How You Can Accurately Value Your People

How would you go about determining the dollar amount value for each of your employee’s contributions to your organization? How would you do that if they were not in a revenue-generating role like Sales? In other words, how do you measure the return on your employee Return on Investment ((eROI):\

For instructional purposes, let’s us the example of a Mid-level Accountant in the New York Metro area, $66,000 per year in a 20-person firm with $5m in annual sales. (Source)

We begin by identifying the Revenue contribution for each employee, whether they are in a revenue generating (sales, client acquisition/retention), a direct client service role, or other admin type function with no direct contact with clients. The most straight-forward approach is to simply divide your firm’s revenue (the $5m) by the total number of employees (20) to determine revenue per employee ($250k). This is the most basic, simplistic approach to use, when factoring revenue by employee regardless of their role in contributing to revenue creation.

The problem with this approach is it really doesn’t get to the heart of the VALUE of each employee. It’s an average and thus not really helpful at all at assessing EACH individual. We can dive deeper to obtain a more detailed insight into that Mid-level Accountant’s specific contributions by including any contribution the staff accountant makes to retaining existing clients, servicing accounts, saving at-risk clients, upselling new services/product offerings to existing clients. So , these are all useful metrics to apply in terms of client acquisition, retention, and indirect contribution to the products and services they utilize. Right?

BUT again, this is a very limited approach and not entirely revealing of that employee’s true “worth.” To truly understand the “total value” of an employee, we have to expand our approach to consider what contributions they make in coming up with new ideas to find revenue generating processes, steps OR how have they helped in cost-saving measures the employee makes by improving processes, removing waste/duplicate steps in processes, helps automate functions, etc.

Further, we can also track their indirect contributions such as bringing in new talent through referrals, and their actions that helped increase the performance of their peers through coaching and mentoring. But to truly get a complete picture of that Staff accountant’s full contribution, how have they helped to market the firm, by speaking as a subject matter expert at events and conferences, give testimonials about why the firm is a great place to work, get involved in community engagement activities.

So, you can see that to truly measure an employee’s total worth requires a rethinking of how you measure the value and contributions of all of your people. But again, this eROI analysis of employee value only measures the revenue side. To obtain EROI we also must assess the COST side of the employee equation.

We can begin to determine the “total cost” associated with an employee by applying an approximate factor (typically 1.2 to 1.4 times an employee’s base salary ($66,000). This factor covers a wide range of the total benefits, health insurance, admin services, bonuses, training, continuing education and other offerings we provide to our employees. So, in this case if we apply a multiple of 1.4 to their base salary of $66,000, the staff accountant’s total adjusted cost is $92,400.

We deduct cost from the employee’s revenue contribution as follows:

Revenue – $5 million divided by 20 employees ($250,000) – the adjusted cost of $92,400, or $157,600 for that Accountant’s employee “profit” / margin eROI. In the same way that we had to dive deeper then surface level of the revenue side of the eROI equation, we can understand an employee’s cost by determining how successful the employee is in their role, by seeing how well they performed in achieving their goals (Key Performance Indicators, KPIs). employee value/contribution is measured using revenue per employee ($250k) times the percentage of the employee’s aggregate KPIs that were achieved. The percentage completion of KPI is a way of answering their performance assessment:

“How close were they to achieving their established goals?” So, if the employee’s last (2022) performance review outcome was they achieved/exceeded their primary goals at 85%, then their revenue ($250k) * 85% leads to an adjusted performance-based contribution of $212,500. Applying such a formulaic calculus to your people’s contributions (eROI) no doubt can risk coming across as a very cold-calculating way to put a price tag on the value of employees. I mean, we are not a number, we are vital contributors to an overall organization performance through many aspects of work which may not be easily measured. Things like brainstorming, collaboration, being supportive of our co-workers…. How do you measure these vital aspects of our people’s jobs. In other words…how do employers actually feel about eROI, and is it being utilized?

* New hire performance metrics are used by 51% of companies.
* Turnover and retention metrics are used by 48% of companies.
* Hiring Manager satisfaction rates are used by 41% of companies.

Again, this approach to quantifying eROI in terms of an employee’s measurable impact is only a starting point. We also need to factor in the overall QUALITY of your organization’s workforce, to determine how well you are doing at finding the right people for the right roles at the right time and then putting them to work.

The three most effective tools at our disposal to measure the Quality of Hire in our organization are performance, productivity, and retention:

1. Performance – consider the average of all new hire performance ratings/reviews.
2. Productivity – as defined by their KPIs.
3. Retention – % of new hires on-board at the end of the year.

Ex. Using these 3 ratings/metrics, If your firm scored an 80%, 85%, and 90% on these three criteria, then the average QoH you achieved is 85% (B-B+ range). To apply eROI and QoH across your organization, conduct an audit of your QoH against your competitors and an industry/sector “average”. This will enable you to identify your baseline eROI and QoH.

