Everyone’s familiar today with the concept of Customer Lifetime Value – the revenue a business can expect a customer to generate during the lifetime of the relationship. And the importance of that versus the cost of acquiring that customer. But does your business look at Employee Lifetime Value (ELV) too?
We all appreciate just how much a new hire costs to find and onboard but few businesses really look at the impact of managing each step of the Employee Journey in a way that maximises the overall value of an employee whilst they’re with you.
As the graph below illustrates, regardless of role, the total value to a business of an employee is the area under the curve above the x-axis less the cost (negative value) in induction and onboarding before a new hire reaches the point of delivering net positive value.
So how can you maximise overall ELV in your own business? In short, there are three components, all of which are key for maximum impact.
Overall Employee Lifetime Value can be enhanced by:
- Reducing the time (and therefore cost) it takes to get someone up to full effectiveness in a role – through a consistent and better induction and onboarding process;
- Helping drive greater performance in that role through skills development – personalised learning pathways set in a context of shared (or social) learning; and
- Helping align personal goals and performance with those of the business in turn leading to better engagement and higher retention rates – replacing annual appraisals with regular digital check-ins and one-to-one coaching sessions.
But how many companies do you know who are even measuring this critical metric, much less have a strategy to boost it?