Your people are the ones who bring your organisation’s mission to life, empathise with your customers and drive revenue for your company. But do you know, it is possible to quantify their contribution as well?
Say Hello To Employee Lifetime Value
Employee Lifetime Value (or simply ELTV) measures the long-term contribution of an employee over their time (referred to as ‘lifetime’) with the company. For any organisation, its employees are arguably the biggest and the most important financial investment. Think about it - The people you hire have a long-term impact on your organisation’s future growth. It’s important to measure the contribution of your employees at every stage of their journey with your workplace.
Here's what a typical employee trajectory looks like
Stage 1: This is the stage where an employee joins the organisation and undergoes onboarding activities. Since ideally the employee hasn’t started contributing yet, the ELTV is negative.
Stage 2: At this stage, the employee is considered as fully trained and starts to regularly contribute at work.
Stage 3: Here, the employee has reached the peak of contribution as a result of either outgrowing the role or facing a lack of further growth opportunities .Hence, the employee starts seeking better opportunities.
Stage 4: This stage marks a dip in employee productivity and focus, where they have decided to part ways with the organisation. Here they might gradually start showing subtle signs of quitting.
Stage 5: This stage signifies an employee's last day at work with their contribution back to zero.
Why Should You Measure ELTV?
As evident through the above stages, measuring employee contribution can give you a fair idea about their ELTV.
Making Better Decisions: It helps you to relook at activities related to investing in talent and accordingly make smart changes in your people strategy.
Seeing The Bigger Picture: Tracking ELTV encourages you to adopt a long-term point of view when it comes to providing a seamless employee experience.
Maximum Employee Productivity: Being aware of the key stages of the employee lifecycle helps you develop a healthier relationship with your people while maximising their contribution at the same time.
Is There A Single Universal Formula To Measure ELTV?
Well, if only identifying employee behaviours and the reasons behind them was that easy! Clearly, there is no one-size-fits-all approach to measuring ELTV across organisations. But in a data-driven world, you can choose to measure what matters the most to you and your firm. For instance, you can consider relooking at your onboarding structure and as a part of it, measure the average onboarding duration for your new joinees. You may revisit your compensation strategy and measure the average annual compensation for a segment of employees. You could also measure the average tenure of employees across departments. Combining factors such as these, you can make your own ELTV formula which enables you to gather a proper estimate of the net value an employee brings to your organisation.
What You Can Do to Boost ELTV
While a plethora of factors contribute to an employee’s decision to stay longer and keep contributing, taking care of the following can help you derive maximum value from your people for a long term:
Hire The Best Fit: Use data-driven insights and deploy robust mechanisms to make better hiring decisions and run well-established onboarding programs. A study by Gartner shows that a successful onboarding program yields committed employees who are nine times less likely to leave! Welcoming people who are bound to be good at what they do gives you a strong head start towards building a higher ELTV.
Help Them Excel: Foster an environment of continuous learning through coaching, courses, regular 1:1 catch-ups, performance assessments and opportunities for growing within the organisation through internal job postings.
Provide A Wholesome Employee Experience: Recognise a job well done, give accessible spaces for your people to express themselves. Allow flexibility wherever possible, be it in their mode of working, approach towards tasks, utilisation of worktools etc.
You’d agree that measuring the true value of an employee is not an easy task. But through well-defined approaches, you can launch insight-led initiatives that inspire maximum contribution from your people while keeping them happy and engaged at the same time.
Psst! This blog was made with💚 and created after some thought by a real person.#NoGenerativeAI