Ethan L. Chazin, MBA is an expert in the field of organizational transformation and learning & development. He specializes in Employee Training & Development, One-on-One Executive Coaching, Growth Mindset Consulting, Culture Building, and Strategic Planning.

In 2021, Unleash Your People’s Untapped Potential

As COVID-19 ran roughshod over our economy, tens of thousands of businesses were forced to close forever while others implemented layoffs and furloughs as a survival strategy.

In short, the American job market has been decimated by the global pandemic!

I understand the rationale of terminating employees as a last ditch effort to reduce costs to keep businesses afloat. HOWEVER, there are many options that visionary, compassionate leaders can and DO pursue instead of treating their people like disposable “assets” to be discarded.

Instead of layoffs, consider the following more creative, compassionate, and financially rewarding alternatives:

* Re-assign your people to new roles;

* Rotate staff between Departments and leverage cross-training;

* Allow 2 or more employees to job share one job;

* Empower your people to “own” their work;

* Pivot your entire business model;

* Enlist your employees as “Brand Ambassadors” by pursuing volunteer work and community engagement to forge powerful relationships with community stakeholders;

* Reward, recognize, coach, mentor, engage, train your employees;

* Find each person’s skills that they are not using in their current role, and rearchitect their work to enable them to leverage those skills; and

* Encourage your people to come up with new ideas for products/services, identify process improvements, and achieve operational efficiency.

These are only a few ideas you can implement IMMEDIATELY to avoid laying off your greatest competitive advantage. The possibilities of untapping employee potential are nearly limitless.

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People are NOT assets! They aren’t living photocopiers with limbs that depreciate over time, until you find it expedient to replace them. Heck no! Your people are the ONLY lasting competitive advantage you have. THEY are your Unique Value Proposition, your Point of Differentiation.

BUT, how do you know you have the right people in the right positions, doing work they are most capable of and passionate about?

You hired your employees to fill job vacancies, and as such recruited people who possessed a specific set of skills, background, and qualifications to perform a specific set of tasks and do the job. Right?

But…how are you leveraging ALL of their OTHER skills, education, training, certifications so they are empowered to “own” their work? Are you giving them control over how they do their work, when they do it, where they do it, and who they work with to achieve greatness? Otherwise, what’s the point? Why did you hire them?

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I have developed a training program to teach you and your people how to conduct a human capital audit. I work with organizations to help them identify ALL of the skills their people possess but are NOT actively using in their current roles.

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Then I show them how to re-architect their employee’s work in order to maximize their potential and increase their performance and productivity. This leads to increased employee retention, higher job satisfaction, more active engagement, proactive client relationship management, and…enhanced financial performance.

What do you think about finding and unleashing employee untapped potential to survive and thrive in 2021?

To Maximize Your Productivity, INVEST Your Time.

Time…the one resource we can’t buy or make more of. You can’t steal it, or borrow someone else’s. It’s the epitome of a FINITE resource. 168 hours a week. That’s all we have. No more.

You delay, but time will not.” – Ben Franklin

Here are a few strategies to assist you in maximizing your time, in order to be as productive as possible?

1. Keep a time track journal.

For ONE week, for every hour you are awake make note of what you were doing, whether you were productive, and why/why not. At the end of that week, review your weeks’ worth of journal entries with an eye towards noticing any evident patterns. Specifically pay attention to:

When are you most/least productive? Time of day, days of week;
What are you doing when you are most/least productive?; and
What enabled you to be most productive or prevented you from performing at an optimal level?

People hurry so they can get to places faster, where they’d rather not be, so they can have more time to do things they’d rather not be doing.” Peter Turla

Now, start applying adjustments to your daily (work-life) rituals based on the trends you noticed from your week of observation. Apply to a second week of productivity/time utilization tracking. At the end of every day assess how you performed.

At the end of the second week, you will have TWO weeks of data and one week’s worth of new tactics you attempted to apply to your old work patterns.

Make similar adjustments as done at the end of week one. Implement the learned outcomes from the past two weeks in one final (THIRD) week of productivity/time tracking.

At the end of those three weeks, you will notice a discernible uptick / increase in your overall effectiveness as reflected in increased productivity. Research shows by committing to this three week behavior modification process, you will “find/create/steal back” two to seven hours of saved time/ increased productivity time gains.

2. Develop a time investment strategic plan.

Step 1: Collect all tasks to be managed whether it’s urgent or not, big or small, personal or professional.

Step 2: Prune it. For all items, decide whether you need to tackle it or not.

Step 3: Organize and Prioritize: Place all tasks that fall under the same project into the same category. Make sure all of your projects and tasks / actions are correctly grouped together.

