Investing in your employees is a crucial element of creating an engaged workforce and an effective way of reducing staff turnover for your business. Here’s how you optimise your greatest investment.
What is employee lifetime value?
This is the total net value that an employee brings to your business from the day they’re hired to the day they leave. It’s measured over the employee lifecycle stages: onboarding, development, retention and exit:
- Start: an employee’s value is negative as they’ve used recruitment resources but haven’t yet contributed to the business
- Ramp time: an employee’s value rises as they’re onboarded into their job and begin to contribute
- Fully contributing: the employee is now established and gives value back to the company in productivity
- Decision to leave: an employee’s productivity begins to drop when they decide to move on to pastures new
- Last day: the employee’s value drops to zero
Although not strictly included in employee lifetime value, the investment you make in recruitment will ensure you hire the right people who, with the right support, will deliver value back to your business. You trust your HR department to do a great recruitment job, but investment can go further than that: make sure you have a solid company reputation in the marketplace. Treat your people right and their positive feedback on job sites such as Glassdoor will attract other great hires.
New hires on ‘ramp time’ are not delivering optimally until they are fully onboarded, so it makes economic sense to integrate them quickly and shorten this time. Invest in getting them comfortable in their roles and clear on the company’s mission and business values. Regular onboarding surveys will help you gauge how your new employee is progressing. You could also set up a ‘buddy’ system with a colleague who monitors a new hire’s performance and spots any issues so they can be addressed early.
Training must be seen as an essential investment from the onboarding stage throughout the employee lifecycle: “The only thing worse than training your employees and having them leave is not training them and having them stay,” observed Henry Ford.
Strategic investment in developing your employees ensures you keep the best ones and build a strong work culture in tune with your company values, embracing innovation, change, success and even failure. Supplying continuous training and supporting employees’ continual professional development will return higher productivity.
As well as the standard healthcare and pension benefits, offer job perks that really matter to employees – for example, a childcare facility, taxis home late at night, a free canteen, or time to be creative. Employees can focus on being productive rather than worrying about their kids or how they’re going to get home.
Because it’s expensive to hire externally, hire internally instead. After all, who knows your business better than someone who has worked for you for a few years? When you offer promotion and decent remuneration and benefits packages, other employees can see you’re an employer who rewards dedication and loyalty. They’ll leave positive feedback on surveys and job sites cementing your reputation as a caring business worth applying to.
You may be surprised to learn that retention begins with a great onboarding experience: businesses with a standard onboarding process experience 50% more new hire retention. Even more reason to invest in your onboarding process.
It’s essential to listen to your employees and really hear them. Give feedback on their work, making them feel that they’re an asset to your company and getting their input into changes and strategy. Performance reviews and 360° feedback help employees to continue to develop, be challenged and want to stay.
Employee engagement surveys play an important role in employee retention. These indicate how involved and engaged employees feel in their work. When employees are engaged, they’re more motivated, fulfilled, productive – and profitable. Invest in a pulse survey program as part of your employee lifecycle, tailored to your company’s strategy and goals to understand what drives your employees to stay with you.
It’s worth investing in an exit program that combines a survey and an interview. You’ll get the most honest feedback from a departing employee – like your employee engagement survey, you’ll be able to identify trends and act upon them. A departing employee who leaves with a positive experience of your organisation is more likely to give personal recommendations for new applicants, saving recruitment costs. And so the lifecycle begins again.