Measure the ROI of Your HR and Culture

Defense Leaders Honor Fallen
May 29, 2018

Measure the ROI of Your HR and Culture

Most entrepreneurs are eager to measure the return on investment (ROI) of their business practices and strategies; I’m no different. But what really intrigues me is figuring out the ROI of categories that are traditionally — and notoriously — difficult to measure, like HR and culture.

Related: What HR Pros Need to Learn From the Rest of the Company

With that in mind, I sat down to chat with Maia Josebachvili, a well-known expert in the area of “People Practices,” meaning employee-recruitment culture and engagement. Currently the VP of marketing and strategy at recruiting software provider Greenhouse, Josebachvili has had an impressive career that’s included stints as a Wall Street derivatives trader, founder of Urban Escapes and senior director at LivingSocial.

People Practices, Josebachvili told me, have “a known cost with an unknown return,” in that executives have traditionally struggled to measure the financial impact this area has. For that reason, they’ve tended to underinvest in it.

In our interview, Josebachvili began the conversation by sharing the framework she personally uses for measuring HR: something she calls employee lifetime value (ELTV). As illustrated in the chart below, ELTV measures the value an employee brings to an organization, from his or her first day to the last: