Neglecting EX and CX drives hidden business costs, expert warns

CALIFORNIA, UNITED STATES — An increasing number of organizations are under fire for sidelining employee experience (EX) and customer experience (CX) initiatives, with a report warning that hiding behind “competing priorities” could be costing businesses far more than they realize.

Hidden costs of sidelining EX and CX

For years, business leaders have used the same refrain when asked to invest in EX or CX programs: “We’d love to, but there are competing priorities.” 

However, according to EX and CX thought leader Annette Franz, this rationale is nothing more than a convenient excuse.

 “Let’s call this what it is: a cop-out. Because nothing truly competes with putting people first, if you actually understand that the people are the engine of your business,” Franz wrote in CX Journey.

Short-term financial pressures, flashy but short-lived projects, and a culture of risk aversion are among the main reasons people-focused initiatives are neglected. 

Executives often chase quarterly results and immediate outputs, while failing to see the long-term costs of disengagement and churn. 

“Every time leadership puts EX and CX on hold, it’s not saving money; it’s spending it on inefficiency, disengagement, and attrition,” Franz warned.

Embedding employee and customer experience into core strategy

Franz argues that real change requires reframing EX and CX as measurable drivers of performance. 

This includes embedding them into strategic priorities, linking them directly to revenue and retention, and holding executives accountable through performance reviews and bonuses.

As Franz emphasized, “The most successful organizations treat people as strategic assets, not optional expenses.” Quoting management thinker Peter Drucker, it reminded leaders: “There is only one valid definition of business purpose: to create a customer.” 

With employees and customers so tightly connected, ignoring either side undermines the very core of business sustainability.

Outsourcing sector under pressure to adapt

The debate around EX and CX priorities is particularly relevant for the outsourcing sector, where service delivery heavily depends on employee engagement and client satisfaction. 

Companies in this space face constant pressure to balance cost efficiency with talent retention and customer loyalty. The lesson from this analysis is clear: outsourcing firms cannot afford to treat people-first initiatives as optional. 

Instead, embedding EX and CX into long-term strategies could provide not only a competitive edge but also a safeguard against the very risks that “competing priorities” are supposed to address.