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 What is Employee Lifetime Value?
How Employees Impact The Bottom Line

Tracking ROI as part of your HR strategy is According to SHRM and Brookings Institute, the
an essential metric for keeping track of your total human capital costs average to nearly 70%
business growth. Tracking how your employees of operating expenses in most organizations,
bring value to your organization is just as including Fortune 500. However, only recently
critical. We are in the midst of a paradigm have we started to understand how to have a
shift: the product-based economy as we know lifetime value perspective on employees, the
it is gradually replaced by a service-focused same way that we are used to look at customers.
economy where people are the focal point Loyal and happy employees stay longer, are
of the ecosystem. The value that services are more productive and willing to go the extra mile
bringing to customers, as well as the value and are great ambassadors for your brand.
that the workforce is bringing to business has
become the current currency of growth.

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 The Employee Lifetime Value Model
The Employee Lifetime Value Model was created
by Maia Josebachvili and is a great visualisation
of that perspective. Essentially, when a new hire
starts, they cost the organization money.

Gradually, as employees grow in their role and

begin producing output, they increase the value
they bring in the company. At a specific time, they
reach a plateau where they produce maximum
output also known as the peak where they reach
the highest value in the life cycle.

What we want to show you is how you can benefit

from looking at the different phases in the lifetime
journey of your employees in order to increase
that value. Inspired by the Employee Lifetime
Value Model we will focus on four phases, from
Onboarding to Offboarding. The Employee Lifetime Value Model

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 The 4 phases
A new hire and a high performer who have been
with your for years are very different and have
different drivers for loyalty.
We believe that communication,
Being aware of the output of your workforce and
training and leadership are the key
realizing how much employees contribute to the disciplines that will help you create
organization at every stage of their lifecycle are
essential indicators for growth and the impact on
stronger employee engagement and
the bottom line. ultimately increase the lifetime value
In the following we will take a look at what you of your people. That is why we will
need to consider when you communicate with,
train and lead your employees throughout the
share a few actionable tips for each
phases and beyond. When they onboard, when discipline in each of the phases.
they begin to deliver value, when they reach the
maximum potential and after they - at some point
Enjoy!
- decide to move on (offboarding).

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 Phase 1: Pre- and Onboarding
Increasing employee lifetime value starts at the beginning of
the journey of every new hire. After identifying quality talent
and finding a culture match in the recruitment process,
a company is ready to welcome a new employee in the
organization. And a bad onboarding experience carries a
huge risk when it comes to employee turnover.

Up to 20% of new hires quit within the first 45 days!

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Phase 1: Pre- and Onboarding

Starting on the right track is essential to get employees set

up for success and accelerate time to productivity. Send
them a welcome message even before they start to build
on the excitement of landing a new job. Perhaps a video
message where the team introduce themselves to their new
colleague. That way, your new employee will recognise some
friendly faces on their first day.

Seamless and streamlined pre- and onboarding plays a

crucial role. By laying the groundwork and providing new
hires with the knowledge they need about your company
culture and their journey ahead, knowledge gaps are closed
fast, and employees are onboarded successfully.

Our pro tips:

Send a welcome message

Introduce them to their new team in advance

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Phase 1: Pre- and Onboarding

Next up you want to help get your new colleague set up on

all the systems as well as get them started on some of the
The majority of our
time and money spent
initial training. You can also start to introduce them to the
most important processes in the team.

on people is invested
In-depth training: When you’ve got the basics covered you
can begin to let your know hire dive into the more advanced
training elements, which should basically cover everything
they need to know in order to be a smashing success in their
role. A crucial key concept here is blended learning. Be
creative here and try to mix classroom training with online
in attracting,
learning. Why just bombard your new hire with company
facts when you can make it into a fun quiz, that they can assessing, and
cultivating new hires
take on their phone while waiting for the train? It would also
be a wise move to split up the training rather than bombard
the new team member with hour long e-learning - think
snackable pieces.

