Employee lifetime value

Employee lifetime value HSBC HSBC is one of the world's largest banking and financial services organisations. With around 7,200 offices in both established and faster-growing markets, they serve around 89 million customers in 85 countries and territories. ELV is total net income that company can expect from employee in period of his employment there. The idea behind Employee lifetime value came from marketing, precisely from Customer lifetime value. The calculation is similar. ELV is not a common metric and it's integration is still All calculations, except for retention and tenure, are made on data presented in financial statement 2011. in process. So we present you some ideas of how to calculate and to use it. Different ways to calculate ELV NOPAT, in million dollars Cost of capital Compensation, in million dollars. In million dollars. Also know as capital Including wages and salaries, social security costs and post-employment benefits. Net operating profit after tax. Operating profit or revenue may be used instead. charge or discount rate. Equals to 11 % 11 232 13 912 17 572 21 166 16 092 19 836 10 067 14 981 18 468 (1 2011 2010 2009 2011 2010 2009 2011 2010 2009 11 737 16 215 19 823 % of Human capital contribution Employees Employees' number in full-time equvalents. Profit on account of employees Compensation Compensation + Cost of Capital Equals to 0,290954 million. 295 061 In million dollars Nopat x % of Contribution 288 316 289 485 19 823 19823 + 16215 3 11 737 x 0,55 2011 2010 2009 0,55 290 954 6 455 Employee tenure Profit per employee Retention rate Profit on account of employees We calculate turnover rate first. We then assume that retention rate is 100% - Turnover rate. We will also assume that this will be the retention rate for subsequent years. N of employees Evarage period of employment. In years. 6455 / 0,290954 4,5 years 22 187 95% ELV 1 ELV 2 Profit x Retention Rate Profit x Employee Tenure 1+ Cost of Capital - Retention Rate 22 187 × 0, 95 22 187 x 4, 5 1+0, 11 - 0,95 99 847 131 734 Another way to calculate precise Employee Lifetime Value is to allocate revenues across employees. By following the customer value chain it is possible to calculate the revenues from non-front-line staff as well. Company can use formulas separately or count the average across different estimations. In case of HSBC, average ELV of particular employee would be 115 790 dollars. What next? Add to dashboard Compare As every other metric ELV should be interpreted in combination with other HRindicators. ELV metric can be calculated and then compared for different groups of employees: Profit per employee is positively related to ELV. Both metrics combine measures of profit or income with costs and investments. Return on Investment (ROoI) metrics might be useful for measuring short-term return on discrete investment in employees, while ELTV is all high, middle, low performers employees about long-term financial flows. Cost informati ELV. Good examples are Recruitment costs, Training and Development costs. also comparable with in particular department talent or leadership cadre Brought to you by Resources HRseconds hsbc.com stockgraphicdesigns.com parkablogs.blogspot.com www.customerthink.com www.vectorfresh.com www.snap2objects.com www.andersonperformance.com www.designlots.com Employee lifetime value HSBC ELV is total net income that company can expect from HSBC is one of the world's largest banking and financial services organisations. With around 7,200 offices in both established and faster-growing markets, they serve around 89 million customers in 85 countries and territories. employee in period of his employment there. The idea behind Employee lifetime value came from marketing, precisely from Customer lifetime value. The calculation is similar. ELV is not a common metric and it's integration is still All calculations, except for retention and tenure, are made on data presented in financial statement 2011. in process. So we present you some ideas of how to calculate and to use it. Different ways to calculate ELV NOPAT, in million dollars Cost of capital Compensation , in million dollars. In million dollars. Also know as capital charge or discount rate. Equals to 11 % Including wages and salaries, social security costs and post-employment benefits. Net operating profit after tax. Operating profit or revenue may be used instead. 11 232 13 912 17 572 21 166 10 о67 16 092 19 836 18 468 14 981 1 2011 2010 2009 2011 2010 2009 2011 2010 2009 11 737 16 215 19 823 2 % of Human capital contribution Employees Profit on account Employees' number in full-time equvalents. Equals to 0,290954 million. of employees Compensation Compensation + Cost of Capital 295 061 In million dollars Nopat x % of Contribution 288 316 289 485 19 823 19823 + 16215 3 11 737 x 0,55 2011 2010 2009 0,55 290 954 6 455 Employee tenure Profit per employee Retention rate Profit on account of employees N of employees We calculate turnover rate first. We then assume that retention rate is 100% - Turnover rate. We will also assume that this will be the retention rate for subsequent years. Evarage period of employment. In years. 