Taking Charge of Your Employee Lifetime Value

Employee lifetime value is the total value in terms of income that an employee is expected to bring to the company minus the cost of keeping the employee. Employees are only an asset to the extent that they are value adds to the company.

When I coach employees, I ask them questions about how much they brought in the previous month in value. By this question, I want to know if they are really a value add to their employer. In many cases, employees don’t really care whether they are adding to their employer or taking as long as they get paid at the end of the month.

The cost of keeping an employee in a coming is much more than just the salaries and allowances paid to the employee. Each employee adds to the general bills of the company like electricity, water, and fuel for the vehicles. Anytime your employer makes anything available for you to work better, there is a cost involved in it.

When you get employed, the assumption is that you are going to ensure that your employer gets more value from you than you are costing them. You were employed for the following reason.

1. You demonstrated that you possess the ability to create value

2. You were able to convince and persuade them that you have this ability and will deploy it for them when employed.

Here is the question that no one really asks during the interview process: Can you create more value than you cost your employer to keep you? Most employees haven’t given such a thought. All they keep thinking about is how much they are going to be paid. I believe most employers are looking to fill roles where they don’t care if the person will give more than their cost.

While studying performance in companies, I noticed that 20 percent of employees produce 80 percent of the income of the company. This means that only 20 percent are valuable to the company. Others are liabilities. They just take from the company. I believe this is why most boards end up selecting someone who has been involved in generating income for the company to rise to the top.

The lifetime value of an employee is broken down into:

Employee Lifetime Value = Employee Equity = Employee Value – Employee Cost

Employee Equity: What an employee is worth in total to the company, taking into account all the benefits and costs over the course of the relationship. Employee equity is the difference between the value the employee brings to the organization and the cost of keeping the employee employed.

Employee Value: This is the total value the employee brings to the company in terms of income.

Employee Cost: This is the total cost over a period that the employee cost the company

Building Employee Equity

“My father taught me to always do more than you get paid for as an investment in your future.” Jim Rohn

It’s the responsibility of an employee to continually build equity. It is like trust. You have to keep making deposits to get a return from it. When employees allow the cost of keeping them to overrun the value they bring, they will have no equity to draw from. They become a liability to their employer and can easily be fired and replaced.

This is the money value of an employee to her employer. The employee could be a valuable father, mother, sibling, and person but may not be a valuable employee. Anytime you take more than you give, you become a liability. You are valuable as a human but not as an employee. If you are fired from a job, get to understand the value of your equity to your employer.

Your employer is your investor. And if they find out that their investment in you isn’t bringing back the returns they expect, they will have to abandon that investment. Being human, you are responsible for making sure their investments in your don’t fail. No one can force you to perform. You have to make the choice to bring value to the table.

No employer will want to fire an employee with positive equity in the business. Those employees are more like owners. They make their contributions bigger than the cost of keeping them. They always make sure they have positive equity with their employer.

Here are how to differentiate employees

1. Liabilities: Employees who create less value than they cost

2. Maintainers: Employees who give the same value as their cost

3. Assets: Employees who give more value than they cost

Become A 10X Contributor

At Value Giver Coach, we work with employees to ensure that they make ten times more contributions to their employer than they cost their employer. That way they make investments in their future.

It's important that employers inform employees of the total cost of keeping them employed in a month. That way employees will have an idea of what it takes to stay valuable and employed. What does it mean when an employee is underperforming? Is it stated in terms of cost to the employer or what?

If you want employees to improve, you tell them the monetary value of their contributions so far and what they are costing the company. That is the best way for performance review. Numbers don’t lie. With that in mind, the employee will know what needs to be done to become valuable. Every employee is involved in making money for the company.

If the company is not making money, it will hurt the people it has made a promise to care for. In as much as profit is not the purpose of a business, it is the oxygen that keeps the business alive. Just as the trees and plants continually provide humans with oxygen, so employees need to ensure that their efforts daily are providing oxygen for the business to stay alive.

One employee not providing such oxygen could change the balance in the business and cost it in the long run. A Truly Human Company creates an environment where every employer can 10X their contribution.

1. Work on Yourself Daily: Don’t depend on your formal education. It has its limitations. You should work on yourself if you want to 10X your contribution. The more you grow, the more your capacity enlarges. With a bigger capacity, you can do more. Working on yourself means working on your mindset and developing new capabilities and improving capabilities you already have till you gain mastery. In our No Limit Growth program employees get equipped to grow and give more value.

2. Create Value Daily: Understanding the value chain and industry employers work in will give employees insight on how to create value. Everyone in a company can create value. Being busy with activities doesn’t necessarily mean one is creating value. Value creation activities are targeted at making sure the customers get a better deal at less cost. At the Value Giver Coach, employees go through the Game-Changing Value Creation program to learn about the Value Creation Mindset and Capabilities.

3. Collaborate With Your Strength: To 10X contributions, employees need to focus on what they can do best. That will require collaboration. At Value |Giver Coach we call it the Unique Capability Collaboration where employees focus on what they can do best and leave what they can’t do to others who can do it so well. When two employees collaborate, they bring their 10X together and make it 100X.

Every employee needs to learn to improve their equity. They need to keep making deposits into the equity account instead of making withdrawals. The more equity they have, the more they will earn and be recognized.

We are organizing a Game-Changing Value Creator Coaching program. You can be part and should be part. It is for you. If you want to attain freedom and find fulfillment at work, then become a value creator.

Be part of the Game-Changer Value Creation Coaching program. You will go through the mindset required to create and the tools you need to always create value in the workplace. Are you ready for a fundamental change- a breakthrough in the way you approach your work? If you are, then you are ready for the Value Giver Coach Program. Please call +2348101671745.