Prioritize your projects with their component actions/tasked, based on importance.

Prioritize your tasks/actions as follows:

Priority 1: Most important To-Do’s with least amount of time to get them completed;

Priority 2: Also critically important but a bit more time to complete than your Priority 1 actions;

Priority 3: Not very important but must be completed fairly soon. Delegate these; and

Priority 4: Not very important, not much time urgency. Get rid of!

Planning to achieve the desired productivity. Some best practices:

• Be me-th-od-ic-al.

• Establish routines and stick with them…except when you DON’T/CAN’T!

• Assign clearly defined roles and responsibilities for yourself.

• Keep records…and keep them UPDATED.

• Schedule time to do the work you HATE.

• Expect/embrace the unexpected. in fact… planning helps mitigate against unanticipated interruptions!

My time investment program PPT.

Ethan L. Chazin, MBA

Chief Motivation Officer

Conduct an Employee Performance Audit

How to quantify your people’s performance productivity.
Your Organization’s Staff Census
Conduct a STAFF CENSUS and overlay that onto your organization chart, in order to conduct an employee portfolio. Conducting a census of your organization’s employees entails looking up and down the organization as well as across functional areas, and at various locations, to see how well staffed you are to handle current workloads, as well as future planned short and long-term projects that will require additional staffing.
Conducting such an organization-wide census will help you to identify who you have, and who you need. A staff census helps you to develop your Talent Acquisition/Management .
Employee Return on
Your employee Return on investment (eROI) is an effective way to determine if you are optimizing your , by generating an acceptable return on your investment into your employees, based on what you pay them and their productivity? Here is how you begin quantifying employee cost versus their productivity return to your organization.
Employee Cost
An employee’s “Cost” can be estimated by applying a factor of 1.2 to 1.4 * the employee’s base salary.
When we refer to employee “COST” that can be determined by applying the sum total of everything it takes to keep an employee. Cost includes their base salary, bonuses, cost of living adjustments you provide, any/all benefits, training, certifications, memberships, transportation, meals & entertainment, etc.
eROI can be measured using the average revenue that is generated on a per employee basis. You calculate this by using your total annual revenue divided by the total number of employees, and your employee’s key performance indicators (KPIs) which hare their annual, quarterly, monthly goals.
eROI (employee value/contribution) can be measured using revenue per employee * .X% of the employee’s KPIs achieved/reached. The percent completion of KPI is a way of determining how the employee was to achieving their established goals?
How do employers feel about/are they using eROI?
· New hire performance metrics are used by 51% of companies.
· Turnover and retention metrics are used by 48% of companies.
· Hiring Manager satisfaction rates are used by 41% of companies.
Performance, productivity, and retention are the 3 most critical factors you have available, in order to determine an organization’s “Quality of Hire.” (QoH)
· Performance – average of all new hire performance ratings.
· Productivity – as defined by KPIs.
· Retention – % of new hires on-board at the end of the year.
Ex. Using these 3 ratings/metrics…if you scored an 80%, 75%, and 70% on these 3 metrics, then the average QoH you achieved is 75% or C to C+ range.
Hat tip goes out to Howard Matalon of Olender Feldman for sharing these concepts during a recent talk conducted at Affinity Federal .

Why I Became a Weight Watchers Leader.

Since last June when I re-joined Weight Watchers, I have lost a total of 67 pounds!
It has been an amazing journey to date. I have discovered a wealth of self-motivation strategies that I use, to regain a healthy life style. You do this by consciously choosing to re-invest in yourself through healthier choices and recommit to health & wellness.
Having reinvigorated myself, I decided to share my experiences as a Group Leader. I’ll be facilitating weekly member meetings. During these meetings, members share their challenges in a friendly and nurturing environment by recounting the stress they face in overcoming shared experiences and coping strategies.
They are in effect “in it” together and committed to helping each other in achieving their goals.
Why does this matter in careers and business?
Many of the exact SAME guiding principles that people face in making wiser decisions about their health in can be applied to work-life balance decisions and their careers and professional pursuits. Choosing to pursue more positive individual, group, and organizational goals driven by empathy and emotional intelligence lead to more positive outcomes achieved in organizations.
Creating positive environments at work that nurture people’s spirit with intrinsic motivation and surrounding employees with positive people who share their values, behave morally and exert positive influence will lead to greater success in one’s goals. Achieving a healthier lifestyle enables us to more aggressively and confidently pursuing our work and career passions, to building more compassionate cultures.
These choices we make for ourselves and in helping others all serve to optimize workplace productivity, more successfully engage and empower employees, and enable you to gain lasting competitive advantage.
Stay tuned…
As I take on this new role I will be reporting back how leading a group of committed individuals on their path to a healthier lifestyle can be applied to one’s career, professional pursuits and be leveraged organizational success.
Here’s to an amazing 2018!
Ethan, Chief Motivation Officer
The Chazin Group, LLC
201.683.3399 | 917.239.5571 |