Keep this in mind for training of new hires: Laszlo Bock

Former SVP of People Operation, Google
Focus on blended learning

Think gamification
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Phase 1: Pre- and Onboarding

Early days in a new job is vulnerable time, so it is crucial to

get a good dialogue rhythm going. Have regular check-ins,
both scheduled and more informal talks, to get an early feel
of whether they are off to a good start.

And you should definitely also see your new hire as a great way
of getting some outside-in perspective on your team and your
organisation. You can ask them to be an “anthropologist”
for the first month and note down everything that surprises
them or is different to previous jobs. That might give you
and your team great new ideas to change habits or improve
processes.

Our top tips for this phase:

Set up one-on-ones right away

Encourage the new hire to challenge your team

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 Phase 2: Delivering Value
In this phase your employee is fully onboarded and well-
integrated into your team and organisation. They have built a
network in the organisation and are delivering value in their
daily tasks. That does not, however, mean that no further
nurturing is needed as that is a huge driver for engagement,
especially among the younger generations.

Offering career training and development would keep

86% of millennials from leaving their current position.
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Phase 2: Delivering value

In order to keep people motivated beyond the A daily task that might seem trivial is much more
“honeymoon” excitement of the onboarding meaningful if linked to the bigger purpose. Just
phase of you need to provide clarity and purpose like the famous anecdote from the NASA HQ
across all layers of your organization. That where John F. Kennedy asked a janitor what his
enables your workforce to become more job was and he replied “I’m helping to put a man
effective, more engaged, and more motivated on the moon.” THAT’S purpose.
about their work and their role. It also enables
you to increase employee lifetime value How to communicate purpose:
dramatically.
Align employee goals with the company strategy
Organizations that want to achieve sustainable
growth need to have clear goals for their Share news from top management - even if it does
employees. Understanding how employees not directly impact your team
relate to the overall brand vision, mission and
core values builds trust and connection across
all pillars of your organization.

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Phase 2: Delivering value

You want to make sure that you keep on building the

competencies of your employees. Build knowledge over time
by equipping your staff with the right training at every step.

Step away from old school learning and focus on building

an intuitive and modern approach to digital learning where
everyone can get up to speed at any time on any topic and
accelerate their learning curve.

A few tips to improve learning at this stage:

Build gamified “academies”

Make content bite-sized so it doesn’t become too

overwhelming

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Phase 2: Delivering value

A few things you can do to successfully

create a feedback loop:
In the onboarding phase we talked about the importance
of setting up a good rhythm for your one-on-ones with Set clear goals
employees. But creating a culture of coaching and feedback
is about more than booking one-on-ones.
Aligning goals leads to a transparent environment
where expectations are met
With supportive coaching and timely feedback, an insightful
manager can enable employees to increase productivity and Ask relevant questions
feel empowered about their role in the organization.
Knowing how employees are doing help building
Adopting a coaching culture based on knowing how trust and nurturing connections
employees feel enables managers to keep a finger on the
pulse, provide continuous support, and point out areas for Take time to listen
improvement.
Value feedback by giving ideas and insights the
Creating a feedback loop between employees and managers needed airtime
helps foster a culture in which teams are aligned and
engaged. However, this process does not happen overnight. Turn insights into action
Focus on swift execution and action plan for full
transparency

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 Phase 3: Reaching Maximum Potential
This is a crucial phase as it’s typically in this phase that an
employee starts to consider leaving. But there are a number of
things you can address that will have a positive effect on your
retention rate and increase the lifetime value of your employees
even after they have reached their maximum potential. And as
the cost to replace a highly-trained employee can be very high
there is good reason to do so.

The cost to replace a highly-trained employee can exceed

actimo.com - Optimizing Employee Lifetime Value in 2019 200 percent of the annual salary. 13
Phase 3: Reaching Maximum Potential

Communication is not a one-way street, so make sure you

get all the feedback you can from your employees. Especially
the people who are in this phase have extremely valuable
input for you and are very likely to pursue new opportunities
if they don’t feel like management listens and take action
when there is an issue.

