ELTV isn’t a silver bullet — it’s a conversation starter
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Check out our recent episode where we sat down to unpack how HR leaders can measure Employee Lifetime Value (ELTV) and actually use it to make better decisions.
If you’ve ever wanted a people metric that has the same weight as marketing’s CAC or LTV, this one’s for you.
Here’s what stood out most from our conversation. ⬇️
1. ELTV isn’t a silver bullet — it’s a conversation starter
The point of tracking ELTV isn’t to get a single “perfect” number. It’s to get people teams thinking more deeply about the cost and value of employees over time.
“Data is a compass point, not a map. It points you in a direction — it’s not something you blindly follow without context.” – Jessica Zwaan
When you run the calculation, you’ll uncover gaps in data, questions about attribution, and the nuances of how your company really operates. That process is as valuable as the final metric.
2. You can (and should) adapt the formula to your company
Like CAC in marketing, there’s no single way to calculate ELTV. You decide which costs to include — recruitment ads, ATS, onboarding, swag, L&D, benefits, etc. — and you decide whether to measure value in revenue, EBITDA, or future growth.
“The lifetime value is the hard part. The cost side is easy — the real work is deciding what ‘value’ means in your context.” – Jessica Zwaan
Consistency is key: once you choose a method, stick with it long enough to see trends.
3. Track multiple versions based on your strategy
Jessica recommends three approaches depending on company stage and priorities:
EBITDA-based for profitability-focused companies
Revenue-based for growth-stage orgs with a performance history
Forecast-based for early-stage orgs projecting future growth
If you’re in growth-at-all-cost mode, revenue may be your leading indicator. If profitability is paramount, EBITDA should lead.
4. Granularity beats perfection
You can calculate ELTV at the company level, but it’s even more powerful when broken down by team, department, or cohort.
You’ll spot where hiring produces outsized returns — and where it doesn’t.
“There’s stuff you’ll never be able to capture — like the halo effect of an incredible employee. But the patterns you do see are what matter.” – Jessica Zwaan
5. Use ELTV to speak the CEO/CFO’s language
If finance leaders already track CAC, LTV, and ROI, ELTV puts people decisions on the same playing field.
It makes the trade-offs clear: should we hire now, invest in retention, or restructure?
“Knowing how much it costs to have one employee work for you for a year is critical — not just for this metric, but for promotions, performance decisions, and beyond.” – Jessica Zwaan
Final Thought
You don’t need the “perfect” ELTV formula to make smarter people decisions. You just need a number you believe in—and the discipline to track it.
The best People teams aren’t obsessing over decimal points. They’re picking a defensible calculation, sticking with it, and using the trends to guide their moves.
Start with one metric that matters for your business. Agree on how you’ll calculate it. Then follow it long enough to see the patterns emerge.
Because the magic of ELTV isn’t in getting the math exactly right.
It’s in what happens when you stop chasing the perfect answer—and start using the data you have to make bolder, better calls.