Employee lifetime value: Measuring the long-term financial contribution of employees
As the economy shows signs of recovery, chief executives continue to focus on driving profitable revenue growth. Too often, products, brands, and customers are defined as a source of revenue and employees are defined as a cost. However, Forum research has found that employees can make a contribution to a company’s financial success. To understand and grow this financial contribution to an organization, management must first measure employee lifetime value (ELTV), evaluating financial flows, net contribution by employee, time unit, discounted margin, and the organization’s investment in the employee. Based on this information and understanding, management can justify investing in new ways to engage these employees and maximize their contribution to the organization’s bottom line.
In this research report we will discuss how management can move away from considering employees as a cost and can instead add them to the profit column.
Some key topics discussed in this research include:
- Key areas the c-suite needs to pay attention to
- The Employee Lifetime Value (ELTV) model
- How to apply this research to your business
From the research:
“There are areas where employee value is fairly easily measured, such as referral activity for non-selling employees and revenue from sales personnel. Areas that are more difficult to measure include employees whose enthusiasm makes a company look attractive to prospects, innovative employees who help organizations develop competitive processes, products, and services, and employees who generate goodwill through interpersonal relationships. Unfortunately, these elements are typically not measured and are only realized when the employee leaves the company.”