The Compassionate Organization

The (organizational behavior) times, they are a changing.
In the past, employees went to work for organizations in an implicit agreement that they would provide their skills for fair pay. If they performed well, they would be rewarded with a modicum of job security and perhaps career advancement. Those days of one employer per career are long gone. In today’s “contract” economy, workers change jobs between eight to ten times by the time they reach 35 years old.
The Mature workers and Baby Boomers who first introduced the American workplace to mass layoffs in the 1980s when they were in their 30s and 40s, are now leaving the workplace by the tens of thousands every day.
This mass exodus of the Mature workforce and Baby Boomers coincides with Millennial workers taking over roles of increasing importance within organizations. The sheer number of Millennials now entering the workforce will fill the void being left by Matures and Boomers. Estimates are Millennials will constitute 75-80% of the American workforce by 2020. Meanwhile, organizations have been “flattening out” their management ranks as they cast off layers of middle management in the past few decades.
With this huge transfer in the balance of power from older to younger American workers, Millennials bring with them into the workplace a new set of organizational values, beliefs about work, and a set of ethics and expectations about appropriate organizational behavior.
These newly minted professionals witnessed first-hand just how poorly their parents and grandparents were treated by the organizations they had committed to during the great American Recession of 2007-2009. Adding insult to injury came the mortgage foreclosure disaster with millions of Americans being cast out of their homes.
Millennials have been demanding that the organizations they work for (and buy from) share their values, practice probity or the possession of a moral compass, and must care for the environment. Sustainability’s explosive growth in recent years is proof that Millennials desire to protect the planet.
Further, Millennials want their ideas to not only be solicited by the organizations they commit to, but also implemented. They want their work to have meaning, and they want to be able to make an IMPACT to the organizations they work for and society as a whole NOW.
They do not expect to have to wait years “putting in their time” before they can make a difference. They seek out those organizations that offer them the most meaningful and appealing work-life balance options. Goodbye and fond farewell to the 20th Century command-control pyramid-shaped organization. Gone is the Corporation whose sole purpose for existence is the pursuit of profit at any and all costs. Welcome to the new “compassionate organization” that is required for lasting competitive success in the 21st Century.
And while it may take global banks, financial institutions, petroleum companies, gun manufacturers, tobacco companies, and other less than ethically based institutions some time to discover this phenomenon and adapt to the new reality of the compassionate organization, the landscape is ALREADY changing and quickly.
Global trends will further expedite the shift to a more ethical, cause-based socially conscious organization. Trends like global competition, social media, the sharing economy, a pervasive “war” for top talent, sustainability, rapid idea diffusion through the Web, virtual reality, augmented reality, artificial intelligence, and the near constant rate of technological innovation the old ways of focusing on maximizing profit and treating employees like assets akin to photocopiers with limbs. The profit above all else mantra and Greed is Good mindset no longer serves as a viable lasting competitive business model.
Many of the foundational underpinnings of this kinder, more caring organization have been in place for some time. Compassionate organizations can be identified by the type of flexible work arrangements they offer to their employees. These caring organizations put employees first every day by allowing their people to work where and when they feel they are most productive, give them time off to solve their organization’s (and society’s) problems, come up with innovative new products and services, solve problems and architect their OWN work as they see fit.
These compassionate organizations are re-aligning their organizations by removing 20th Century pyramid-shaped command and control organizations. In its place, leaner, less hierarchical flatter MATRIX organizations with self-directed/self-managed work teams are forming in lieu of traditional management structures.
The new compassionate organization encourages its employees to pursue outside interests and achieve self-actualization through community engagement, volunteer work and giving back to their communities. Need examples? Following is merely a short list of compassionate organizations who comprise an enlightened employer ‘Hall of Fame’:
Edward Jones
Whole Foods
W.L. Gore
Johnson & Johnson
For a more comprehensive list of these compassionate organizations, check out the Fortune 100 best companies to work for.
Ethical Organizations are MORE Profitable.
Need proof that there is a growing global trend afoot as for-profit companies shift their focus from pure profit maximization to more ethical and compassionate behaviors?
The Ethisphere Institute has been researching the financial performance of ethical organizations for over a decade now. Their research has uncovered an amazing phenomenon. Organizations globally that perform the most “ethically” consistently outperform financially their less ethical competitors across all industries and countries.
Think this is a fluke? Think again! Compassionate organizations are ideally positioned to unleash their people’s untapped potential for lasting competitive advantage.
Be on the look out for my upcoming book “The Compassionate Organization.”
Here’s to your continued success in 2017
– Ethan