Last week, I shared my thoughts on measuring People and Talent as a business function, not just as a collection of activities and if I had to pick one metric that’s genuinely changed how exec teams see the function, it’s eLTV:eARC - essentially our version of ROI for people. On one side → the value our employees ('Primigos') create over their time with us. On the other → what it costs to hire, support, develop and retain them. It forces the ultimate question that HR teams sometimes forget to answer “Are we increasing company value through how we design, support and grow our talent?” I’ve yet to find a reliable industry benchmark for what “great” looks like in the eLTV:eARC ratio, because companies calculate it in wildly different ways. So we built our own internal model and track it YoY to make sure it’s meaningfully shifting in the right direction 📈 At a high level: Employee Lifetime Value (eLTV) We look at revenue per FTE, projected growth and average primigo tenure. That gives us a forward-looking view of the value created over someone’s time with us. Employee Acquisition & Retention Cost (eARC) This includes all salaries, variable/commission, employer contributions, hiring costs, and our broader people budget - benefits, L&D, tools, co-working membership, workations, retreats, recognition, etc. And measuring this is not about squeezing costs, but about understanding which investments compound over time, through stronger capability, higher engagement, better leadership and lower regretted attrition. The ratio really highlights the importance of: - Tenure and retention - Ramp time and time to capability - Engagement and performance - Leadership quality and succession depth Because all of these expand the lifetime value curve and reduce company risk at the same time. By measuring this properly last year, we were able to significantly improve the ratio by reallocating spend towards productivity, engagement and hiring discipline, and being more deliberate about where investment creates durable value. Just like Customer LTV informs smarter marketing investment, eLTV helps us make smarter people investments & for me this helped shift our conversations into the same language as Product and Finance. It made the link between happy, skilled employees and commercial performance explicit rather than assumed. Really curious whether others are using a version of eLTV - how you’re calculating it, and whether you’ve found a useful industry benchmark. *Kudos to the brilliant Jessica Z. for bringing the concept of eLTV:eCAC (aka eARC) to life. If you’re curious, go check out her amazing books.
Interesting conversation to focus managers on time to ramp too. Thanks for sharing.
I love your articulation on this! Thanks for sharing….its certainly sparked some thoughts for me!
Love this thanks for sharing
Ah thanks so much for the shout out but your work truly speaks for itself!!