4 5 6455 / 0,290954 4,5 years 22 187 95% ELV 1 ELV 2 Profit x Retention Rate Profit x Employee Tenure 1+ Cost of Capital - Retention Rate 22 187 × 0, 95 22 187 x 4, 5 1+0, 11 - 0,95 99 847 131 734 Another way to calculate precise Employee Lifetime Value is to allocate revenues across employees. By following the customer value chain it is possible to calculate the revenues from non-front-line staff as well. Company can use formulas separately or count the average across different estimations. In case of HSBC, average ELV of particular employee would be 115 790 dollars. What next? Add to dashboard Compare As every other metric ELV should be interpreted in combination with other HRindicators. ELV metric can be calculated and then compared for different groups of employees: Profit per employee is positively related to ELV. Both metrics combine measures of profit or income with costs and investments. Return on Investment (ROI) metrics might be useful for measuring short-term return on discrete investment in employees, while ELTV is all about long-term financial flows. Cost informatio high, middle, low performers employees also comparable with in ELV. Good examples are Recruitment costs, Training and Development costs. particular department talent or leadership cadre Brought to you by Resources hsbc.com stockgraphicdesigns.com parkablogs.blogspot.com HRseconds www.customerthink.com www.vectorfresh.com www.snap2objects.com www.andersonperformance.com www.designlots.com Employee lifetime value HSBC ELV is total net income that company can expect from HSBC is one of the world's largest banking and financial services organisations. With around 7,200 offices in both established and faster-growing markets, they serve around 89 million customers in 85 countries and territories. employee in period of his employment there. The idea behind Employee lifetime value came from marketing, precisely from Customer lifetime value. The calculation is similar. ELV is not a common metric and it's integration is still All calculations, except for retention and tenure, are made on data presented in financial statement 2011. in process. So we present you some ideas of how to calculate and to use it. Different ways to calculate ELV NOPAT, in million dollars Cost of capital Compensation , in million dollars. In million dollars. Also know as capital charge or discount rate. Equals to 11 % Including wages and salaries, social security costs and post-employment benefits. Net operating profit after tax. Operating profit or revenue may be used instead. 11 232 13 912 17 572 21 166 10 о67 16 092 19 836 18 468 14 981 1 2011 2010 2009 2011 2010 2009 2011 2010 2009 11 737 16 215 19 823 2 % of Human capital contribution Employees Profit on account Employees' number in full-time equvalents. Equals to 0,290954 million. of employees Compensation Compensation + Cost of Capital 295 061 In million dollars Nopat x % of Contribution 288 316 289 485 19 823 19823 + 16215 3 11 737 x 0,55 2011 2010 2009 0,55 290 954 6 455 Employee tenure Profit per employee Retention rate Profit on account of employees N of employees We calculate turnover rate first. We then assume that retention rate is 100% - Turnover rate. We will also assume that this will be the retention rate for subsequent years. Evarage period of employment. In years. 4 5 6455 / 0,290954 4,5 years 22 187 95% ELV 1 ELV 2 Profit x Retention Rate Profit x Employee Tenure 1+ Cost of Capital - Retention Rate 22 187 × 0, 95 22 187 x 4, 5 1+0, 11 - 0,95 99 847 131 734 Another way to calculate precise Employee Lifetime Value is to allocate revenues across employees. By following the customer value chain it is possible to calculate the revenues from non-front-line staff as well. Company can use formulas separately or count the average across different estimations. In case of HSBC, average ELV of particular employee would be 115 790 dollars. What next? Add to dashboard Compare As every other metric ELV should be interpreted in combination with other HRindicators. ELV metric can be calculated and then compared for different groups of employees: Profit per employee is positively related to ELV. Both metrics combine measures of profit or income with costs and investments. Return on Investment (ROI) metrics might be useful for measuring short-term return on discrete investment in employees, while ELTV is all about long-term financial flows. Cost informatio high, middle, low performers employees also comparable with in ELV. Good examples are Recruitment costs, Training and Development costs. particular department talent or leadership cadre Brought to you by Resources hsbc.com stockgraphicdesigns.com parkablogs.blogspot.com HRseconds www.customerthink.com www.vectorfresh.com www.snap2objects.com www.andersonperformance.com