How L&D Elevates Employee Lifetime Value

What is Employee Lifetime Value?

The increasingly popular HR topic of Employee Lifetime Value (ELTV) refers to the efforts of an employer to assess and improve upon the tangible, if not measurable value, that employees will likely bring (or have already brought) throughout their employment with the organization. It considers value generated via relevant skills, reflected in demonstrated results and ideas converted into actions, and extends to employer brand and corporate culture advocacy.

ELTV also includes less visible sources of value which might pertain to employees having a positive influence on the performance, productivity, attitudes and engagement of co-workers. HR technology comes into the ELTV picture when the co-workers being influenced by the employee are not on the same team or in the same business area or location. The specific HR tech capability used to capture these employee-to-employee connections is known as organizational network analysis (ONA). Among other things, ONA demonstrates the direct impact employee connections have on employee retention and talent acquisition (e.g., helping bring new people into the organization).

The relatively recent adoption of an ELTV orientation within HR departments and the people/talent management arena goes a step further when the organization regularly views employee contribution through an even broader “sphere of influence” lens. This lens applies to an employee’s support for things like:

• Building diversity and inclusion
• Ensuring alignment between business practices and core values
• Managing workers with transparency and respect
• Avoiding instances of harassment and other counterproductive—if not toxic—behavior

Innovative Learning and Development (L&D) Meets ELTV

The Fuel and Friction Approach—a theory co-created by David Schonthal, an award-winning professor at the Kellogg School of Management, and Loran Nordgren, an organizational psychologist—was initially used to explain why promising innovations often don't reach their full potential; however, its applicability has also been seen in the change management domain. For the purposes here, I’ll extend it to the ELTV topic where fuel represents the enablers of better ELTV, and friction the blockers or barriers to better ELTV.

In my view, employee training (including manager and executive training)—particularly the type that is demonstrably effective and where benefits are sustained for the long haul—is one of the strongest sources of fuel or enablers of improved ELTV. In contrast, elements such as outdated methods and processes, or low adoption of new workforce technology would be examples under the friction category as they often serve to weaken ELTV. 

ELTV-enhancing L&D is usually of the more innovative variety, as a preponderance of industry research points to the lack of impact (and learning content retention) from traditional, didactic or static training methods and programs.

When we start to drill into the types of L&D that fuel ELTV, we see examples such as manager/executive training and coaching designed to reduce, if not eradicate, behaviors that impede and shorten the ELTV lifecycle such as those that discriminate against, devalue or demoralize employees. These must obviously be identified or recognized and then swiftly addressed for benefit at both the micro (individual) and macro (organizational) level. It’s obvious to all that managers have a huge influence over the employees in their charge; and since the typical HR department represents only 1% of the total workforce, it is really managers who must serve as true stewards of Human Capital Management (HCM). 

L&D initiatives that feature a combination of practical training content, tech-guided action steps, and science-backed analytics that measure the outcomes of actions taken, are more likely to result in what I’ll refer to as “soft skill adjustments.” I use this phrase because a manager or executive’s personal attributes encompass not just the way they deal with stress and conflict (and how that affects their teams), but also shortcomings such as subjectivity, bias and the potential to harass.

Some might contend that an effective traditional training course can fully ameliorate these types of personal behavioral weaknesses. But I maintain they are part of how some managers and executives are wired or naturally predisposed. A more realistic view, perhaps, is to see that an innovation-driven training intervention focused on “soft skill adjustments” over time is more likely to truly move the needle on someone’s core management repertoire. That improvement in management repertoire or skillset multiplied by the number of managers in an organization essentially becomes one of the biggest drivers of ELTV.

Done well, L&D also ensures organizations are building an internal talent pipeline for key roles.  A strong pipeline, of course, results in the ability to proactively address future talent needs, and arguably as important, enables ample career mobility opportunities for employees.

That improvement in management repertoire or skillset multiplied by the number of managers in an organization essentially becomes one of the biggest drivers of ELTV.

A Superior Employee Experience Also Drives a Better ELTV

Career mobility, as cited above, is actually one of the key pillars of my Superior Employee Experience (EX) framework developed five years ago. In my view, all five pillars should ideally be accounted for in an organization’s ELTV blueprint.

My “EX” framework 

Recognize and internalize that ALL employees:

• Have an intrinsic need to do meaningful work, feel valued and be productive.
• Should be provided a line of sight into their career progress and how the organization is supporting it.
• Must have a clear sense that the organization genuinely cares about their well-being.
• Must perceive fairness in how they’re evaluated, rewarded and invested in.
• Should believe that the tools and processes they regularly engage with enhance rather than impede their productivity and job satisfaction.

Concluding Remarks

Organizations of all sizes and in all industries should view ELTV the same exact way they view Customer Lifetime Value. To me, the main difference is that while the latter usually involves knowing and always accounting for customer needs, interests and tendencies, the former includes these aspects plus leveraging the right L&D-related technology, content and (if possible) accompanying analytics that can be counted on to reliably extend and amplify ELTV.