In the war for talent, companies are increasingly concerned about workforce retention. And for good reason — getting the greatest value out of your talent does not happen on Day One on the job. It’s a process of onboarding, activating, and developing that talent over a period of time. The greatest employee lifetime value (ELTV) comes from finding the right people, incentivizing them to perform at high levels, and retaining their skills within the company for as many years as possible.
Consider the diagram below from Maia Josebachvili, Head Head of People at Stripe. It visualizes the ROI of investing in talent as time goes on, where the ongoing management and development of talent leads to greater overall ROI. Over time, an organization is able to pull a greater output from its initial investment — but only if employees choose to stay.
As the year progresses and companies and markets recover from the uncertainty of 2020, organizations will continue to face pressure to retain the most talented employees and increase overall employee lifetime value. Here are four important ways they can do so:
1. Employee onboarding
The cost of hiring a new employee seems to rise every year, most recently calculated to be about $4,000 per employee. This might not be such a burden for organizations if spread across a timeline of years. But considering the fact that as many as 3.5 million people in the U.S. voluntarily leave their jobs each month, those costs can really add up. Employee onboarding offers employers an important opportunity to reduce turnover at the early stages of employment and contribute to a higher employee lifetime value. When designed correctly, it can be a powerful touchpoint for establishing clarity, creating connection, and building culture — allowing employees to kick off their tenure with the resources and information they need to be successful.
2. Employee wellness
Employee wellness programs support employees in pursuing better sleep, nutrition, and exercise habits, which in turn sends happier, healthier employees into work. Such programs have become increasingly popular over the past decade, to the point that more than half of employers surveyed by SHRM offer well-being programs to their global employees. These employers saw several benefits associated with retention, including improved absenteeism (79%), attracting and retaining talent (78%), and maintaining or improving morale (76%). It’s interesting to note that wellness programs retain talent even when employees don’t use them.
3. Work-life balance
As much as 87% of employees expect their employer to support them in balancing work and professional lives, an increasingly difficult feat as companies in the knowledge sector move employees home for remote work. Employers that create work environments where work-life balance is respected — welcoming clear boundaries between work and home, accepting flexible schedules, and carefully monitoring workloads for burnout — will benefit from higher levels of loyalty and retention in the long run.
4. Internal promotions and transfers
In the context of employee lifetime value, turnover isn’t always a bad thing so long as it’s internal turnover. After all, the highest-performing employees are the ones who are engaged in their work and constantly investing in themselves. It’s only natural these employees would seek to rise up in your company every 3-5 years. Organizations with access to powerful tools like org chart tools built on position management are better prepared to facilitate these promotions and transfers, making it more appealing for employees to stay on board.
Keep Reading: Three Meaningful Ways the World of Work Is Changing – And How HCM Technology Is Pivoting to Support It [eBook]
Building a team, building value
Building your workforce is not just a way to get the job done. It’s a way to build value for the long-term. Organizations that focus on increasing employee lifetime value will find that every investment in employee resources — from wellness to engagement to development, and beyond —becomes an investment back into the organization itself.
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