The core idea
Employee lifetime value is a practitioner planning concept for considering contribution and cost across an employment journey. Maia Josebachvili helped popularise it in people-operations discussions. There is no single universally standardised formula. An explicit scenario can include recruitment, ramp-up, ongoing contribution, development and transition costs, with a stated time horizon. It should be treated as a model of assumptions about roles or cohorts, not a monetary judgement of a person’s worth.
Source and attribution [1]Using it in practice
Choose a planning question, such as whether better onboarding could shorten time to competence. Define contribution carefully and distinguish it from revenue already supported by capital, colleagues and other costs. Set a horizon and test plausible scenarios for retention and development. Keep costs from being counted twice. Present ranges and the assumptions most responsible for the result.
An example, not a reported case
Worked example · illustrative
For an invented role cohort, assume a £2,000 joining cost, net contribution after ongoing employment costs of £500 in each of the first three months, then £1,500 in each of the next nine, and a £1,000 transition cost. The undiscounted 12-month scenario is −2,000 + 1,500 + 13,500 −1,000 = £12,000. It is an illustrative scenario, not an estimate for a real employee or a promise that retention produces this amount.
What to watch for
Contribution is often difficult to isolate in team-based work. Long horizons amplify uncertain assumptions, and retaining someone is not automatically beneficial in every circumstance. Do not use the model to ration fair treatment or predict an individual’s worth. Where long-term cash flows are material, finance should help with timing and discounting; this example deliberately uses a short undiscounted horizon.
Separate assumptions from observations
Mark which inputs come from records and which are estimates. Time to competence might be observed; future contribution may be speculative. Show both rather than letting a spreadsheet’s precision hide the distinction.
Test the intervention mechanism
If the proposal is better onboarding, specify how it changes ramp-up or avoidable rework. Do not simply increase every positive input at once. Compare the intervention with a plausible alternative and include its implementation cost.
Avoid double-counting
If net contribution already subtracts salary and benefits, do not subtract them again. If replacement cost includes lost output, avoid adding the same loss separately. Document the cost boundary so another person can reproduce the calculation.
Use a range and a decision rule
Vary the assumptions that could change the conclusion, such as ramp-up time or retention duration. Ask what evidence would justify proceeding or revising the plan. The useful output is a transparent decision discussion, not a precise-looking valuation assigned to an employee.
Take it into your next conversation
Three useful questions.
- Which decision will this analysis change?
- Are the population, denominator, time period and assumptions explicit?
- What alternative explanation or unintended effect must we check?
Related terms
Go to the evidence
Sources & attribution
[1] Greenhouse: The impact of people operations on employee lifetime value ↗
The core idea is an original summary of the cited work. Application notes, examples and sketches are our interpretations, not quotations or reproductions of the authors’ figures. Publisher records may require access to read the full original work.
Published 2026-09-20 · Reviewed 2026-09-20. Editorial approach