In a pair of reports released late last month by The Forum: Business Results Through People, it was revealed that 85 percent of a company’s assets are related to intangible capital, such as knowledge and human talent. In addition, employee turnover costs companies in the U.S. more than $140 billion annually in recruiting, training, replacement, administrative and other costs.
The Forum’s Measuring the Financial Impact of Employee Lifetime Value report provides businesses’ human resources leaders new information on the value employees bring to improving corporate performance and profitability.
The report’s author, Dr. Frank Mulhern of Northwestern University, says: “In today’s marketplace, competitive advantage and differentiation for companies comes from the energy, passion, talents and creativity of all its people. Therefore, it is crucial for an organization to have the ability to measure individual and team performance across the enterprise.”
Mulhern is also the author of the second report, Employee Lifetime Value: Measuring the Long-Term Financial Contribution of Employees. Targeted at C-level executives, it argues that engaging and satisfying valuable employees should be an increasingly important strategy for chief executives.
“Employee lifetime value creates a model to measure the long-term contribution an employee makes within an organization,” says Dr. Mulhern. “Too often products, brands and customers are defined as a source of revenue and employees are defined as a cost.”
Click here to read the research summary of Measuring the Financial Impact of Employee Lifetime Value and here to read the summary of Employee Lifetime Value: Measuring the Long-Term Financial Contribution of Employees.
The Forum: Business Results Through People is an organization affiliated with Northwestern University in Evanston, Illinois. It advocates that the most effective way business leaders create and sustain organizational value is through a partnership with the people in their companies. PPAI President and CEO Paul Bellantone, CAE, is a member of The Forum’s board of directors.