www.designlots.com Employee lifetime value HSBC ELV is total net income that company can expect from HSBC is one of the world's largest banking and financial services organisations. With around 7,200 offices in both established and faster-growing markets, they serve around 89 million customers in 85 countries and territories. employee in period of his employment there. The idea behind Employee lifetime value came from marketing, precisely from Customer lifetime value. The calculation is similar. ELV is not a common metric and it's integration is still All calculations, except for retention and tenure, are made on data presented in financial statement 2011. in process. So we present you some ideas of how to calculate and to use it. Different ways to calculate ELV NOPAT, in million dollars Cost of capital Compensation , in million dollars. In million dollars. Also know as capital charge or discount rate. Equals to 11 % Including wages and salaries, social security costs and post-employment benefits. Net operating profit after tax. Operating profit or revenue may be used instead. 11 232 13 912 17 572 21 166 10 о67 16 092 19 836 18 468 14 981 1 2011 2010 2009 2011 2010 2009 2011 2010 2009 11 737 16 215 19 823 2 % of Human capital contribution Employees Profit on account Employees' number in full-time equvalents. Equals to 0,290954 million. of employees Compensation Compensation + Cost of Capital 295 061 In million dollars Nopat x % of Contribution 288 316 289 485 19 823 19823 + 16215 3 11 737 x 0,55 2011 2010 2009 0,55 290 954 6 455 Employee tenure Profit per employee Retention rate Profit on account of employees N of employees We calculate turnover rate first. We then assume that retention rate is 100% - Turnover rate. We will also assume that this will be the retention rate for subsequent years. Evarage period of employment. In years. 4 5 6455 / 0,290954 4,5 years 22 187 95% ELV 1 ELV 2 Profit x Retention Rate Profit x Employee Tenure 1+ Cost of Capital - Retention Rate 22 187 × 0, 95 22 187 x 4, 5 1+0, 11 - 0,95 99 847 131 734 Another way to calculate precise Employee Lifetime Value is to allocate revenues across employees. By following the customer value chain it is possible to calculate the revenues from non-front-line staff as well. Company can use formulas separately or count the average across different estimations. In case of HSBC, average ELV of particular employee would be 115 790 dollars. What next? Add to dashboard Compare As every other metric ELV should be interpreted in combination with other HRindicators. ELV metric can be calculated and then compared for different groups of employees: Profit per employee is positively related to ELV. Both metrics combine measures of profit or income with costs and investments. Return on Investment (ROI) metrics might be useful for measuring short-term return on discrete investment in employees, while ELTV is all about long-term financial flows. Cost informatio high, middle, low performers employees also comparable with in ELV. Good examples are Recruitment costs, Training and Development costs. particular department talent or leadership cadre Brought to you by Resources hsbc.com stockgraphicdesigns.com parkablogs.blogspot.com HRseconds www.customerthink.com www.vectorfresh.com www.snap2objects.com www.andersonperformance.com www.designlots.com Employee lifetime value HSBC ELV is total net income that company can expect from HSBC is one of the world's largest banking and financial services organisations. With around 7,200 offices in both established and faster-growing markets, they serve around 89 million customers in 85 countries and territories. employee in period of his employment there. The idea behind Employee lifetime value came from marketing, precisely from Customer lifetime value. The calculation is similar. ELV is not a common metric and it's integration is still All calculations, except for retention and tenure, are made on data presented in financial statement 2011. in process. So we present you some ideas of how to calculate and to use it. Different ways to calculate ELV NOPAT, in million dollars Cost of capital Compensation , in million dollars. In million dollars. Also know as capital charge or discount rate. Equals to 11 % Including wages and salaries, social security costs and post-employment benefits. Net operating profit after tax. Operating profit or revenue may be used instead. 11 232 13 912 17 572 21 166 10 о67 16 092 19 836 18 468 14 981 1 2011 2010 2009 2011 2010 2009 2011 2010 2009 11 737 16 215 19 823 2 % of Human capital contribution Employees Profit on account Employees' number in full-time equvalents. Equals to 0,290954 million. of employees Compensation Compensation + Cost of Capital 295 061 In million dollars Nopat x % of Contribution 288 316 289 485 19 823 19823 + 16215 3 11 737 x 0,55 2011 2010 2009 0,55 290 954 6 455 Employee tenure Profit per employee Retention rate Profit on account of employees N of employees We calculate turnover rate first. We then assume that retention rate is 100% - Turnover rate. We will also assume that this will be the retention rate for subsequent years. Evarage period of employment. In years. 