How to make your employees’ opinion heard:

Make it easy and seamless to voice your opinion

Think mobile-ready surveys and live polls

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Phase 3: Reaching Maximum Potential

What can really make a difference when it comes to training and increasing
employee lifetime value is an analytical focus. That helps you identify
strengths and knowledge gaps to provide support to your employees
when it’s needed.

That could help you expand the

tenure of your high achievers as
you avoid situations where a valued
employee doesn’t feel that they get
the training, attention and nurturing
that they deserve.

Our top learning tips for this phase:

Track training progress in real time

Make sure you also nurture and train high achievers

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Phase 3: Reaching Maximum Potential

And that takes us to “Lead”. When it comes to leadership, a

crucial element when looking at this phase of the employee
life time is getting the right data to base your decisions on.

Up until now, lengthy employee surveys and biannual or

annual performance appraisals have been considered
the gold standard for measuring employee satisfaction
and managing performance in most industries. For many
organizations, this method has proved ineffective simply
because managers are not getting the feedback they need
when they need it. In order to impact development and drive
change in your organisation, surveys need to be conducted
at the right time, in the right place.

Here is our advice to lead through people data:

Base your HR decisions on real-time employee

sentiment

Rethink traditional performance appraisals

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 Phase 4: Offboarding
No matter how strong your employee engagement is, even your
most loyal employees will at some point down the line decide to
seek new opportunities outside the company. But even though
they have given their resignation, there are still a few key things
you can do to optimise the lifetime value. Because you want
your alumni to stay ambassadors for your employer brand even
after they leave to be able to attract great new candidates.

According to Harvard Business Review, a bad reputation

costs a company at least 10% more per hire .
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Phase 4: Offboarding

Losing a valued employee and team mate can be a big blow

to an organisation on a professional as well as personal level.
Don’t underestimate the impact it can have on morale in your
team and make sure you make room for the mixed emotions
that occur. Great vision
without great people
Make a farewell party so they leave on a high - you want to
increase the chance of “boomerang” employees who find out
that the grass was not greener after all.

You should: is irrelevant

Make room for goodbyes and mixed emotions

Set up alumni newsletters

Simon Sinek
Author, Start with Why

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Phase 4: Offboarding

Knowledge transfer is very, very important. Your company

has spent time, money and resources on training employees,
so it’s crucial that they don’t just disappear and take their
knowledge with them. So as soon as you get the resignation,
you need to plan the handover process.

How to make sure no knowledge is lost:

Make sure that the employee documents their tasks

Agree with them on due dates on final deliveries

Have a colleague shadow them in the final weeks

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Phase 4: Offboarding

It can be tempting to throw yourself into the recruitment

process, because the sooner you have a replacement for the
valued employee who is leaving the better. But it can be well
worth it to prioritize exit interviews.

You can get a lot of valuable information and honest

feedback from asking, e.g. why they are leaving, what
could have persuaded them to stay and if they have any
recommendations.

Our best advice for this phase:

Conduct exit interviews - either 1:1 or automate them

as a survey

Turn your leavers into employee brand ambassadors

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 Conclusion

So as you can see, there are a lot of action points and

initiatives to take in order to improve the Employee Lifetime
Value in your company.

Depending on your starting point, some might seem as low

hanging fruit and some may seem like significant projects
that require time and heavy investment. But regardless of
the maturity level in your organisation, you can go a long
way with keeping some simple things in mind:

Remember to think of the life cycle of your employees. Their

needs evolve as they go from:

Pre- and onboarding phase

To delivering value

To reaching their maximum potential

The Employee Lifetime Value Model
And finally go to the offboarding phase.

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 The Employee Lifetime Mantra to Keep in Mind

1 Knowledge
Accelerate onboarding time by providing your
2 Coaching
Keep on ramping up employee performance
3 Purpose
Increase sense of belonging and productivity
new hires the guidance and knowledge they by providing timely coaching and individual by providing clear goals and transparency.
need from the start. feedback.

4 Performance
Improve employee performance with made-
5 Culture
Make your employees stay longer by investing
to-measure training, snackable surveys. and in your culture and your core brand values.
dynamic check-ins.

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