What is the Employee Cost to Value? Let’s Do Some Math
When does an employee grow from a liability into an asset?
That may sound like a rhetorical question, the opening to an article about how they’re at once both and neither, how simple dichotomies don’t map onto today’s complex organizations, and and how, ultimately, the difference between “assets” and “liabilities” is a matter of perspective.
“Much common wisdom over the years blames first line management. Over and over I hear the words ‘people don’t leave companies; they leave managers.’ Of course there is much truth to this—nobody wants to work for an uncaring, difficult manager. But our research shows that the real ‘retention model’ in companies is far more complex.
When we look at retention … we find that each company has its own unique “retention model.”
Typically the model involves a whole variety of factors, and these factors take on different weights depending on the age, demographic, and role of the employee. So your goal is not to simply do one thing, but to understand your own company’s “retention drivers” by role.
But for companies in industries where high rates of employee turnover are an unfortunate fact of doing business, it’s a critical, operational question—as are these:
- How soon can I start deriving value from a new employee?
- How can I maximize the value of every employee?
- How can I retain my most skilled employees?
If you’re in a position to ask those questions, and you can’t afford to invest in an employee’s potential indefinitely, we have good news: someone did the math.
In “Employee Retention Now a Big Issue: Why the Tide has Turned,” corporate talent guru Josh Bursin lays out a simple figure that shows when an employee moves from the “Investment Zone” (in which the organization is losing money on employee development) to the “Return Zone” (in which the organization starts benefiting from the employee).
He writes that organizations need to move new people “up [the] curve as rapidly and effectively as possible,” and that poor retention rates create “low levels of employee commitment which in turn move employees back down the value curve.”
Here’s how Bursin suggests you can spin the equation in your favor >>
Read his considerations for employers—including compensation, job “fit,” work environment, and more—in the full article on LinkedIn.
Do you know the extent to which turnover is costing your organization? We’ve got another calculation for you—based on a great ROI story from one of our trucking clients, who was able to shave off one day of training per driver using Compligo. Break out the pencils and paper.
