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What is the ‘Lifetime value’ of your employees?

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in Employee Benefits Program,Human Resources,Leaders & Managers,Management Training

Businesses have always understood the value of cultivating lifelong relationships with customers eager to patronize them again and again as their lifestyles change and they need new products or services.

Nurturing those same kinds of relationships with employees has just as much value.

In business school, an organization’s efforts to engage and motivate individuals so they become long-term customers is called “Customer Lifetime Value.” Now, a new field of study is emerging: “Employee Lifetime Value.” The two are intimately related. When organizations recognize the value of their employees and invest in them, those employees, in turn, contribute to the care and nurturing of lifetime customers.

Still, many organizations focus solely on products, brands and customers as their main sources of profit and value. At the same time, they regard employees as a cost.

Change that mindset! In fact, an organization’s employees distinguish it from its competitors.

Organizations that adopt an Employee Lifetime Value model embrace three key concepts:

  1. Acknowledge that employees create value for the organization.
  2. Identify ways to measure employee contributions.
  3. Focus on employee professional development and behaviors that drive value to the organization.

The comp & benefits role

The “lifetime” of an employee is the time he or she works for the organization. Employers can influence how successful that time is for both the employee and the business.

Comp and benefits pros are in good positions to steer their organizations toward sound investments in training and rewards that make an employee’s career more worthwhile—and, in turn, make the worker more productive and loyal.

For example, Maritz—our sales and marketing services firm—has six guiding principles, including one about client service. Our culture rewards employees who go out of their way to put those principles into action. When an employee does, he or she is rewarded on the spot by a supervisor or even a peer who can send an e-card that says, “Thanks,” along with a copy to management. Some behaviors are tied to points, which the employee can cash in for rewards that might be meaningful to that individual.

Other practices that support the Employee Lifetime Value concept:

  • A call center supervisor who “catches” an employee handling a customer in a way that furthers the mission of the organization might reward the worker with something the employee considers a huge prize—like an extra day off.
  • An organization that traditionally has handed out bonuses or recognition for longevity might instead tie rewards to desirable behaviors that prompt the employee to repeat the behaviors.

These are interventions that can alter an employee’s “lifetime value”—the length of the career with the organization and the quality of his or her time and work during that tenure.

Know your employees

In order to do this successfully, you need to know what your employees need and want. Yet the employee information available to most organizations typically includes just demographics, like age, gender, salary and length of service.

Start collecting more critical information on performance, workplace behavior, attitudes and loyalty. 

A good place to start: Change the questions you ask on employee surveys. Measure more than your employees’ satisfaction with their jobs. Ask them if they have the tools they need to do their jobs well. Find out what’s in their way when it comes to serving customers or becoming peak producers. Learn what kinds of rewards appeal to each employee—and then customize your rewards to make each individual feel valued by the organization.

Ask questions to gain the answers that will help you spur changes that will make each employee more valuable to the organization—and more likely to stay.

You don’t have to leave an employee’s “lifetime value” up to chance. You can guide it toward greater value if you have the right kinds of information about your employees.
_______________________________________
Karen Renk is executive director of the Incentive Marketing Association in Naperville, Ill. You can reach her at (630) 369-7780. Jerry Klein (jerry.klein@maritz.com) is director of solution development at Maritz, and Joanne Cuddeback (joanne.cuddeback@maritz.com) is VP of Maritz’s employee engagement practice.

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