4 5 6455 / 0,290954 4,5 years 22 187 95% ELV 1 ELV 2 Profit x Retention Rate Profit x Employee Tenure 1+ Cost of Capital - Retention Rate 22 187 × 0, 95 22 187 x 4, 5 1+0, 11 - 0,95 99 847 131 734 Another way to calculate precise Employee Lifetime Value is to allocate revenues across employees. By following the customer value chain it is possible to calculate the revenues from non-front-line staff as well. Company can use formulas separately or count the average across different estimations. In case of HSBC, average ELV of particular employee would be 115 790 dollars. What next? Add to dashboard Compare As every other metric ELV should be interpreted in combination with other HRindicators. ELV metric can be calculated and then compared for different groups of employees: Profit per employee is positively related to ELV. Both metrics combine measures of profit or income with costs and investments. Return on Investment (ROI) metrics might be useful for measuring short-term return on discrete investment in employees, while ELTV is all about long-term financial flows. Cost informatio high, middle, low performers employees also comparable with in ELV. Good examples are Recruitment costs, Training and Development costs. particular department talent or leadership cadre Brought to you by Resources hsbc.com stockgraphicdesigns.com parkablogs.blogspot.com HRseconds www.customerthink.com www.vectorfresh.com www.snap2objects.com www.andersonperformance.com www.designlots.com Employee lifetime value HSBC ELV is total net income that company can expect from HSBC is one of the world's largest banking and financial services organisations. With around 7,200 offices in both established and faster-growing markets, they serve around 89 million customers in 85 countries and territories. employee in period of his employment there. The idea behind Employee lifetime value came from marketing, precisely from Customer lifetime value. The calculation is similar. ELV is not a common metric and it's integration is still All calculations, except for retention and tenure, are made on data presented in financial statement 2011. in process. So we present you some ideas of how to calculate and to use it. Different ways to calculate ELV NOPAT, in million dollars Cost of capital Compensation , in million dollars. In million dollars. Also know as capital charge or discount rate. Equals to 11 % Including wages and salaries, social security costs and post-employment benefits. Net operating profit after tax. Operating profit or revenue may be used instead. 11 232 13 912 17 572 21 166 10 о67 16 092 19 836 18 468 14 981 1 2011 2010 2009 2011 2010 2009 2011 2010 2009 11 737 16 215 19 823 2 % of Human capital contribution Employees Profit on account Employees' number in full-time equvalents. Equals to 0,290954 million. of employees Compensation Compensation + Cost of Capital 295 061 In million dollars Nopat x % of Contribution 288 316 289 485 19 823 19823 + 16215 3 11 737 x 0,55 2011 2010 2009 0,55 290 954 6 455 Employee tenure Profit per employee Retention rate Profit on account of employees N of employees We calculate turnover rate first. We then assume that retention rate is 100% - Turnover rate. We will also assume that this will be the retention rate for subsequent years. Evarage period of employment. In years. 4 5 6455 / 0,290954 4,5 years 22 187 95% ELV 1 ELV 2 Profit x Retention Rate Profit x Employee Tenure 1+ Cost of Capital - Retention Rate 22 187 × 0, 95 22 187 x 4, 5 1+0, 11 - 0,95 99 847 131 734 Another way to calculate precise Employee Lifetime Value is to allocate revenues across employees. By following the customer value chain it is possible to calculate the revenues from non-front-line staff as well. Company can use formulas separately or count the average across different estimations. In case of HSBC, average ELV of particular employee would be 115 790 dollars. What next? Add to dashboard Compare As every other metric ELV should be interpreted in combination with other HRindicators. ELV metric can be calculated and then compared for different groups of employees: Profit per employee is positively related to ELV. Both metrics combine measures of profit or income with costs and investments. Return on Investment (ROI) metrics might be useful for measuring short-term return on discrete investment in employees, while ELTV is all about long-term financial flows. Cost informatio high, middle, low performers employees also comparable with in ELV. Good examples are Recruitment costs, Training and Development costs. particular department talent or leadership cadre Brought to you by Resources hsbc.com stockgraphicdesigns.com parkablogs.blogspot.com HRseconds www.customerthink.com www.vectorfresh.com www.snap2objects.com www.andersonperformance.com www.designlots.com