risks overlooking the real drivers of behavior that impact customer experiences.

For example, an employee might feel “happy” due to perks like a flexible schedule or free snacks but still lack the psychological safety, autonomy and resources needed to deliver exceptional customer service.

What Truly Connects EX and CX

To understand the true connection between EX and CX, leaders must move beyond assumptions and adopt a holistic approach to data analysis that synthesizes signals from complex data sets with insights into how emotions, identity, content and culture influence human behavior.

By integrating engagement surveys, operational metrics and customer feedback through this lens, organizations can uncover key factors that shape both employee and customer outcomes. These factors are not one-size-fits-all; they are shaped by the distinctive dynamics of each organization.

Examples of key drivers to examine include:

1. Are employees comfortable sharing ideas and taking risks without the fear of repercussions – often referred to as psychological safety?

2. Do employees feel empowered to make decisions that positively impact customers, or are they restricted by inflexible processes?

3. Do employees experience a sense of belonging and alignment with their teams and leadership?

While these are common drivers, each organization’s data will reveal its own patterns. For example, psychological safety might be the biggest driver in one organization, while autonomy plays a larger role in another. Different types of people are drawn to different roles or organizations, which may shape the needs or gaps that exist. Understanding the nuances is critical in designing effective strategies and solutions.

Why Organizations Must Connect Data and Dig Deeper

Oftentimes, a company’s experience underscores the need to expand how it analyzes EX and CX feedback. Success comes from blending data science with behavioral science to identify the specific factors that drive human behavior and align efforts to address them.

Connect and analyze data across your organization by:

1. Unifying feedback across departments. Combine employee engagement data, operational metrics and customer feedback to gain a cohesive view of key performance drivers.

2. Pinpointing predictors. Use advanced analytics to identify which factors most strongly correlate with customer satisfaction.

3. Uncovering root causes. Apply behavioral science to interpret findings and reveal human drivers behind employee and customer behaviors.

4. Socializing findings. Communicate insights across relevant executive stakeholders to align leadership and secure buy-in for future initiatives.

5. Aligning investments. Use the insights to prioritize initiatives that address root causes and maximize impact.

This approach ensures employee engagement initiatives are targeted, data-driven and aligned with organizational goals, rather than relying on assumptions or focusing on superficial measures like happiness.

Real-world Example: Happiness Isn’t Always the Answer

Let’s take this recent example from one of our US-based clients. This organization wanted to improve customer satisfaction by enhancing employee engagement across different customer and non-customer facing roles. Initial surveys suggested a correlation between employee happiness and customer satisfaction, leading them to focus on initiatives aimed at boosting happiness, such as recognition programs and workplace perks.

However, when deeper analysis leveraging data and behavioral science was conducted, it became clear that happiness wasn’t the key driver of customer satisfaction. The company discovered several critical insights.

1. Psychological safety was the real driver. Employees who felt safe to voice concerns and share feedback without fear of repercussions consistently delivered better customer experiences.

2. Communication gaps created barriers. Employees often felt decisions were made without their input, leading to frustration and disconnection.

3. Resource challenges hindered performance. Front-line employees lacked the tools and processes needed to resolve customer issues effectively.

Once these insights were uncovered, the first step was socializing the findings across the organization to ensure alignment and understanding among key executive stakeholders. Through cross-functional collaboration, and based on our strategic recommendations, the company worked to develop and finalize targeted strategies and initiatives to address the root causes preventing EX-CX alignment – ensuring every department had a shared vision for success. This collaborative approach maximized the impact of the results and laid the groundwork for measuring and sustaining employee engagement initiatives that impact customer satisfaction.

The Collaborative Approach: Breaking Silos

Among the biggest barriers to improving EX and CX are organizational silos.

Too often, employee engagement and customer satisfaction are treated as separate initiatives, with HR, operations and customer service working in isolation. Removing these silos is essential to define a cohesive strategy that aligns employee and customer experiences. While we understand this is a long and (sometimes) also uncomfortable process, organizations can take first steps toward improvement by creating shared language and frameworks that talk about these initiatives and ensure teams understand the impact and connections.

At Material, as a CX consultant we take a collaborative approach to exploring and addressing EX-CX challenges. Our process includes:

• Engaging employees. Employee voices provide critical insights into day-to-day realities that impact EX and CX.

• Aligning leadership. Cross-functional leaders commit to work together to ensure strategies are aligned and supported across the organization.

• Driving actionable insights. Behavioral science and data analytics reveal root causes and guide effective solutions.

By bringing cross-functional experts to the table, we ensure solutions are holistic, actionable and sustainable.

Be sure to remember these five key points.

1. Look beyond happiness. Happiness is subjective and doesn’t always correlate with outcomes. Focus on deeper drivers like psychological safety, autonomy and connection.

2. Analyze holistically. Combine data from across the organization to uncover meaningful insights.

3. Understand root causes. Use behavioral science principles to identify underlying drivers of employee behavior that impact customer experiences.

4. Remove silos. Foster collaboration and connection across departments to ensure alignment and drive meaningful change.

5. Prioritize strategically. Focus on initiatives that address root causes and improve both employee and customer experience outcomes.

At Material, we combine data-driven insights with behavioral science and a collaborative approach to support organizations, remove silos and design strategies that deliver real results.

Let’s work together to explore true connections between your employees and customers and design a future where both thrive. To learn more about our employee and customer experience measurement services, start the conversation today.