Talent Makers

3Employee Lifetime Value

What are your top performers worth? We don't mean what you're paying them, but what they're worth. Better yet, what ROI are you getting on them? You might be able to answer these questions if those people are in sales, but how about for the many other roles? If you struggle with these questions, then this chapter will provide some clarity.

Most leaders believe talent is important, but in concrete terms they cannot figure out precisely what great hiring is worth to their companies.

In a sense, that's understandable. If I buy a piece of equipment, I should be able to calculate what it will produce for me over time, or the cost savings it may create over its useful life. If I advertise on Google, I can measure in real time what are my clicks, conversions, revenue, and ROI.

But hiring creates this odd paradox. On the one hand, many organizations say things like “People are our most important asset,” yet they don't have a clue about how to calculate any overall ROI for that “most important” asset.

It's true that they know pieces of the equation. They know what it costs to hire people, but they often don't know what they're worth. In this situation, organizations tend to focus on costs.

One way they do this is to copy what high-profile companies do. For example, Google has been known to up the ante in the perks war by first having top chefs, and then things like free dry cleaning, dog sitters, and so on. All these costs can be easily quantified and the unspoken ...